59216 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 414, 416, and 419 

[CMS–1678–FC] 

RIN 0938–AT03 

Medicare Program: Hospital Outpatient 

Prospective Payment and Ambulatory 

Surgical Center Payment Systems and 

Quality Reporting Programs 

Republication 

Editorial Note: Rule document 2017– 

23932 was originally published on pages 

52356 through 52637 in the issue of Monday, 

November 13, 2017. In that publication, a 

section of the document was omitted due to 

a printing error. The corrected document is 

published here in its entirety. 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule with comment period. 

SUMMARY: This final rule with comment 

period revises the Medicare hospital 

outpatient prospective payment system 

(OPPS) and the Medicare ambulatory 

surgical center (ASC) payment system 

for CY 2018 to implement changes 

arising from our continuing experience 

with these systems. In this final rule 

with comment period, we describe the 

changes to the amounts and factors used 

to determine the payment rates for 

Medicare services paid under the OPPS 

and those paid under the ASC payment 

system. In addition, this final rule with 

comment period updates and refines the 

requirements for the Hospital 

Outpatient Quality Reporting (OQR) 

Program and the ASC Quality Reporting 

(ASCQR) Program. 

DATES:

Effective date: This final rule with 

comment period is effective on January 

1, 2018, unless otherwise noted. 

Comment period: To be assured 

consideration, comments on the 

payment classifications assigned to 

HCPCS codes identified in Addenda B, 

AA, and BB with the comment indicator 

‘‘NI’’ and on other areas specified 

throughout this final rule with comment 

period must be received at one of the 

addresses provided in the ADDRESSES

section no later than 5 p.m. EST on 

December 31, 2017. 

ADDRESSES: In commenting, please refer 

to file code CMS–1678–FC when 

commenting on the issues in this 

proposed rule. Because of staff and 

resource limitations, we cannot accept 

comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (no duplicates, please): 

1. Electronically. You may (and we 

encourage you to) submit electronic 

comments on this regulation to http://

www.regulations.gov. Follow the 

instructions under the ‘‘submit a 

comment’’ tab. 

2. By regular mail. You may mail 

written comments to the following 

address ONLY: 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Attention: CMS–1678– 

FC, P.O. Box 8013, Baltimore, MD 

21244–1850. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments via express 

or overnight mail to the following 

address ONLY: 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Attention: CMS–1678– 

FC, Mail Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments before the close 

of the comment period to either of the 

following addresses: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal Government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your 

comments to the Baltimore address, 

please call the telephone number (410) 

786–7195 in advance to schedule your 

arrival with one of our staff members. 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

For information on viewing public 

comments, we refer readers to the 

beginning of the SUPPLEMENTARY

INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: (We 

note that public comments must be 

submitted through one of the four 

channels outlined in the ADDRESSES

section above. Comments may not be 

submitted via email.) 

Advisory Panel on Hospital Outpatient 

Payment (HOP Panel), contact the HOP Panel 

mailbox at APCPanel@cms.hhs.gov. 

Ambulatory Surgical Center (ASC) 

Payment System, contact Elisabeth Daniel via 

email Elisabeth.Daniel1@cms.hhs.gov or at 

410–786–0237. 

Ambulatory Surgical Center Quality 

Reporting (ASCQR) Program Administration, 

Validation, and Reconsideration Issues, 

contact Anita Bhatia via email Anita.Bhatia@

cms.hhs.gov or at 410–786–7236. 

Ambulatory Surgical Center Quality 

Reporting (ASCQR) Program Measures, 

contact Vinitha Meyyur via email 

Vinitha.Meyyur@cms.hhs.gov or at 410–786– 

8819. 

Blood and Blood Products, contact Josh 

McFeeters via email Joshua.McFeeters@

cms.hhs.gov at 410–786–9732. 

Cancer Hospital Payments, contact Scott 

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

or at 410–786–4142. 

Care Management Services, contact Scott 

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

or at 410–786–4142. 

CPT Codes, contact Marjorie Baldo via 

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

786–4617. 

CMS Web Posting of the OPPS and ASC 

Payment Files, contact Chuck Braver via 

email Chuck.Braver@cms.hhs.gov or at 410– 

786–6719. 

Composite APCs (Low Dose Brachytherapy 

and Multiple Imaging), contact Twi Jackson 

via email Twi.Jackson@cms.hhs.gov or at 

410–786–1159. 

Comprehensive APCs (C–APCs), contact 

Lela Strong via email Lela.Strong@

cms.hhs.gov or at 410–786–3213. 

Hospital Outpatient Quality Reporting 

(OQR) Program Administration, Validation, 

and Reconsideration Issues, contact Anita 

Bhatia via email Anita.Bhatia@cms.hhs.gov 

or at 410–786–7236. 

Hospital Outpatient Quality Reporting 

(OQR) Program Measures, contact Vinitha 

Meyyur via email Vinitha.Meyyur@

cms.hhs.gov or at 410–786–8819. 

Hospital Outpatient Visits (Emergency 

Department Visits and Critical Care Visits), 

contact Twi Jackson via email Twi.Jackson@

cms.hhs.gov or at 410–786–1159. 

Inpatient Only (IPO) Procedures List, 

contact Lela Strong via email Lela.Strong@

cms.hhs.gov or at 410–786–3213. 

New Technology Intraocular Lenses 

(NTIOLs), contact Scott Talaga via email 

Scott.Talaga@cms.hhs.gov or at 410–786– 

4142. 

No Cost/Full Credit and Partial Credit 

Devices, contact Twi Jackson via email 

Twi.Jackson@cms.hhs.gov or at 410–786– 

1159. 

OPPS Brachytherapy, contact Scott Talaga 

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

410–786–4142. 

OPPS Data (APC Weights, Conversion 

Factor, Copayments, Cost-to-Charge Ratios 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59217 

(CCRs), Data Claims, Geometric Mean 

Calculation, Outlier Payments, and Wage 

Index), contact Erick Chuang via email 

Erick.Chuang@cms.hhs.gov or at 410–786– 

1816 or Elisabeth Daniel via email 

Elisabeth.Daniel1@cms.hhs.gov or at 410– 

786–0237. 

OPPS Drugs, Radiopharmaceuticals, 

Biologicals, and Biosimilar Products, contact 

Elisabeth Daniel via email 

Elisabeth.Daniel1@cms.hhs.gov or at 410– 

786–0237. 

OPPS New Technology Procedures/ 

Services, contact the New Technology APC 

email at NewTechAPCapplications@

cms.hhs.gov. 

OPPS Exceptions to the 2 Times Rule, 

contact Marjorie Baldo via email 

Marjorie.Baldo@cms.hhs.gov or at 410–786– 

4617. 

OPPS Packaged Items/Services, contact 

Elisabeth Daniel via email Elisabeth.

Daniel1@cms.hhs.gov or at 410–786–0237. 

OPPS Pass-Through Devices, contact the 

Device Pass-Through email at Device

PTapplications@cms.hhs.gov. 

OPPS Status Indicators (SI) and Comment 

Indicators (CI), contact Marina Kushnirova 

via email Marina.Kushnirova@cms.hhs.gov or 

at 410–786–2682. 

Partial Hospitalization Program (PHP) and 

Community Mental Health Center (CMHC) 

Issues, contact the PHP Payment Policy 

Mailbox at PHPPaymentPolicy@cms.hhs.gov. 

Revisions to the Laboratory Date of Service 

Policy, contact Craig Dobyski via email 

Craig.Dobyski@cms.hhs.gov or at 410–786– 

4584 or Rasheeda Johnson via email 

Rasheeda.Johnson1@cms.hhs.gov or at 410– 

786–3434 or Marjorie Baldo (for OPPS) via 

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

786–4617. 

Rural Hospital Payments, contact Josh 

McFeeters via email Joshua.McFeeters@

cms.hhs.gov or at 410–786–9732. 

Skin Substitutes, contact Josh McFeeters 

via email Joshua.McFeeters@cms.hhs.gov or 

at 410–786–9732. 

All Other Issues Related to Hospital 

Outpatient and Ambulatory Surgical 

Center Payments Not Previously 

Identified, contact Lela Strong via email 

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

3213. 

SUPPLEMENTARY INFORMATION: 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http://

www.regulations.gov/. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection, 

generally beginning approximately 3 

weeks after publication of the rule, at 

the headquarters of the Centers for 

Medicare & Medicaid Services, 7500 

Security Boulevard, Baltimore, MD 

21244, on Monday through Friday of 

each week from 8:30 a.m. to 4 p.m. EST. 

To schedule an appointment to view 

public comments, phone 1–800–743– 

3951. 

Electronic Access 

This Federal Register document is 

also available from the Federal Register 

online database through Federal Digital 

System (FDsys), a service of the U.S. 

Government Printing Office. This 

database can be accessed via the 

Internet at https://www.gpo.gov/fdsys/. 

Addenda Available Only Through the 

Internet on the CMS Web Site 

In the past, a majority of the Addenda 

referred to in our OPPS/ASC proposed 

and final rules were published in the 

Federal Register as part of the annual 

rulemakings. However, beginning with 

the CY 2012 OPPS/ASC proposed rule, 

all of the Addenda no longer appear in 

the Federal Register as part of the 

annual OPPS/ASC proposed and final 

rules to decrease administrative burden 

and reduce costs associated with 

publishing lengthy tables. Instead, these 

Addenda are published and available 

only on the CMS Web site. The 

Addenda relating to the OPPS are 

available at: https://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/ 

index.html. The Addenda relating to the 

ASC payment system are available at: 

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

Medicare-Fee-for-Service-Payment/ 

HospitalOutpatientPPS/index.html. 

Alphabetical List of Acronyms 

Appearing in This Federal Register 

Document 

AHA American Hospital Association 

AMA American Medical Association 

AMI Acute myocardial infarction 

APC Ambulatory Payment Classification 

API Application programming interface 

APU Annual payment update 

ASC Ambulatory surgical center 

ASCQR Ambulatory Surgical Center 

Quality Reporting 

ASP Average sales price 

AUC Appropriate use criteria 

AWP Average wholesale price 

BBA Balanced Budget Act of 1997, Public 

Law 105–33 

BBRA Medicare, Medicaid, and SCHIP 

[State Children’s Health Insurance 

Program] Balanced Budget Refinement Act 

of 1999, Public Law 106–113 

BIPA Medicare, Medicaid, and SCHIP 

Benefits Improvement and Protection Act 

of 2000, Public Law 106–554 

BLS Bureau of Labor Statistics 

CAH Critical access hospital 

CAHPS Consumer Assessment of 

Healthcare Providers and Systems 

CAP Competitive Acquisition Program 

C–APC Comprehensive Ambulatory 

Payment Classification 

CASPER Certification and Survey Provider 

Enhanced Reporting 

CAUTI Catheter-associated urinary tract 

infection 

CBSA Core-Based Statistical Area 

CCM Chronic care management 

CCN CMS Certification Number 

CCR Cost-to-charge ratio 

CDC Centers for Disease Control and 

Prevention 

CED Coverage with Evidence Development 

CERT Comprehensive Error Rate Testing 

CFR Code of Federal Regulations 

CI Comment indicator 

CLABSI Central Line [Catheter] Associated 

Blood Stream Infection 

CLFS Clinical Laboratory Fee Schedule 

CMHC Community mental health center 

CMS Centers for Medicare & Medicaid 

Services 

CoP Condition of participation 

CPI–U Consumer Price Index for All Urban 

Consumers 

CPT Current Procedural Terminology 

(copyrighted by the American Medical 

Association) 

CR Change request 

CRC Colorectal cancer 

CSAC Consensus Standards Approval 

Committee 

CT Computed tomography 

CV Coefficient of variation 

CY Calendar year 

DFO Designated Federal Official 

DME Durable medical equipment 

DMEPOS Durable Medical Equipment, 

Prosthetic, Orthotics, and Supplies 

DOS Date of service 

DRA Deficit Reduction Act of 2005, Public 

Law 109–171 

DSH Disproportionate share hospital 

EACH Essential access community hospital 

EAM Extended assessment and 

management 

ECD Expanded criteria donor 

EBRT External beam radiotherapy 

ECG Electrocardiogram 

ED Emergency department 

EDTC Emergency department transfer 

communication 

EHR Electronic health record 

E/M Evaluation and management 

ESRD End-stage renal disease 

ESRD QIP End-Stage Renal Disease Quality 

Improvement Program 

FACA Federal Advisory Committee Act, 

Public Law 92–463 

FDA Food and Drug Administration 

FFS [Medicare] Fee-for-service 

FY Fiscal year 

GAO Government Accountability Office 

GI Gastrointestinal 

GME Graduate medical education 

HAI Healthcare-associated infection 

HCAHPS Hospital Consumer Assessment of 

Healthcare Providers and Systems 

HCERA Health Care and Education 

Reconciliation Act of 2010, Public Law 

111–152 

HCP Health care personnel 

HCPCS Healthcare Common Procedure 

Coding System 

HCRIS Healthcare Cost Report Information 

System 


sradovich on DSK3GMQ082PROD with RULES2
59218 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

HCUP Healthcare Cost and Utilization 

Project 

HEU Highly enriched uranium 

HH QRP Home Health Quality Reporting 

Program 

HHS Department of Health and Human 

Services 

HIE Health information exchange 

HIPAA Health Insurance Portability and 

Accountability Act of 1996, Public Law 

104–191 

HOP Hospital Outpatient Payment [Panel] 

HOPD Hospital outpatient department 

HOP QDRP Hospital Outpatient Quality 

Data Reporting Program 

HPMS Health Plan Management System 

IBD Inflammatory bowel disease 

ICC Interclass correlation coefficient 

ICD Implantable cardioverter defibrillator 

ICD–9–CM International Classification of 

Diseases, Ninth Revision, Clinical 

Modification 

ICD–10 International Classification of 

Diseases, Tenth Revision 

ICH In-center hemodialysis 

ICR Information collection requirement 

IDTF Independent diagnostic testing facility 

IGI IHS Global, Inc. 

IHS Indian Health Service 

I/OCE Integrated Outpatient Code Editor 

IOL Intraocular lens 

IORT Intraoperative radiation treatment 

IPFQR Inpatient Psychiatric Facility 

Quality Reporting 

IPPS [Hospital] Inpatient Prospective 

Payment System 

IQR [Hospital] Inpatient Quality Reporting 

IRF Inpatient rehabilitation facility 

IRF QRP Inpatient Rehabilitation Facility 

Quality Reporting Program 

IT Information technology 

LCD Local coverage determination 

LDR Low dose rate 

LTCH Long-term care hospital 

LTCHQR Long-Term Care Hospital Quality 

Reporting 

MAC Medicare Administrative Contractor 

MACRA Medicare Access and CHIP 

Reauthorization Act of 2015, Public Law 

114–10 

MAP Measure Application Partnership 

MDH Medicare-dependent, small rural 

hospital 

MedPAC Medicare Payment Advisory 

Commission 

MEG Magnetoencephalography 

MFP Multifactor productivity 

MGCRB Medicare Geographic Classification 

Review Board 

MIEA–TRHCA Medicare Improvements and 

Extension Act under Division B, Title I of 

the Tax Relief Health Care Act of 2006, 

Public Law 109–432 

MIPPA Medicare Improvements for Patients 

and Providers Act of 2008, Public Law 

110–275 

MLR Medical loss ratio 

MMA Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003, Public Law 108–173 

MMEA Medicare and Medicaid Extenders 

Act of 2010, Public Law 111–309 

MMSEA Medicare, Medicaid, and SCHIP 

Extension Act of 2007, Public Law 110–173 

MPFS Medicare Physician Fee Schedule 

MR Medical review 

MRA Magnetic resonance angiography 

MRgFUS Magnetic Resonance Image 

Guided Focused Ultrasound 

MRI Magnetic resonance imaging 

MRSA Methicillin-Resistant 

Staphylococcus Aureus 

MS–DRG Medicare severity diagnosisrelated group 

MSIS Medicaid Statistical Information 

System 

MUC Measure under consideration 

NCCI National Correct Coding Initiative 

NEMA National Electrical Manufacturers 

Association 

NHSN National Healthcare Safety Network 

NOTA National Organ and Transplantation 

Act 

NOS Not otherwise specified 

NPI National Provider Identifier 

NQF National Quality Forum 

NQS National Quality Strategy 

NTIOL New technology intraocular lens 

NUBC National Uniform Billing Committee 

OACT [CMS] Office of the Actuary 

OBRA Omnibus Budget Reconciliation Act 

of 1996, Public Law 99–509 

O/E Observed to expected event 

OIG [HHS] Office of the Inspector General 

OMB Office of Management and Budget 

ONC Office of the National Coordinator for 

Health Information Technology 

OPD [Hospital] Outpatient Department 

OPPS [Hospital] Outpatient Prospective 

Payment System 

OPSF Outpatient Provider-Specific File 

OQR [Hospital] Outpatient Quality 

Reporting 

OT Occupational therapy 

PAMA Protecting Access to Medicare Act of 

2014, Public Law 113–93 

PCHQR PPS-Exempt Cancer Hospital 

Quality Reporting 

PCR Payment-to-cost ratio 

PDC Per day cost 

PDE Prescription Drug Event 

PE Practice expense 

PHP Partial hospitalization program 

PHSA Public Health Service Act, Public 

Law 96–88 

PN Pneumonia 

POS Place of service 

PPI Producer Price Index 

PPS Prospective payment system 

PQRI Physician Quality Reporting Initiative 

PQRS Physician Quality Reporting System 

QDC Quality data code 

QIO Quality Improvement Organization 

RFA Regulatory Flexibility Act 

RHQDAPU Reporting Hospital Quality Data 

for Annual Payment Update 

RTI Research Triangle Institute, 

International 

RVU Relative value unit 

SAD Self-administered drug 

SAMS Secure Access Management Services 

SCH Sole community hospital 

SCOD Specified covered outpatient drugs 

SES Socioeconomic status 

SI Status indicator 

SIA Systems Improvement Agreement 

SIR Standardized infection ratio 

SNF Skilled nursing facility 

SRS Stereotactic radiosurgery 

SRTR Scientific Registry of Transplant 

Recipients 

SSA Social Security Administration 

SSI Surgical site infection 

TEP Technical Expert Panel 

TOPs Transitional Outpatient Payments 

VBP Value-based purchasing 

WAC Wholesale acquisition cost 

Table of Contents 

I. Summary and Background 

A. Executive Summary of This Document 

1. Purpose 

2. Summary of the Major Provisions 

3. Summary of Costs and Benefits 

B. Legislative and Regulatory Authority for 

the Hospital OPPS 

C. Excluded OPPS Services and Hospitals 

D. Prior Rulemaking 

E. Advisory Panel on Hospital Outpatient 

Payment (the HOP Panel or the Panel) 

1. Authority of the Panel 

2. Establishment of the Panel 

3. Panel Meetings and Organizational 

Structure 

F. Public Comments Received in Response 

to CY 2017 OPPS/ASC Final Rule With 

Comment Period 

II. Updates Affecting OPPS Payments 

A. Recalibration of APC Relative Payment 

Weights 

1. Database Construction 

a. Database Source and Methodology 

b. Calculation and Use of Cost-to-Charge 

Ratios (CCRs) 

2. Data Development Process and 

Calculation of Costs Used for Ratesetting 

a. Calculation of Single Procedure APC 

Criteria-Based Costs 

(1) Blood and Blood Products 

(2) Brachytherapy Sources 

b. Comprehensive APCs (C–APCs) for CY 

2018 

(1) Background 

(2) C–APCs for CY 2018 

(3) Brachytherapy Insertion Procedures 

(4) C–APC 5627 (Level 7 Radiation) 

Stereotactic Radiosurgery (SRS) 

(5) Complexity Adjustment for Blue Light 

Cystoscopy Procedures 

(6) Analysis of C–APC Packaging Under the 

OPPS 

c. Calculation of Composite APC CriteriaBased Costs 

(1) Mental Health Services Composite APC 

(2) Multiple Imaging Composite APCs 

(APCs 8004, 8005, 8006, 8007, and 8008) 

3. Changes to Packaged Items and Services 

a. Background and Rationale for Packaging 

in the OPPS 

b. CY 2018 Drug Administration Packaging 

Policies 

(1) Background of Drug Administration 

Packaging Policy 

(2) Packaging of Level 1 and Level 2 Drug 

Administration Services 

(3) Discussion and Summary of Comments 

Received in Response to Solicitation 

Regarding Unconditionally Packaging 

Drug Administration Add-On Codes 

c. Analysis of Packaging of Pathology 

Services in the OPPS 

d. Summary of Public Comments and Our 

Responses Regarding Packaging of Items 

and Services Under the OPPS 

4. Calculation of OPPS Scaled Payment 

Weights 

B. Conversion Factor Update 

C. Wage Index Changes 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59219 

D. Statewide Average Default CCRs 

E. Adjustment for Rural Sole Community 

Hospitals (SCHs) and Essential Access 

Community Hospitals (EACHs) Under 

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

F. Payment Adjustment for Certain Cancer 

Hospitals for CY 2018 

1. Background 

2. Policy for CY 2018 

G. Hospital Outpatient Outlier Payments 

1. Background 

2. Outlier Calculation for CY 2018 

H. Calculation of an Adjusted Medicare 

Payment From the National Unadjusted 

Medicare Payment 

I. Beneficiary Copayments 

1. Background 

2. OPPS Copayment Policy 

3. Calculation of an Adjusted Copayment 

Amount for an APC Group 

III. OPPS Ambulatory Payment Classification 

(APC) Group Policies 

A. OPPS Treatment of New CPT and Level 

II HCPCS Codes 

1. Treatment of New HCPCS Codes That 

Were Effective April 1, 2017 for Which 

We Solicited Public Comments in the CY 

2018 OPPS/ASC Proposed Rule 

2. Treatment of New HCPCS Codes 

Effective July 1, 2017 for Which We 

Solicited Public Comments in the CY 

2018 OPPS/ASC Proposed Rule 

3. Process for New Level II HCPCS Codes 

That Are Effective October 1, 2017 and 

January 1, 2018 for Which We Are 

Soliciting Public Comments in This CY 

2018 OPPS/ASC Final Rule With 

Comment Period 

4. Treatment of New and Revised CY 2018 

Category I and III CPT Codes That Are 

Effective January 1, 2018 for Which We 

Solicited Public Comments in the CY 

2018 OPPS/ASC Proposed Rule 

B. OPPS Changes—Variations Within APCs 

1. Background 

2. Application of the 2 Times Rule 

3. APC Exceptions to the 2 Times Rule 

C. New Technology APCs 

1. Background 

2. Revised and Additional New 

Technology APC Groups 

3. Procedures Assigned to New Technology 

APC Groups for CY 2018 

a. Overall Policy 

b. Magnetic Resonance-Guided Focused 

Ultrasound Surgery (MRgFUS) (APCs 

1537, 5114, and 5415) 

c. Retinal Prosthesis Implant Procedure 

d. Pathogen Test for Platelets 

e. Fractional Flow Reserve Derived From 

Computed Tomography (FFRCT) 

D. OPPS APC-Specific Policies 

1. Blood-Driven Hematopoietic Cell 

Harvesting 

2. Brachytherapy Insertion Procedures (C– 

APCs 5341 and 5092) 

a. C–APC 5341 (Abdominal/Peritoneal/ 

Biliary and Related Procedures) 

b. C–APC 5092 (Level 2 Breast/Lymphatic 

Surgery and Related Procedures) 

3. Care Management Coding Changes 

Effective January 1, 2018 (APCs 5821 and 

5822) 

4. Cardiac Telemetry (APC 5721) 

5. Collagen Cross-Linking of Cornea 

(C–APC 5503) 

6. Cryoablation Procedures for Lung 

Tumors (C–APC 5361) 

7. Diagnostic Bone Marrow Aspiration and 

Biopsy (C–APC 5072) 

8. Discussion of the Comment Solicitation 

in the Proposed Rule on Intraocular 

Procedures APCs 

9. Endovascular APCs (C–APCs 5191 

Through 5194) 

10. Esophagogastroduodenoscopy (C–APC 

5362) 

11. Hemorrhoid Treatment by Thermal 

Energy (APC 5312) 

12. Ileoscopy Through Stoma With Stent 

Placement (C–APC 5303) 

13. Laparoscopic Nephrectomy (C–APC 

5362) 

14. Multianalyte Assays With Algorithmic 

Analyses (MAAA) 

15. Musculoskeletal APCs (APCs 5111 

Through 5116) 

16. Nasal/Sinus Endoscopy Procedures 

(C–APC 5155) 

17. Nuclear Medicine Services (APCs 5592 

and 5593) 

18. Percutaneous Transluminal Mechanical 

Thrombectomy (C–APC 5192) 

19. Peripherally Inserted Central Venous 

Catheter (APC 5182) 

20. Pulmonary Rehabilitation Services 

(APCs 5732 and 5733) and Cardiac 

Rehabilitation Services (APC 5771) 

21. Radiology and Imaging Procedures and 

Services 

a. Imaging APCs 

b. Non-Ophthalmic Fluorescent Vascular 

Angiography (APC 5523) 

22. Sclerotherapy (APC 5054) 

23. Skin Substitutes (APCs 5053, 5054, and 

5055) 

24. Subdermal Drug Implants for the 

Treatment of Opioid Addiction (APC 

5735) 

25. Suprachoroidal Delivery of 

Pharmacologic Agent (APC 5694) 

26. Transperineal Placement of 

Biodegradable Material (C–APC 5375) 

27. Transcranial Magnetic Stimulation 

Therapy (TMS) (APCs 5721 and 5722) 

28. Transurethral Waterjet Ablation of 

Prostate (C–APC 5375) 

29. Transurethral Water Vapor Thermal 

Therapy of Prostate (C–APC 5373) 

IV. OPPS Payment for Devices 

A. Pass-Through Payments for Devices 

1. Beginning Eligibility Date for Device 

Pass-Through Status and Quarterly 

Expiration of Device Pass-Through 

Payments 

a. Background 

b. Expiration of Transitional Pass-Through 

Payment for Certain Devices 

2. New Device Pass-Through Applications 

a. Background 

b. Applications Received for Device PassThrough Payment for CY 2018 

B. Device-Intensive Procedures 

1. Background 

2. HCPCS Code-Level Device-Intensive 

Determination 

3. Device Edit Policy 

4. Adjustment to OPPS Payment for No 

Cost/Full Credit and Partial Credit 

Devices 

a. Background 

b. Policy for No Cost/Full Credit and 

Partial Credit Devices 

5. Payment Policy for Low-Volume DeviceIntensive Procedures 

V. OPPS Payment Changes for Drugs, 

Biologicals, and Radiopharmaceuticals 

A. OPPS Transitional Pass-Through 

Payment for Additional Costs of Drugs, 

Biologicals, and Radiopharmaceuticals 

1. Background 

2. 3-Year Transitional Pass-Through 

Payment Period for All Pass-Through 

Drugs, Biologicals, and 

Radiopharmaceuticals and Expiration of 

Pass-Through Status 

3. Drugs and Biologicals With Expiring 

Pass-Through Payment Status in CY 

2017 

4. Drugs, Biologicals, and 

Radiopharmaceuticals With New or 

Continuing Pass-Through Status in CY 

2018 

5. Provisions for Reducing Transitional 

Pass-Through Payments for PolicyPackaged Drugs, Biologicals, and 

Radiopharmaceuticals to Offset Costs 

Packaged Into APC Groups 

B. OPPS Payment for Drugs, Biologicals, 

and Radiopharmaceuticals Without PassThrough Payment Status 

1. Criteria for Packaging Payment for 

Drugs, Biologicals, and 

Radiopharmaceuticals 

a. Packaging Threshold 

b. Packaging of Payment for HCPCS Codes 

That Describe Certain Drugs, Certain 

Biologicals, and Therapeutic 

Radiopharmaceuticals Under the Cost 

Threshold (‘‘Threshold-Packaged 

Policy’’) 

c. Policy Packaged Drugs, Biologicals, and 

Radiopharmaceuticals 

d. High Cost/Low Cost Threshold for 

Packaged Skin Substitutes 

e. Packaging Determination for HCPCS 

Codes That Describe the Same Drug or 

Biological But Different Dosages 

2. Payment for Drugs and Biologicals 

Without Pass-Through Status That Are 

Not Packaged 

a. Payment for Specified Covered 

Outpatient Drugs (SCODs) and Other 

Separately Payable and Packaged Drugs 

and Biologicals 

b. CY 2018 Payment Policy 

c. Biosimilar Biological Products 

3. Payment Policy for Therapeutic 

Radiopharmaceuticals 

4. Payment Adjustment Policy for 

Radioisotopes Derived From Non-Highly 

Enriched Uranium Sources 

5. Payment for Blood Clotting Factors 

6. Payment for Nonpass-Through Drugs, 

Biologicals, and Radiopharmaceuticals 

With HCPCS Codes But Without OPPS 

Hospital Claims Data 

7. Alternative Payment Methodology for 

Drugs Purchased Under the 340B 

Program 

a. Background 

b. OPPS Payment Rate for 340B Purchased 

Drugs 

c. Summaries of Public Comments 

Received and Our Responses 

d. Summary of Final Policies for CY 2018 

e. Comment Solicitation on Additional 

340B Considerations 


sradovich on DSK3GMQ082PROD with RULES2
59220 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

VI. Estimate of OPPS Transitional PassThrough Spending for Drugs, Biologicals, 

Radiopharmaceuticals, and Devices 

A. Background 

B. Estimate of Pass-Through Spending 

VII. OPPS Payment for Hospital Outpatient 

Visits and Critical Care Services 

VIII. Payment for Partial Hospitalization 

Services 

A. Background 

B. PHP APC Update for CY 2018 

1. PHP APC Geometric Mean per Diem 

Costs 

2. Development of the PHP APC Geometric 

Mean per Diem Costs 

a. CMHC Data Preparation: Data Trims, 

Exclusions, and CCR Adjustments 

b. Hospital-Based PHP Data Preparation: 

Data Trims and Exclusions 

3. PHP Service Utilization Updates 

4. Minimum Service Requirement: 20 

Hours per Week 

C. Outlier Policy for CMHCs 

IX. Procedures That Will Be Paid Only as 

Inpatient Procedures 

A. Background 

B. Changes to the Inpatient Only (IPO) List 

1. Methodology for Identifying Appropriate 

Changes to IPO List 

2. Removal of Procedures Described by 

CPT Code 55866 

3. Removal of the Total Knee Arthroplasty 

(TKA) Procedure Described by CPT Code 

27447 

4. Recovery Audit Contractor (RAC) 

Review of TKA Procedures 

5. Public Requests for Additions to or 

Removal of Procedures on the IPO List 

6. Summary of Changes to the IPO List for 

CY 2018 

C. Discussion of Solicitation of Public 

Comments on the Possible Removal of 

Partial Hip Arthroplasty (PHA) and Total 

Hip Arthroplasty (THA) Procedures 

From the IPO List 

1. Background 

2. Topics and Questions Posed for Public 

Comments 

X. Nonrecurring Policy Changes 

A. Payment for Certain Items and Services 

Furnished by Certain Off-Campus 

Departments of a Provider 

1. Background 

2. Expansion of Services by Excepted OffCampus Hospital Outpatient 

Departments 

3. Section 16002 of the 21st Century Cures 

Act (Treatment of Cancer Hospitals in 

Off-Campus Outpatient Department of a 

Provider Policy) 

B. Medicare Site-of-Service Price 

Transparency (Section 4011 of the 21st 

Century Cures Act) 

C. Appropriate Use Criteria for Advanced 

Diagnostic Imaging Services 

D. Enforcement Instruction for the 

Supervision of Outpatient Therapeutic 

Services in Critical Access Hospitals 

(CAHs) and Certain Small Rural 

Hospitals 

E. Payment Changes for Film X-Rays 

Services and Payment Changes for 

X-Rays Taken Using Computed 

Radiography Technology 

F. Revisions to the Laboratory Date of 

Service Policy 

XI. CY 2018 OPPS Payment Status and 

Comment Indicators 

A. CY 2018 OPPS Payment Status Indicator 

Definitions 

B. CY 2018 Comment Indicator Definitions 

XII. Updates to the Ambulatory Surgical 

Center (ASC) Payment System 

A. Background 

1. Legislative History, Statutory Authority, 

and Prior Rulemaking for the ASC 

Payment System 

2. Policies Governing Changes to the Lists 

of Codes and Payment Rates for ASC 

Covered Surgical Procedures and 

Covered Ancillary Services 

3. Definition of ASC Covered Surgical 

Procedures 

B. Treatment of New and Revised Codes 

1. Background on Current Process for 

Recognizing New and Revised Category 

I and Category III CPT Codes and Level 

II HCPCS Codes 

2. Treatment of New and Revised Level II 

HCPCS Codes Implemented in April 

2017 for Which We Solicited Public 

Comments in the CY 2018 Proposed Rule 

3. Treatment of New and Revised Level II 

HCPCS Codes Implemented in July 2017 

for Which We Solicited Public 

Comments in the CY 2018 Proposed Rule 

4. Process for New and Revised Level II 

HCPCS Codes That Are Effective October 

1, 2017 and January 1, 2018 for Which 

We Are Soliciting Public Comments in 

this CY 2018 OPPS/ASC Final Rule With 

Comment Period 

5. Process for Recognizing New and 

Revised Category I and Category III CPT 

Codes That Are Effective January 1, 2018 

for Which We Are Soliciting Public 

Comments in This CY 2018 OPPS/ASC 

Final Rule With Comment Period 

C. Update to the List of ASC Covered 

Surgical Procedures and Covered 

Ancillary Services 

1. Covered Surgical Procedures 

a. Covered Surgical Procedures Designated 

as Office-Based 

(1) Background 

(2) Changes for CY 2018 to Covered 

Surgical Procedures Designated as 

Office-Based 

b. ASC Covered Surgical Procedures 

Designated as Device-Intensive 

(1) Background 

(2) Changes to List of ASC Covered 

Surgical Procedures Designated as 

Device-Intensive for CY 2018 

c. Adjustment to ASC Payments for No 

Cost/Full Credit and Partial Credit 

Devices 

d. Additions to the List of ASC Covered 

Surgical Procedures 

e. Discussion of Comment Solicitation on 

Adding Additional Procedures to the 

ASC Covered Procedures List 

2. Covered Ancillary Services 

D. ASC Payment for Covered Surgical 

Procedures and Covered Ancillary 

Services 

1. ASC Payment for Covered Surgical 

Procedures 

a. Background 

b. Update to ASC Covered Surgical 

Procedure Payment Rates for CY2018 

2. Payment for Covered Ancillary Services 

a. Background 

b. Payment for Covered Ancillary Services 

for CY 2018 

E. New Technology Intraocular Lenses 

(NTIOLs) 

1. NTIOL Application Cycle 

2. Requests To Establish New NTIOL 

Classes for CY 2018 

3. Payment Adjustment 

4. Announcement of CY 2019 Deadline for 

Submitting Requests for CMS Review of 

Applications for a New Class of NTIOLs 

F. ASC Payment and Comment Indicators 

1. Background 

2. ASC Payment and Comment Indicators 

G. Calculation of the ASC Conversion 

Factor and the ASC Payment Rates 

1. Background 

2. Calculation of the ASC Payment Rates 

a. Updating the ASC Relative Payment 

Weights for CY 2018 and Future Years 

b. Updating the ASC Conversion Factor 

3. Discussion of Comment Solicitation on 

ASC Payment System Reform 

4. Display of CY 2018 ASC Payment Rates 

XIII. Requirements for the Hospital 

Outpatient Quality Reporting (OQR) 

Program 

A. Background 

1. Overview 

2. Statutory History of the Hospital OQR 

Program 

3. Regulatory History of the Hospital OQR 

Program 

B. Hospital OQR Program Quality 

Measures 

1. Considerations in the Selection of 

Hospital OQR Program Quality Measures 

2. Accounting for Social Risk Factors in the 

Hospital OQR Program 

3. Retention of Hospital OQR Program 

Measures Adopted in Previous Payment 

Determinations 

4. Removal of Quality Measures From the 

Hospital OQR Program Measure Set 

a. Considerations in Removing Quality 

Measures From the Hospital OQR 

Program 

b. Criteria for Removal of ‘‘Topped-Out’’ 

Measures 

c. Measure Removal From the Hospital 

OQR Program Measure Set 

5. Make Reporting of OP–37a–e: Outpatient 

and Ambulatory Surgery Consumer 

Assessment of Healthcare Providers and 

Systems (OAS CAHPS) Survey-Based 

Measures Voluntary for CY 2018 

Reporting and Subsequent Years 

6. Previously Adopted Hospital OQR 

Program Measure Set for the CY 2020 

Payment Determination and Subsequent 

Years 

7. Newly Finalized Hospital OQR Program 

Measure Set for the CY 2020 Payment 

Determination and Subsequent Years 

8. Hospital OQR Program Measures and 

Topics for Future Consideration 

a. Future Measure Topics 

b. Possible Future Adoption of the 

Electronic Version of OP–2: Fibrinolytic 

Therapy Received Within 30 Minutes of 

Emergency Department Arrival 

9. Maintenance of Technical Specifications 

for Quality Measures 

10. Public Display of Quality Measures 

a. Background 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59221 

b. Public Reporting of OP–18c: Median 

Time From Emergency Department 

Arrival to Emergency Department 

Departure for Discharged Emergency 

Department Patients—Psychiatric/ 

Mental Health Patients 

C. Administrative Requirements 

1. QualityNet Account and Security 

Administrator 

2. Requirements Regarding Participation 

Status 

a. Background 

b. Changes to the NOP Submission 

Deadline 

D. Form, Manner, and Timing of Data 

Submitted for the Hospital OQR Program 

1. Hospital OQR Program Annual Payment 

Determinations 

2. Requirements for Chart-Abstracted 

Measures Where Patient-Level Data Are 

Submitted Directly to CMS for the CY 

2021 Payment Determination and 

Subsequent Years 

3. Claims-Based Measure Data 

Requirements for the CY 2020 Payment 

Determination and Subsequent Years 

4. Data Submission Requirements for OP– 

37a–e: Outpatient and Ambulatory 

Surgery Consumer Assessment of 

Healthcare Providers and Systems (OAS 

CAHPS) Survey-Based Measures for the 

CY 2020 Payment Determination and 

Subsequent Years 

5. Data Submission Requirements for 

Previously Finalized Measures for Data 

Submitted via a Web-Based Tool for the 

CY 2020 Payment Determination and 

Subsequent Years 

6. Population and Sampling Data 

Requirements for the CY 2020 Payment 

Determination and Subsequent Years 

7. Hospital OQR Program Validation 

Requirements for Chart-Abstracted 

Measure Data Submitted Directly to CMS 

for the CY 2020 Payment Determination 

and Subsequent Years 

a. Clarification 

b. Codification 

c. Modifications to the Educational Review 

Process for Chart-Abstracted Measures 

Validation 

8. Extraordinary Circumstances Exception 

Process for the CY 2020 Payment 

Determination and Subsequent Years 

a. ECE Policy Nomenclature 

b. Timeline for CMS Response to ECE 

Requests 

9. Hospital OQR Program Reconsideration 

and Appeals Procedures for the CY 2020 

Payment Determination and Subsequent 

Years 

E. Payment Reduction for Hospitals That 

Fail To Meet the Hospital OQR Program 

Requirements for the CY 2018 Payment 

Determination 

1. Background 

2. Reporting Ratio Application and 

Associated Adjustment Policy for CY 

2018 

XIV. Requirements for the Ambulatory 

Surgical Center Quality Reporting 

(ASCQR) Program 

A. Background 

1. Overview 

2. Statutory History of the ASCQR Program 

3. Regulatory History of the ASCQR 

Program 

B. ASCQR Program Quality Measures 

1. Considerations in the Selection of 

ASCQR Program Quality Measures 

2. Accounting for Social Risk Factors in the 

ASCQR Program 

3. Policies for Retention and Removal of 

Quality Measures From the ASCQR 

Program 

a. Retention of Previously Adopted ASCQR 

Program Measures 

b. Measure Removal 

4. Delay of ASC–15a–e: Outpatient and 

Ambulatory Surgery Consumer 

Assessment of Healthcare Providers and 

Systems (OAS CAHPS) Survey-Based 

Measures Beginning With the 2020 

Payment Determination 

5. ASCQR Program Quality Measures 

Adopted in Previous Rulemaking 

6. ASCQR Program Quality Measures for 

the CY 2021 and CY 2022 Payment 

Determinations and Subsequent Years 

a. Adoption of ASC–16: Toxic Anterior 

Segment Syndrome Beginning With the 

CY 2021 Payment Determination 

b. Adoption of ASC–17: Hospital Visits 

After Orthopedic Ambulatory Surgical 

Center Procedures Beginning With the 

CY 2022 Payment Determination 

c. Adoption of ASC–18: Hospital Visits 

After Urology Ambulatory Surgical 

Center Procedures Beginning With the 

CY 2022 Payment Determination 

d. Summary of Previously Adopted 

Measurers and Newly Adopted ASCQR 

Program Measures for the CY 2022 

Payment Determination and Subsequent 

Years 

7. ASCQR Program Measures and Topics 

for Future Consideration 

8. Maintenance of Technical Specifications 

for Quality Measures 

9. Public Reporting of ASCQR Program 

Data 

C. Administrative Requirements 

1. Requirements Regarding QualityNet 

Account and Security Administrator 

2. Requirements Regarding Participation 

Status 

D. Form, Manner, and Timing of Data 

Submitted for the ASCQR Program 

1. Requirements Regarding Data Processing 

and Collection Periods for Claims-Based 

Measures Using Quality Data Codes 

(QDCs) 

2. Minimum Threshold, Minimum Case 

Volume, and Data Completeness for 

Claims-Based Measures Using QDCs 

3. Requirements for Data Submitted via an 

Online Data Submission Tool 

a. Requirements for Data Submitted via a 

Non-CMS Online Data Submission Tool 

b. Requirements for Data Submitted via a 

CMS Online Data Submission Tool 

4. Requirements for Claims-Based Measure 

Data 

5. Requirements for Data Submission for 

ASC–15a–e: Outpatient and Ambulatory 

Surgery Consumer Assessment of 

Healthcare Providers and Systems (OAS 

CAHPS) Survey-Based Measures 

6. Extraordinary Circumstances Extensions 

or Exemptions for the CY 2019 Payment 

Determination and Subsequent Years 

a. Background 

b. ECE Policy Nomenclature 

c. Timeline for CMS Response to ECE 

Requests 

7. ASCQR Program Reconsideration 

Procedures 

E. Payment Reduction for ASCs That Fail 

To Meet the ASCQR Program 

Requirements 

1. Statutory Background 

2. Reduction to the ASC Payment Rates for 

ASCs That Fail To Meet the ASCQR 

Program Requirements for a Payment 

Determination Year 

XV. Files Available to the Public via the 

Internet 

XVI. Collection of Information Requirements 

A. Statutory Requirement for Solicitation 

of Comments 

B. ICRs for the Hospital OQR Program 

C. ICRs for the ASCQR Program 

XVII. Response to Comments 

XVIII. Economic Analyses 

A. Regulatory Impact Analysis 

1. Introduction 

2. Statement of Need 

3. Overall Impacts for the OPPS and ASC 

Payment Provisions 

4. Regulatory Review Costs 

5. Detailed Economic Analyses 

a. Estimated Effects of OPPS Changes in 

This Final Rule With Comment Period 

(1) Limitations of Our Analysis 

(2) Estimated Effects of OPPS Changes to 

Part B Drug Payment on 340B Eligible 

Hospitals Paid Under the OPPS 

(3) Estimated Effects of OPPS Changes on 

Hospitals 

(4) Estimated Effects of OPPS Changes on 

CMHCs 

(5) Estimated Effects of OPPS Changes on 

Beneficiaries 

(6) Estimated Effects of OPPS Changes on 

Other Providers 

(7) Estimated Effects of OPPS Changes on 

the Medicare and Medicaid Programs 

(8) Alternative OPPS Policies Considered 

b. Estimated Effects of CY 2018 ASC 

Payment System Policies 

(1) Limitations of Our Analysis 

(2) Estimated Effects of CY 2018 ASC 

Payment System Policies on ASCs 

(3) Estimated Effects of ASC Payment 

System Policies on Beneficiaries 

(4) Alternative ASC Payment Policies 

Considered 

c. Accounting Statements and Tables 

d. Effects of Requirements for the Hospital 

OQR Program 

e. Effects of Requirements for the ASCQR 

Program 

B. Regulatory Flexibility Act (RFA) 

Analysis 

C. Unfunded Mandates Reform Act 

Analysis 

D. Reducing Regulation and Controlling 

Regulatory Costs 

E. Conclusion 

XIX. Federalism Analysis 

Regulation Text 

I. Summary and Background 

A. Executive Summary of This 

Document 

1. Purpose 

In this final rule with comment 

period, we are updating the payment 


sradovich on DSK3GMQ082PROD with RULES2
59222 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

policies and payment rates for services 

furnished to Medicare beneficiaries in 

hospital outpatient departments 

(HOPDs) and ambulatory surgical 

centers (ASCs) beginning January 1, 

2018. Section 1833(t) of the Social 

Security Act (the Act) requires us to 

annually review and update the 

payment rates for services payable 

under the Hospital Outpatient 

Prospective Payment System (OPPS). 

Specifically, section 1833(t)(9)(A) of the 

Act requires the Secretary to review 

certain components of the OPPS not less 

often than annually, and to revise the 

groups, relative payment weights, and 

other adjustments that take into account 

changes in medical practices, changes in 

technologies, and the addition of new 

services, new cost data, and other 

relevant information and factors. In 

addition, under section 1833(i) of the 

Act, we annually review and update the 

ASC payment rates. We describe these 

and various other statutory authorities 

in the relevant sections of this final rule 

with comment period. In addition, this 

final rule with comment period updates 

and refines the requirements for the 

Hospital Outpatient Quality Reporting 

(OQR) Program and the ASC Quality 

Reporting (ASCQR) Program. 

2. Summary of the Major Provisions 

• OPPS Update: For CY 2018, we are 

increasing the payment rates under the 

OPPS by an Outpatient Department 

(OPD) fee schedule increase factor of 

1.35 percent. This increase factor is 

based on the hospital inpatient market 

basket percentage increase of 2.7 

percent for inpatient services paid 

under the hospital inpatient prospective 

payment system (IPPS), minus the 

multifactor productivity (MFP) 

adjustment of 0.6 percentage point, and 

minus a 0.75 percentage point 

adjustment required by the Affordable 

Care Act. Based on this update, we 

estimate that total payments to OPPS 

providers (including beneficiary costsharing and estimated changes in 

enrollment, utilization, and case-mix) 

for CY 2018 is approximately $70 

billion, an increase of approximately 

$5.8 billion compared to estimated CY 

2017 OPPS payments. 

We are continuing to implement the 

statutory 2.0 percentage point reduction 

in payments for hospitals failing to meet 

the hospital outpatient quality reporting 

requirements, by applying a reporting 

factor of 0.980 to the OPPS payments 

and copayments for all applicable 

services. 

• High Cost/Low Cost Threshold for 

Packaged Skin Substitutes: As we did 

for CY 2017, we are assigning skin 

substitutes with a geometric mean unit 

cost (MUC) or a per day cost (PDC) that 

exceeds either the MUC threshold or the 

PDC threshold to the high cost group. In 

addition, for CY 2018, we are 

establishing that a skin substitute 

product that does not exceed either the 

CY 2018 MUC or PDC threshold for CY 

2018, but was assigned to the high cost 

group for CY 2017, is assigned to the 

high cost group for CY 2018. The goal 

of our policy is to maintain similar 

levels of payment for skin substitute 

products for CY 2018 while we study 

our current skin substitute payment 

methodology to determine whether 

refinements to our existing 

methodologies may be warranted. 

• Supervision of Hospital Outpatient 

Therapeutic Services: In the CY 2009 

and CY 2010 OPPS/ASC proposed rules 

and final rules with comment period, 

we clarified that direct supervision is 

required for hospital outpatient 

therapeutic services covered and paid 

by Medicare that are furnished in 

hospitals, CAHs, and in provider-based 

departments (PBDs) of hospitals, as set 

forth in the CY 2000 OPPS final rule 

with comment period. For several years, 

there has been a moratorium on the 

enforcement of the direct supervision 

requirement for CAHs and small rural 

hospitals, with the latest moratorium on 

enforcement expiring on December 31, 

2016. In this final rule with comment 

period, as we proposed, we are 

reinstating the nonenforcement policy 

for direct supervision of outpatient 

therapeutic services furnished in CAHs 

and small rural hospitals having 100 or 

fewer beds and reinstating our 

enforcement instruction for CY 2018 

and CY 2019. 

• 340B Drug Pricing: We are changing 

our current Medicare Part B drug 

payment methodology for 340B 

hospitals that we believe will better, and 

more appropriately, reflect the resources 

and acquisition costs that these 

hospitals incur. These changes will 

lower drug costs for Medicare 

beneficiaries for drugs acquired by 

hospitals under the 340B Program. For 

CY 2018, we are exercising the 

Secretary’s authority to adjust the 

applicable payment rate as necessary for 

separately payable drugs and biologicals 

(other than drugs on pass-through 

payment status and vaccines) acquired 

under the 340B Program from average 

sales price (ASP) plus 6 percent to ASP 

minus 22.5 percent. Rural sole 

community hospitals (SCHs), children’s 

hospitals, and PPS-exempt cancer 

hospitals are excluded from this 

payment adjustment in CY 2018. In 

addition, in this final rule with 

comment period, we are establishing 

two modifiers to identify whether a drug 

billed under the OPPS was purchased 

under the 340B Program—one for 

hospitals that are subject to the payment 

reduction and another for hospitals not 

subject to the payment reduction but 

that acquire drugs under the 340B 

Program. 

• Device Pass-Through Payment 

Applications: For CY 2018, we 

evaluated five devices for eligibility to 

receive pass through payments and 

sought public comments in the CY 2018 

proposed rule on whether each of these 

items meet the criteria for device passthrough payment status. None of the 

applications were approved for device 

pass-through payments for CY 2018. 

• Rural Adjustment: We are 

continuing the adjustment of 7.1 percent 

to the OPPS payments to certain rural 

SCHs, including essential access 

community hospitals (EACHs). This 

adjustment will apply to all services 

paid under the OPPS, excluding 

separately payable drugs and 

biologicals, devices paid under the passthrough payment policy, and items paid 

at charges reduced to cost. 

• Cancer Hospital Payment 

Adjustment: For CY 2018, we are 

continuing to provide additional 

payments to cancer hospitals so that the 

cancer hospital’s payment-to-cost ratio 

(PCR) after the additional payments is 

equal to the weighted average PCR for 

the other OPPS hospitals using the most 

recently submitted or settled cost report 

data. However, beginning CY 2018, 

section 16002(b) of the 21st Century 

Cures Act requires that this weighted 

average PCR be reduced by 1.0 

percentage point. Based on the data and 

the required 1.0 percentage point 

reduction, a target PCR of 0.88 will be 

used to determine the CY 2018 cancer 

hospital payment adjustment to be paid 

at cost report settlement. That is, the 

payment adjustments will be the 

additional payments needed to result in 

a PCR equal to 0.88 for each cancer 

hospital. 

• Changes to the Inpatient Only List: 

For CY 2018, we are finalizing our 

proposal to remove total knee 

arthroplasty (TKA) from the inpatient 

only list. In addition, we are precluding 

the Recovery Audit Contractors from 

reviewing TKA procedures for ‘‘patient 

status’’ (that is, site of service) for a 

period of 2 years. We note that we will 

monitor changes in site of service to 

determine whether changes may be 

necessary to certain CMS Innovation 

Center models. In addition, we are 

removing five other procedures from the 

inpatient only list and adding one 

procedure to the list. 

• Comprehensive APCs: For CY 2018, 

we did not propose to create any new 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59223 

C–APCs or make any extensive changes 

to the already established methodology 

used for C–APCs. There will be a total 

number of 62 C–APCs as of January 1, 

2018. For CY 2018, for the C–APC for 

stereotactic radio surgery (SRS), 

specifically, C–APC 5627 (Level 7 

Radiation Therapy), we are continuing 

to make separate payments for the 10 

planning and preparation services 

adjunctive to the delivery of the SRS 

treatment using either the Cobalt-60- 

based or LINAC-based technology when 

furnished to a beneficiary within 30 

days of the SRS treatment. In addition, 

the data collection period for SRS 

claims with modifier ‘‘CP’’ is set to 

conclude on December 31, 2017. 

Accordingly, for CY 2018, we are 

deleting this modifier and discontinuing 

its required use. 

• Packaging Policies: In CY 2015, we 

implemented a policy to conditionally 

package ancillary services assigned to 

APCs with a geometric mean cost of 

$100 or less prior to packaging, with 

some exceptions, including drug 

administration services. For CY 2018, 

we are removing the exception for 

certain drug administration services and 

conditionally packaging payment for 

low-cost drug administration services. 

We did not propose to package drug 

administration add-on codes for CY 

2018, but solicited comments on this 

policy. The public comments that we 

received are discussed in this final rule 

with comment period. In addition, we 

solicited comments on existing 

packaging policies that exist under the 

OPPS, including those related to drugs 

that function as a supply in a diagnostic 

test or procedure or in a surgical 

procedure. The public comments that 

we received are also discussed in this 

final rule with comment period. 

• Payment Changes for X-rays Taken 

Using Computed Radiography 

Technology: Section 502(b) of Division 

O, Title V of the Consolidated 

Appropriations Act, 2016 (Pub. L. 114– 

113) amended section 1833(t)(16) of the 

Act by adding new subparagraph (F). 

New section 1833(t)(16)(F)(ii) of the Act 

provides for a phased-in reduction of 

payments for imaging services that are 

taken using computed radiography 

technology. That section provides that 

payments for such services furnished 

during CYs 2018 through 2022 shall be 

reduced by 7 percent, and if such 

services are furnished during CY 2023 

or a subsequent year, payments for such 

services shall be reduced by 10 percent. 

We are establishing a new modifier that 

will be reported on claims to identify 

those HCPCS codes that describe X-rays 

taken using computed radiography 

technology. Specifically, this modifier, 

as allowed under the provisions of new 

section 1833(t)(16)(F)(ii) of the Act, will 

be reported with the applicable HCPCS 

code to describe imaging services that 

are taken using computed radiography 

technology beginning January 1, 2018. 

• ASC Payment Update: For CY 2018, 

we are increasing payment rates under 

the ASC payment system by 1.2 percent 

for ASCs that meet the quality reporting 

requirements under the ASCQR 

Program. This increase is based on a 

projected CPI–U update of 1.7 percent 

minus a multifactor productivity 

adjustment required by the Affordable 

Care Act of 0.5 percentage point. Based 

on this update, we estimate that total 

payments to ASCs (including 

beneficiary cost-sharing and estimated 

changes in enrollment, utilization, and 

case-mix) for CY 2018 is approximately 

$4.62 billion, an increase of 

approximately $130 million compared 

to estimated CY 2017 Medicare 

payments. In addition, in the CY 2018 

proposed rule, we solicited comment on 

payment reform for ASCs, including the 

collection of cost data which may 

support a rate update other than CPI–U. 

We discuss the public comments that 

we received in response to this 

solicitation in this final rule with 

comment period. 

• Comment Solicitation on ASC 

Payment Reform: In the CY 2018 

proposed rule, we indicated that we 

were broadly interested in feedback 

from stakeholders and other interested 

parties on potential reforms to the 

current payment system, including, but 

not limited to (1) the rate update factor 

applied to ASC payments, (2) whether 

and how ASCs should submit data 

relating to costs, (3) whether ASCs 

should bill on the institutional claim 

form rather than the professional claim 

form, and (4) other ideas to improve 

payment accuracy for ASCs. We discuss 

the feedback we received in this final 

rule with comment period. 

• Changes to the List of ASC Covered 

Surgical Procedures: For CY 2018, we 

are adding three procedures to the ASC 

covered procedures list. In addition, in 

the CY 2018 proposed rule, we solicited 

comment on whether total knee 

arthroplasty, partial hip arthroplasty 

and total hip arthroplasty meet the 

criteria to be added to the ASC covered 

procedures list. We also solicited 

comments from stakeholders on 

whether there are codes that are outside 

the AMA–CPT surgical code range that 

nonetheless, should be considered to be 

a covered surgical procedure. We 

discuss the public comments we 

received on this solicitation in this final 

rule with comment period. 

• Revisions to the Laboratory Date of 

Service Policy: To better understand the 

potential impact of the current date of 

service (DOS) policy on billing for 

molecular pathology tests and advanced 

diagnostic laboratory tests (ADLTs) 

under the new private payor rate-based 

Clinical Laboratory Fee Schedule 

(CLFS), in the CY 2018 proposed rule, 

we solicited public comments on billing 

for molecular pathology tests and 

certain ADLTs ordered less than 14 days 

of a hospital outpatient discharge and 

discussed potential modifications to our 

DOS policy to address those tests. After 

considering the public comments 

received, we are adding an additional 

exception to our current laboratory DOS 

regulations at 42 CFR 414.510. This new 

exception to the laboratory DOS policy 

generally permits laboratories to bill 

Medicare directly for ADLTs and 

molecular pathology tests excluded 

from OPPS packaging policy if the 

specimen was collected from a hospital 

outpatient during a hospital outpatient 

encounter and the test was performed 

following the patient’s discharge from 

the hospital outpatient department. We 

discuss the public comments we 

received on this solicitation in this final 

rule with comment period. 

• Hospital Outpatient Quality 

Reporting (OQR) Program: For the 

Hospital OQR Program, we are 

finalizing our proposals to remove and 

delay certain measures for the CY 2020 

payment determination and subsequent 

years. Specifically, beginning with the 

CY 2020 payment determination, we are 

finalizing our proposals to remove: (1) 

OP–21: Median Time to Pain 

Management for Long Bone Fracture; 

and (2) OP–26: Hospital Outpatient 

Volume Data on Selected Outpatient 

Surgical Procedures. While we proposed 

to remove: OP–1: Median Time to 

Fibrinolysis, OP–4: Aspirin at Arrival, 

OP–20: Door to Diagnostic Evaluation 

by a Qualified Medical Professional, and 

OP–25: Safe Surgery Checklist for the 

CY 2021 payment determination and 

subsequent years, we are finalizing 

these proposals with modification, such 

that we are removing them for the CY 

2020 payment determination and 

subsequent years, one year earlier than 

proposed. We are also finalizing our 

proposal to delay the OAS CAHPS 

Survey-based measures (OP–37 a–e) 

beginning with the CY 2020 payment 

determination (CY 2018 reporting). In 

addition, for the CY 2020 payment 

determination and subsequent years we 

are: (1) Providing clarification on our 

procedures for validation of chartabstracted measures for targeting the 

poorest performing outlier hospitals; (2) 


sradovich on DSK3GMQ082PROD with RULES2
59224 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

formalizing the validation educational 

review process and updating it to allow 

corrections of incorrect validation 

results for chart-abstracted measures, 

and modifying the CFR accordingly; (3) 

aligning the first quarter for which to 

submit data for hospitals that did not 

participate in the previous year’s 

Hospital OQR Program and make 

corresponding changes to the CFR; and 

(4) aligning the naming of the 

Extraordinary Circumstances Exceptions 

(ECE) policy with that used in our other 

quality reporting and value-based 

payment programs and making 

corresponding changes to the CFR. We 

are not finalizing our proposal to extend 

the Notice of Participation (NOP) 

deadline and make corresponding 

changes to the CFR. Lastly, we are 

finalizing with modifications, our 

proposal to publicly report OP–18c: 

Median Time from Emergency 

Department Arrival to Emergency 

Department Departure for Discharged 

Emergency Department Patients— 

Psychiatric/Mental Health Patients. 

• Ambulatory Surgical Center Quality 

Reporting (ASCQR) Program: For the 

ASCQR Program, we are finalizing 

measures and policies for the CY 2019 

payment determination, 2021 payment 

determination, and CY 2022 payment 

determination and subsequent years. 

Specifically, we are finalizing our 

proposals to, beginning with the CY 

2019 payment determination, remove 

three measures from the ASCQR 

Program measure set: (1) ASC–5: 

Prophylactic Intravenous (IV) Antibiotic 

Timing; (2) ASC–6: Safe Surgery 

Checklist Use; and, (3) ASC–7: 

Ambulatory Surgical Center Facility 

Volume Data on Selected Ambulatory 

Surgical Center Surgical Procedures. In 

addition, we are also finalizing our 

proposal to delay the OAS CAHPS 

Survey measures (ASC–15a–e) 

beginning with the CY 2020 payment 

determination (CY 2018 data collection). 

Furthermore, starting with CY 2018, we 

are finalizing our proposals to: (1) 

Expand the CMS online tool to also 

allow for batch submission of measure 

data and make corresponding changes to 

the CFR; and (2) align the naming of the 

Extraordinary Circumstances Exceptions 

(ECE) policy with that used in our other 

quality reporting and value-based 

payment programs and make 

corresponding changes to the CFR. We 

are not finalizing our proposal to adopt 

one new measure, ASC–16: Toxic 

Anterior Segment Syndrome, beginning 

with the CY 2021 payment 

determination. However, we are 

finalizing proposals to adopt two new 

measures collected via claims, 

beginning with the CY 2022 payment 

determination, ASC–17: Hospital Visits 

after Orthopedic Ambulatory Surgical 

Center Procedures and ASC–18: 

Hospital Visits after Urology 

Ambulatory Surgical Center Procedures. 

3. Summary of Costs and Benefits 

In sections XVIII. and XIX. of this 

final rule with comment period, we set 

forth a detailed analysis of the 

regulatory and Federalism impacts that 

the changes will have on affected 

entities and beneficiaries. Key estimated 

impacts are described below. 

a. Impacts of the OPPS Update 

(1) Impacts of All OPPS Changes 

Table 88 in section XVIII. of this final 

rule with comment period displays the 

distributional impact of all the OPPS 

changes on various groups of hospitals 

and CMHCs for CY 2018 compared to all 

estimated OPPS payments in CY 2017. 

We estimate that policies in this final 

rule with comment period will result in 

a 1.4 percent overall increase in OPPS 

payments to providers. We estimate that 

total OPPS payments for CY 2018, 

including beneficiary cost-sharing, to 

the approximate 3,900 facilities paid 

under the OPPS (including general 

acute care hospitals, children’s 

hospitals, cancer hospitals, and CMHCs) 

will increase by approximately $690 

million compared to CY 2017 payments, 

excluding our estimated changes in 

enrollment, utilization, and case-mix. 

We estimated the isolated impact of 

our OPPS policies on CMHCs because 

CMHCs are only paid for partial 

hospitalization services under the 

OPPS. Continuing the provider-specific 

structure that we adopted beginning in 

CY 2011 and basing payment fully on 

the type of provider furnishing the 

service, we estimate a 17.2 percent 

increase in CY 2018 payments to 

CMHCs relative to their CY 2017 

payments. 

(2) Impacts of the Updated Wage 

Indexes 

We estimate that our update of the 

wage indexes based on the FY 2018 

IPPS final rule wage indexes results in 

no change for urban and rural hospitals 

under the OPPS. These wage indexes 

include the continued implementation 

of the OMB labor market area 

delineations based on 2010 Decennial 

Census data. 

(3) Impacts of the Rural Adjustment and 

the Cancer Hospital Payment 

Adjustment 

There are no significant impacts of 

our CY 2018 payment policies for 

hospitals that are eligible for the rural 

adjustment or for the cancer hospital 

payment adjustment. We are not making 

any change in policies for determining 

the rural hospital payment adjustments. 

While we are implementing the required 

reduction to the cancer hospital 

payment adjustment in Section 16002 of 

the 21st Century Cures Act for CY 2018, 

the adjustment amounts do not 

significantly impact the budget 

neutrality adjustments for these 

policies. 

(4) Impacts of the OPD Fee Schedule 

Increase Factor 

We estimate that, for most hospitals, 

the application of the OPD fee schedule 

increase factor of 1.35 percent to the 

conversion factor for CY 2018 will 

mitigate the impacts of the budget 

neutrality adjustments. As a result of the 

OPD fee schedule increase factor and 

other budget neutrality adjustments, we 

estimate that rural and urban hospitals 

will experience increases of 

approximately 1.3 percent for urban 

hospitals and 2.7 percent for rural 

hospitals. Classifying hospitals by 

teaching status, we estimate nonteaching hospitals will experience 

increases of 2.9 percent, minor teaching 

hospitals will experience increases of 

1.7 percent, and major teaching 

hospitals will experience decreases of 

¥0.9 percent. We also classified 

hospitals by type of ownership. We 

estimate that hospitals with voluntary 

ownership will experience increases of 

1.3 percent, hospitals with proprietary 

ownership will experience increases of 

4.5 percent and hospitals with 

government ownership will experience 

no change in payments. 

b. Impacts of the ASC Payment Update 

For impact purposes, the surgical 

procedures on the ASC list of covered 

procedures are aggregated into surgical 

specialty groups using CPT and HCPCS 

code range definitions. The percentage 

change in estimated total payments by 

specialty groups under the CY 2018 

payment rates, compared to estimated 

CY 2017 payment rates, generally ranges 

between an increase of 1 to 5 percent, 

depending on the service, with some 

exceptions. 

B. Legislative and Regulatory Authority 

for the Hospital OPPS 

When Title XVIII of the Social 

Security Act was enacted, Medicare 

payment for hospital outpatient services 

was based on hospital-specific costs. In 

an effort to ensure that Medicare and its 

beneficiaries pay appropriately for 

services and to encourage more efficient 

delivery of care, the Congress mandated 

replacement of the reasonable costVerDate Sep<11>2014 00:57 Dec 14, 2017 Jkt 244001 PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 E:\FR\FM\14DER2.SGM 14DER2

sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59225 

based payment methodology with a 

prospective payment system (PPS). The 

Balanced Budget Act of 1997 (BBA) 

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

to the Act, authorizing implementation 

of a PPS for hospital outpatient services. 

The OPPS was first implemented for 

services furnished on or after August 1, 

2000. Implementing regulations for the 

OPPS are located at 42 CFR parts 410 

and 419. 

The Medicare, Medicaid, and SCHIP 

Balanced Budget Refinement Act of 

1999 (BBRA) (Pub. L. 106–113) made 

major changes in the hospital OPPS. 

The following Acts made additional 

changes to the OPPS: The Medicare, 

Medicaid, and SCHIP Benefits 

Improvement and Protection Act of 

2000 (BIPA) (Pub. L. 106–554); the 

Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 (MMA) (Pub. L. 108–173); the 

Deficit Reduction Act of 2005 (DRA) 

(Pub. L. 109–171), enacted on February 

8, 2006; the Medicare Improvements 

and Extension Act under Division B of 

Title I of the Tax Relief and Health Care 

Act of 2006 (MIEA–TRHCA) (Pub. L. 

109–432), enacted on December 20, 

2006; the Medicare, Medicaid, and 

SCHIP Extension Act of 2007 (MMSEA) 

(Pub. L. 110–173), enacted on December 

29, 2007; the Medicare Improvements 

for Patients and Providers Act of 2008 

(MIPPA) (Pub. L. 110–275), enacted on 

July 15, 2008; the Patient Protection and 

Affordable Care Act (Pub. L. 111–148), 

enacted on March 23, 2010, as amended 

by the Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111– 

152), enacted on March 30, 2010 (these 

two public laws are collectively known 

as the Affordable Care Act); the 

Medicare and Medicaid Extenders Act 

of 2010 (MMEA, Pub. L. 111–309); the 

Temporary Payroll Tax Cut 

Continuation Act of 2011 (TPTCCA, 

Pub. L. 112–78), enacted on December 

23, 2011; the Middle Class Tax Relief 

and Job Creation Act of 2012 

(MCTRJCA, Pub. L. 112–96), enacted on 

February 22, 2012; the American 

Taxpayer Relief Act of 2012 (Pub. L. 

112–240), enacted January 2, 2013; the 

Pathway for SGR Reform Act of 2013 

(Pub. L. 113–67) enacted on December 

26, 2013; the Protecting Access to 

Medicare Act of 2014 (PAMA, Pub. L. 

113–93), enacted on March 27, 2014; the 

Medicare Access and CHIP 

Reauthorization Act (MACRA) of 2015 

(Pub. L. 114–10), enacted April 16, 

2015; the Bipartisan Budget Act of 2015 

(Pub. L. 114–74), enacted November 2, 

2015; the Consolidated Appropriations 

Act, 2016 (Pub. L. 114–113), enacted on 

December 18, 2015, and the 21st 

Century Cures Act (Pub. L. 114–255), 

enacted on December 13, 2016. 

Under the OPPS, we generally pay for 

hospital Part B services on a rate-perservice basis that varies according to the 

APC group to which the service is 

assigned. We use the Healthcare 

Common Procedure Coding System 

(HCPCS) (which includes certain 

Current Procedural Terminology (CPT) 

codes) to identify and group the services 

within each APC. The OPPS includes 

payment for most hospital outpatient 

services, except those identified in 

section I.C. of this final rule with 

comment period. Section 1833(t)(1)(B) 

of the Act provides for payment under 

the OPPS for hospital outpatient 

services designated by the Secretary 

(which includes partial hospitalization 

services furnished by CMHCs), and 

certain inpatient hospital services that 

are paid under Medicare Part B. 

The OPPS rate is an unadjusted 

national payment amount that includes 

the Medicare payment and the 

beneficiary copayment. This rate is 

divided into a labor-related amount and 

a nonlabor-related amount. The laborrelated amount is adjusted for area wage 

differences using the hospital inpatient 

wage index value for the locality in 

which the hospital or CMHC is located. 

All services and items within an APC 

group are comparable clinically and 

with respect to resource use (section 

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

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

subject to certain exceptions, items and 

services within an APC group cannot be 

considered comparable with respect to 

the use of resources if the highest 

median cost (or mean cost, if elected by 

the Secretary) for an item or service in 

the APC group is more than 2 times 

greater than the lowest median cost (or 

mean cost, if elected by the Secretary) 

for an item or service within the same 

APC group (referred to as the ‘‘2 times 

rule’’). In implementing this provision, 

we generally use the cost of the item or 

service assigned to an APC group. 

For new technology items and 

services, special payments under the 

OPPS may be made in one of two ways. 

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

for temporary additional payments, 

which we refer to as ‘‘transitional passthrough payments,’’ for at least 2 but not 

more than 3 years for certain drugs, 

biological agents, brachytherapy devices 

used for the treatment of cancer, and 

categories of other medical devices. For 

new technology services that are not 

eligible for transitional pass-through 

payments, and for which we lack 

sufficient clinical information and cost 

data to appropriately assign them to a 

clinical APC group, we have established 

special APC groups based on costs, 

which we refer to as New Technology 

APCs. These New Technology APCs are 

designated by cost bands which allow 

us to provide appropriate and consistent 

payment for designated new procedures 

that are not yet reflected in our claims 

data. Similar to pass-through payments, 

an assignment to a New Technology 

APC is temporary; that is, we retain a 

service within a New Technology APC 

until we acquire sufficient data to assign 

it to a clinically appropriate APC group. 

C. Excluded OPPS Services and 

Hospitals 

Section 1833(t)(1)(B)(i) of the Act 

authorizes the Secretary to designate the 

hospital outpatient services that are 

paid under the OPPS. While most 

hospital outpatient services are payable 

under the OPPS, section 

1833(t)(1)(B)(iv) of the Act excludes 

payment for ambulance, physical and 

occupational therapy, and speechlanguage pathology services, for which 

payment is made under a fee schedule. 

It also excludes screening 

mammography, diagnostic 

mammography, and effective January 1, 

2011, an annual wellness visit providing 

personalized prevention plan services. 

The Secretary exercises the authority 

granted under the statute to also exclude 

from the OPPS certain services that are 

paid under fee schedules or other 

payment systems. Such excluded 

services include, for example, the 

professional services of physicians and 

nonphysician practitioners paid under 

the Medicare Physician Fee Schedule 

(MPFS); certain laboratory services paid 

under the Clinical Laboratory Fee 

Schedule (CLFS); services for 

beneficiaries with end-stage renal 

disease (ESRD) that are paid under the 

ESRD prospective payment system; and 

services and procedures that require an 

inpatient stay that are paid under the 

hospital IPPS. In addition, section 

1833(t)(1)(B)(v) of the Act does not 

include applicable items and services 

(as defined in subparagraph (A) of 

paragraph (21)) that are furnished on or 

after January 1, 2017 by an off-campus 

outpatient department of a provider (as 

defined in subparagraph (B) of 

paragraph (21). We set forth the services 

that are excluded from payment under 

the OPPS in regulations at 42 CFR 

419.22. 

Under § 419.20(b) of the regulations, 

we specify the types of hospitals that are 

excluded from payment under the 

OPPS. These excluded hospitals 

include: 

• Critical access hospitals (CAHs); 


sradovich on DSK3GMQ082PROD with RULES2
59226 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

• Hospitals located in Maryland and 

paid under the Maryland All-Payer 

Model; 

• Hospitals located outside of the 50 

States, the District of Columbia, and 

Puerto Rico; and 

• Indian Health Service (IHS) 

hospitals. 

D. Prior Rulemaking 

On April 7, 2000, we published in the 

Federal Register a final rule with 

comment period (65 FR 18434) to 

implement a prospective payment 

system for hospital outpatient services. 

The hospital OPPS was first 

implemented for services furnished on 

or after August 1, 2000. Section 

1833(t)(9)(A) of the Act requires the 

Secretary to review certain components 

of the OPPS, not less often than 

annually, and to revise the groups, 

relative payment weights, and other 

adjustments that take into account 

changes in medical practices, changes in 

technologies, and the addition of new 

services, new cost data, and other 

relevant information and factors. 

Since initially implementing the 

OPPS, we have published final rules in 

the Federal Register annually to 

implement statutory requirements and 

changes arising from our continuing 

experience with this system. These rules 

can be viewed on the CMS Web site at: 

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

Medicare-Fee-for-Service-Payment/ 

HospitalOutpatientPPS/HospitalOutpatient-Regulations-andNotices.html. 

E. Advisory Panel on Hospital 

Outpatient Payment (the HOP Panel or 

the Panel) 

1. Authority of the Panel 

Section 1833(t)(9)(A) of the Act, as 

amended by section 201(h) of Public 

Law 106–113, and redesignated by 

section 202(a)(2) of Public Law 106–113, 

requires that we consult with an 

external advisory panel of experts to 

annually review the clinical integrity of 

the payment groups and their weights 

under the OPPS. In CY 2000, based on 

section 1833(t)(9)(A) of the Act, the 

Secretary established the Advisory 

Panel on Ambulatory Payment 

Classification Groups (APC Panel) to 

fulfill this requirement. In CY 2011, 

based on section 222 of the PHS Act 

which gives discretionary authority to 

the Secretary to convene advisory 

councils and committees, the Secretary 

expanded the panel’s scope to include 

the supervision of hospital outpatient 

therapeutic services in addition to the 

APC groups and weights. To reflect this 

new role of the panel, the Secretary 

changed the panel’s name to the 

Advisory Panel on Hospital Outpatient 

Payment (the HOP Panel or the Panel). 

The HOP Panel is not restricted to using 

data compiled by CMS, and in 

conducting its review, it may use data 

collected or developed by organizations 

outside the Department. 

2. Establishment of the Panel 

On November 21, 2000, the Secretary 

signed the initial charter establishing 

the Panel, and at that time named the 

APC Panel. This expert panel is 

composed of appropriate representatives 

of providers (currently employed fulltime, not as consultants, in their 

respective areas of expertise), reviews 

clinical data, and advises CMS about the 

clinical integrity of the APC groups and 

their payment weights. Since CY 2012, 

the Panel also is charged with advising 

the Secretary on the appropriate level of 

supervision for individual hospital 

outpatient therapeutic services. The 

Panel is technical in nature, and it is 

governed by the provisions of the 

Federal Advisory Committee Act 

(FACA). The current charter specifies, 

among other requirements, that the 

Panel— 

• May advise on the clinical integrity 

of Ambulatory Payment Classification 

(APC) groups and their associated 

weights; 

• May advise on the appropriate 

supervision level for hospital outpatient 

services; 

• Continues to be technical in nature; 

• Is governed by the provisions of the 

FACA; 

• Has a Designated Federal Official 

(DFO); and 

• Is chaired by a Federal Official 

designated by the Secretary. 

The Panel’s charter was amended on 

November 15, 2011, renaming the Panel 

and expanding the Panel’s authority to 

include supervision of hospital 

outpatient therapeutic services and to 

add critical access hospital (CAH) 

representation to its membership. The 

Panel’s charter was also amended on 

November 6, 2014 (80 FR 23009), and 

the number of members was revised 

from up to 19 to up to 15 members. The 

Panel’s current charter was approved on 

November 21, 2016, for a 2-year period 

(81 FR 94378). 

The current Panel membership and 

other information pertaining to the 

Panel, including its charter, Federal 

Register notices, membership, meeting 

dates, agenda topics, and meeting 

reports, can be viewed on the CMS Web 

site at: https://www.cms.gov/ 

Regulations-and-Guidance/Guidance/ 

FACA/AdvisoryPanelonAmbulatory

PaymentClassificationGroups.html. 

3. Panel Meetings and Organizational 

Structure 

The Panel has held multiple meetings, 

with the last meeting taking place on 

August 21, 2017. Prior to each meeting, 

we publish a notice in the Federal 

Register to announce the meeting and, 

when necessary, to solicit nominations 

for Panel membership, to announce new 

members and to announce any other 

changes of which the public should be 

aware. Beginning in CY 2017, we have 

transitioned to one meeting per year (81 

FR 31941). Further information on the 

2017 summer meeting can be found in 

the meeting notice titled ‘‘Medicare 

Program: Announcement of the 

Advisory Panel on Hospital Outpatient 

Payment (the Panel) Meeting on August 

21–22, 2017’’ (82 FR 24128). 

In addition, the Panel has established 

an operational structure that, in part, 

currently includes the use of three 

subcommittees to facilitate its required 

review process. The three current 

subcommittees include the following: 

• APC Groups and Status Indicator 

Assignments Subcommittee, which 

advises the Panel on the appropriate 

status indicators to be assigned to 

HCPCS codes, including but not limited 

to whether a HCPCS code or a category 

of codes should be packaged or 

separately paid, as well as the 

appropriate APC assignment of HCPCS 

codes regarding services for which 

separate payment is made; 

• Data Subcommittee, which is 

responsible for studying the data issues 

confronting the Panel and for 

recommending options for resolving 

them; and 

• Visits and Observation 

Subcommittee, which reviews and 

makes recommendations to the Panel on 

all technical issues pertaining to 

observation services and hospital 

outpatient visits paid under the OPPS. 

Each of these subcommittees was 

established by a majority vote from the 

full Panel during a scheduled Panel 

meeting, and the Panel recommended at 

the August 21, 2017 meeting that the 

subcommittees continue. We accepted 

this recommendation. 

In addition, discussions of the other 

recommendations made by the Panel at 

the August 21, 2017 Panel meeting are 

included in the sections of this final 

rule with comment period that are 

specific to each recommendation. For 

discussions of earlier Panel meetings 

and recommendations, we refer readers 

to previously published OPPS/ASC 

proposed and final rules, the CMS Web 

site mentioned earlier in this section, 

and the FACA database at http://

facadatabase.gov. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59227 

We note that we received some public 

comments on the CY 2018 OPPS/ASC 

proposed rule related to the HOP Panel 

meeting presentations, which we 

address below. 

Comment: One commenter supported 

CMS’ extension of the HOP Panel 

meeting presentation submission 

deadline when there is a truncated 

submittal timeframe due to delayed 

publication of the OPPS/ASC proposed 

rule. However, to avoid the need to 

modify the submission deadline in the 

future, the commenter suggested that 

CMS revise the submission deadline in 

the Federal Register notice from a firm 

date to a fluid 21 days from the 

proposed rule display date to avoid this 

deadline issue in the future. 

Response: We appreciate the 

commenter’s request to modify the HOP 

Panel meeting submission deadline 

format. However, frequency, timing, and 

presentation deadlines are outside the 

scope of the proposed rule and are 

generally announced through either a 

separate Federal Register notice or 

subregulatory channel such as the CMS 

Web site, or both. 

Comment: One commenter requested 

that CMS reinstate the winter Panel 

meetings as part of a multifaceted 

process that would allow for multiple 

proposal refinements with Panel input 

prior to finalization of a policy. The 

commenter also suggested that CMS use 

this winter meeting as a vehicle to allow 

stakeholders to review and discuss 

updated cost data for HCPCS codes and 

APCs prior to the release of the data in 

the proposed rule. 

Response: We appreciate the 

commenter’s request to modify the 

Panel meeting processes. However, the 

frequency of Panel meetings is outside 

the scope of the proposed rule; meetings 

are generally announced through either 

a separate Federal Register notice or a 

subregulatory channel such as the CMS 

Web site, or both. 

F. Public Comments Received on the CY 

2017 OPPS/ASC Final Rule With 

Comment Period 

We received 39 timely pieces of 

correspondence on the CY 2017 OPPS/ 

ASC final rule with comment period 

that appeared in the Federal Register on 

November 14, 2016 (81 FR 79562), some 

of which contained comments on the 

interim APC assignments and/or status 

indicators of new or replacement Level 

II HCPCS codes (identified with 

comment indicator ‘‘NI’’ in OPPS 

Addendum B, ASC Addendum AA, and 

ASC Addendum BB to that final rule), 

the potential limitation on clinical 

service line expansion or volume of 

service increases by nonexcepted offcampus provider-based departments, 

and the Medicare Physician Fee 

Schedule (MPFS) payment rates for 

nonexcepted items and services 

furnished and billed by nonexcepted 

off-campus provider-based departments 

of hospitals. Summaries of the public 

comments are set forth in the CY 2018 

proposed rule and this final rule with 

comment period under the appropriate 

subject matter headings. Summaries of 

public comments on the MPFS payment 

rates for nonexcepted items and services 

are set forth in the CY 2018 MPFS final 

rule with comment period. 

II. Updates Affecting OPPS Payments 

A. Recalibration of APC Relative 

Payment Weights 

1. Database Construction 

a. Database Source and Methodology 

Section 1833(t)(9)(A) of the Act 

requires that the Secretary review not 

less often than annually and revise the 

relative payment weights for APCs. In 

the April 7, 2000 OPPS final rule with 

comment period (65 FR 18482), we 

explained in detail how we calculated 

the relative payment weights that were 

implemented on August 1, 2000 for each 

APC group. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33568), for CY 2018, we 

proposed to recalibrate the APC relative 

payment weights for services furnished 

on or after January 1, 2018, and before 

January 1, 2019 (CY 2018), using the 

same basic methodology that we 

described in the CY 2017 OPPS/ASC 

final rule with comment period (81 FR 

79574 through 79595). For this final rule 

with comment period, for CY 2018, we 

recalibrated the APC relative payment 

weights for services furnished on or 

after January 1, 2018, and before January 

1, 2019 (CY 2018), using the same basic 

methodology that we described in the 

CY 2017 OPPS/ASC final rule with 

comment period, using updated CY 

2016 claims data. That is, we recalibrate 

the relative payment weights for each 

APC based on claims and cost report 

data for hospital outpatient department 

(HOPD) services, using the most recent 

available data to construct a database for 

calculating APC group weights. 

For the purpose of recalibrating the 

APC relative payment weights for CY 

2018, we began with approximately 163 

million final action claims (claims for 

which all disputes and adjustments 

have been resolved and payment has 

been made) for HOPD services furnished 

on or after January 1, 2016, and before 

January 1, 2017, before applying our 

exclusionary criteria and other 

methodological adjustments. After the 

application of those data processing 

changes, we used approximately 86 

million final action claims to develop 

the CY 2018 OPPS payment weights. 

For exact numbers of claims used and 

additional details on the claims 

accounting process, we refer readers to 

the claims accounting narrative under 

supporting documentation for this CY 

2018 OPPS/ASC final rule with 

comment period on the CMS Web site 

at: http://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

HospitalOutpatientPPS/index.html. 

Addendum N to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site) 

includes the list of bypass codes for CY 

2018. The list of bypass codes contains 

codes that were reported on claims for 

services in CY 2016 and, therefore, 

includes codes that were in effect in CY 

2016 and used for billing, but were 

deleted for CY 2017. We retained these 

deleted bypass codes on the CY 2018 

bypass list because these codes existed 

in CY 2016 and were covered OPD 

services in that period, and CY 2016 

claims data are used to calculate CY 

2018 payment rates. Keeping these 

deleted bypass codes on the bypass list 

potentially allows us to create more 

‘‘pseudo’’ single procedure claims for 

ratesetting purposes. ‘‘Overlap bypass 

codes’’ that are members of the multiple 

imaging composite APCs are identified 

by asterisks (*) in the third column of 

Addendum N to this final rule with 

comment period. HCPCS codes that we 

are adding for CY 2018 are identified by 

asterisks (*) in the fourth column of 

Addendum N. 

Table 1 below contains the list of 

codes that we are removing from the CY 

2018 bypass list. 

TABLE 1—HCPCS CODES REMOVED

FROM THE CY 2018 BYPASS LIST

HCPCS 

code HCPCS short descriptor 

77305 Teletx isodose plan simple. 

77310 Teletx isodose plan intermed. 

77315 Teletx isodose plan complex. 

77327 Brachytx isodose calc intern. 

90801 Psy dx interview. 

90802 Intac psy dx interview. 

90804 Psytx office 20–30 min. 

90805 Psytx off 20–30 min w/e&m. 

90806 Psytx off 45–50 min. 

90807 Psytx off 45–50 min w/e&m. 

90808 Psytx office 75–80 min. 

90809 Psytx off 75–80 w/e&m. 

90810 Intac psytx off 20–30 min. 

90811 Intac psytx 20–40 w/e&m. 

90812 Intac psytx off 45–50 min. 

90857 Intac group psytx. 

90862 Medication management. 

95115 Immunotherapy one injection. 

95117 Immunotherapy injections. 


sradovich on DSK3GMQ082PROD with RULES2
59228 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 1—HCPCS CODES REMOVED

FROM THE CY 2018 BYPASS LIST— 

Continued 

HCPCS 

code HCPCS short descriptor 

95144 Antigen therapy services. 

95147 Antigen therapy services. 

95165 Antigen therapy services. 

96402 Chemo hormon antineopl sq/im. 

99201 Office/outpatient visit new. 

99202 Office/outpatient visit new. 

99203 Office/outpatient visit new. 

99204 Office/outpatient visit new. 

99205 Office/outpatient visit new. 

99212 Office/outpatient visit est. 

99213 Office/outpatient visit est. 

99214 Office/outpatient visit est. 

C1300 Hyperbaric oxygen. 

G0340 Robt lin-radsurg fractx 2–5. 

G9141 Influenza A H1N1, admin w cou. 

M0064 Visit for drug monitoring. 

b. Calculation and Use of Cost-to-Charge 

Ratios (CCRs) 

For CY 2018, in this CY 2018 OPPS/ 

ASC final rule with comment period, as 

we proposed, we are continuing to use 

the hospital-specific overall ancillary 

and departmental cost-to-charge ratios 

(CCRs) to convert charges to estimated 

costs through application of a revenue 

code-to-cost center crosswalk. To 

calculate the APC costs on which the 

CY 2018 APC payment rates are based, 

we calculated hospital-specific overall 

ancillary CCRs and hospital-specific 

departmental CCRs for each hospital for 

which we had CY 2016 claims data by 

comparing these claims data to the most 

recently available hospital cost reports, 

which, in most cases, are from CY 2015. 

For the final CY 2018 OPPS payment 

rates, we used the set of claims 

processed during CY 2016. We applied 

the hospital-specific CCR to the 

hospital’s charges at the most detailed 

level possible, based on a revenue codeto-cost center crosswalk that contains a 

hierarchy of CCRs used to estimate costs 

from charges for each revenue code. 

That crosswalk is available for review 

and continuous comment on the CMS 

Web site at: http://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/ 

index.html. 

To ensure the completeness of the 

revenue code-to-cost center crosswalk, 

we reviewed changes to the list of 

revenue codes for CY 2016 (the year of 

claims data we used to calculate the CY 

2018 OPPS payment rates) and found 

that the National Uniform Billing 

Committee (NUBC) did not add any new 

revenue codes to the NUBC 2016 Data 

Specifications Manual. 

In accordance with our longstanding 

policy, we calculate CCRs for the 

standard and nonstandard cost centers 

accepted by the electronic cost report 

database. In general, the most detailed 

level at which we calculate CCRs is the 

hospital-specific departmental level. For 

a discussion of the hospital-specific 

overall ancillary CCR calculation, we 

refer readers to the CY 2007 OPPS/ASC 

final rule with comment period (71 FR 

67983 through 67985). The calculation 

of blood costs is a longstanding 

exception (since the CY 2005 OPPS) to 

this general methodology for calculation 

of CCRs used for converting charges to 

costs on each claim. This exception is 

discussed in detail in the CY 2007 

OPPS/ASC final rule with comment 

period and discussed further in section 

II.A.2.a.(1) of this final rule with 

comment period. 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 74840 

through 74847), we finalized our policy 

of creating new cost centers and distinct 

CCRs for implantable devices, MRIs, CT 

scans, and cardiac catheterization. 

However, in response to the CY 2014 

OPPS/ASC proposed rule, commenters 

reported that some hospitals currently 

use an imprecise ‘‘square feet’’ 

allocation methodology for the costs of 

large moveable equipment like CT scan 

and MRI machines. They indicated that 

while CMS recommended using two 

alternative allocation methods, ‘‘direct 

assignment’’ or ‘‘dollar value,’’ as a 

more accurate methodology for directly 

assigning equipment costs, industry 

analysis suggested that approximately 

only half of the reported cost centers for 

CT scans and MRIs rely on these 

preferred methodologies. In response to 

concerns from commenters, we finalized 

a policy for the CY 2014 OPPS to 

remove claims from providers that use 

a cost allocation method of ‘‘square 

feet’’ to calculate CCRs used to estimate 

costs associated with the CT and MRI 

APCs (78 FR 74847). Further, we 

finalized a transitional policy to 

estimate imaging APC relative payment 

weights using only CT and MRI cost 

data from providers that do not use 

‘‘square feet’’ as the cost allocation 

statistic. We provided that this finalized 

policy would sunset in 4 years to 

provide a sufficient time for hospitals to 

transition to a more accurate cost 

allocation method and for the related 

data to be available for ratesetting 

purposes (78 FR 74847). Therefore, 

beginning CY 2018, with the sunset of 

the transition policy, we will estimate 

the imaging APC relative payment 

weight using cost data from all 

providers, regardless of the cost 

allocation statistic employed. 

As we discussed in the CY 2018 

OPPS/ASC proposed rule (82 FR 33570), 

some stakeholders have raised concerns 

regarding using claims from all 

providers to calculate CT and MRI 

CCRs, regardless of the cost allocations 

statistic employed (78 FR 74840 through 

74847). Stakeholders noted that 

providers continue to use the ‘‘square 

feet’’ cost allocation method and that 

including claims from such providers 

would cause significant reductions in 

imaging APC payment rates. 

Table 2 below demonstrates the 

relative effect on imaging APC payments 

after removing cost data for providers 

that report CT and MRI standard cost 

centers using ‘‘square feet’’ as the cost 

allocation method by extracting HCRIS 

data on Worksheet B–1. Table 3 below 

provides statistical values based on the 

CT and MRI standard cost center CCRs 

using the different cost allocation 

methods. 

TABLE 2—PERCENTAGE CHANGE IN ESTIMATE COST FOR CT AND MRI APCS WHEN EXCLUDING CLAIMS FROM PROVIDER

USING ‘‘SQUARE FEET’’ AS THE COST ALLOCATION METHOD

APC APC descriptor Percentage 

change 

5521 ........................... Level 1 Imaging without Contrast ................................................................................................................ ¥3.8 

5522 ........................... Level 2 Imaging without Contrast ................................................................................................................ 5.3 

5523 ........................... Level 3 Imaging without Contrast ................................................................................................................ 6.3 

5524 ........................... Level 4 Imaging without Contrast ................................................................................................................ 5.0 

5571 ........................... Level 1 Imaging with Contrast ..................................................................................................................... 9.0 

5572 ........................... Level 2 Imaging with Contrast ..................................................................................................................... 7.0 

5573 ........................... Level 3 Imaging with Contrast ..................................................................................................................... 2.1 

8005 ........................... CT and CTA without Contrast Composite ................................................................................................... 14.4 

8006 ........................... CT and CTA with Contrast Composite ........................................................................................................ 11.9 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59229 

TABLE 2—PERCENTAGE CHANGE IN ESTIMATE COST FOR CT AND MRI APCS WHEN EXCLUDING CLAIMS FROM PROVIDER

USING ‘‘SQUARE FEET’’ AS THE COST ALLOCATION METHOD—Continued 

APC APC descriptor Percentage 

change 

8007 ........................... MRI and MRA without Contrast Composite ................................................................................................ 7.2 

8008 ........................... MRI and MRA with Contrast Composite ..................................................................................................... 7.5 

TABLE 3—CCR STATISTICAL VALUES BASED ON USE OF DIFFERENT COST ALLOCATION METHODS

Cost allocation method 

CT MRI 

Median CCR Mean CCR Median CCR Mean CCR 

All Providers ..................................................................................................... 0.0387 0.0538 0.0795 0.1059 

Square Feet Only ............................................................................................ 0.0317 0.0488 0.0717 0.0968 

Direct Assign .................................................................................................... 0.0557 0.0650 0.1032 0.1222 

Dollar Value ..................................................................................................... 0.0457 0.0603 0.0890 0.1178 

Direct Assign and Dollar Value ....................................................................... 0.0457 0.0603 0.0893 0.1175 

Our analysis showed that since the 

CY 2014 OPPS in which we established 

the transition policy, the number of 

valid MRI CCRs has increased by 17.5 

percent to 2,177 providers and the 

number of valid CT CCRs has increased 

by 15.1 percent to 2,251 providers. 

However, in the proposed rule, we 

noted that, as shown in Table 2 above, 

nearly all imaging APCs would see an 

increase in payment rates for CY 2018 

if claims from providers that report 

‘‘square feet’’ cost allocation method 

were removed. This can be attributed to 

the generally lower CCR values from 

providers that use a cost allocation 

method of ‘‘square feet’’ as shown in 

Table 3 above. We stated in the 

proposed rule that we believe that the 

imaging CCRs that we have are 

appropriate for ratesetting. However, in 

response to provider concerns and to 

provide added flexibility for hospitals to 

improve their cost allocation methods, 

we proposed to extend the transition 

policy an additional year, for the CY 

2018 OPPS. 

For the CY 2018 OPPS, we proposed 

to continue to remove claims from 

providers that use a cost allocation 

method of ‘‘square feet’’ to calculate 

CCRs used to estimate costs with the CT 

and MRI APCs identified in Table 2 

above. Beginning in CY 2019, we would 

estimate the imaging APC relative 

payment weights using cost data from 

all providers, regardless of the cost 

allocation statistic employed. 

Comment: Commenters supported 

CMS’ proposal to extend the transition 

policy an additional year, for the CY 

2018 OPPS. Several commenters 

recommended that CMS continue to 

remove claims from providers that use 

a cost allocation method of ‘‘square 

feet’’ to calculate CT and MRI CCRs in 

subsequent calendar years. 

Response: We thank the commenters 

for their support. As we discussed in the 

CY 2018 OPPS/ASC proposed rule (82 

FR 33570), our analysis shows that the 

number of valid MRI and CT CCRs has 

increased since we established the 

transition policy. We believe extending 

our transition policy for 1 additional 

year will provide hospitals adequate 

time to implement a more accurate cost 

allocation method for the costs of large 

moveable equipment like CT scan and 

MRI machines. 

Comment: Some commenters 

recommended that CMS discontinue the 

use of CT and MRI cost centers for 

developing CT and MRI CCRs. One 

commenter believed that creating 

separate CT and MRI cost centers has 

resulted in a decline in geometric means 

for imaging APCs which can be 

attributed to costs being dropped out 

and changes in hospital charging 

practices. 

Response: We are not convinced that 

the change in CT and MRI CCRs over 

the previous years is a result of costs not 

being reported accurately. The standard 

cost centers for CT scans and MRIs have 

been in effect since cost reporting 

periods beginning on or after May 1, 

2010, on the revised Medicare cost 

report Form CMS–2552–10. Therefore, 

the cost reports that we used to develop 

the CY 2018 OPPS relative payment 

weights were the fifth or sixth 

opportunity for hospitals to submit cost 

reports with the CT and MRI cost 

centers. However, we will continue to 

monitor cost reporting practices with 

respect to CT scan and MRI cost centers 

as well as trends in CT and MRI CCRs. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to extend our 

transition policy for 1 additional year 

and continue to remove claims from 

providers that use a cost allocation 

method of ‘‘square feet’’ to calculate CT 

and MRI CCRs for the CY 2018 OPPS. 

2. Data Development Process and 

Calculation of Costs Used for Ratesetting 

In this section of this final rule with 

comment period, we discuss the use of 

claims to calculate the OPPS payment 

rates for CY 2018. The Hospital OPPS 

page on the CMS Web site on which this 

final rule with comment period is 

posted (http://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

HospitalOutpatientPPS/index.html) 

provides an accounting of claims used 

in the development of the payment 

rates. That accounting provides 

additional detail regarding the number 

of claims derived at each stage of the 

process. In addition, below in this 

section we discuss the file of claims that 

comprises the data set that is available 

upon payment of an administrative fee 

under a CMS data use agreement. The 

CMS Web site, http://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/ 

index.html, includes information about 

obtaining the ‘‘OPPS Limited Data Set,’’ 

which now includes the additional 

variables previously available only in 

the OPPS Identifiable Data Set, 

including ICD–10–CM diagnosis codes 

and revenue code payment amounts. 

This file is derived from the CY 2016 

claims that were used to calculate the 

payment rates for the CY 2018 OPPS. 

In the history of the OPPS, we have 

traditionally established the scaled 

relative weights on which payments are 

based using APC median costs, which is 

a process described in the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74188). However, as 

discussed in more detail in section 

II.A.2.f. of the CY 2013 OPPS/ASC final 


sradovich on DSK3GMQ082PROD with RULES2
59230 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

rule with comment period (77 FR 68259 

through 68271), we finalized the use of 

geometric mean costs to calculate the 

relative weights on which the CY 2013 

OPPS payment rates were based. While 

this policy changed the cost metric on 

which the relative payments are based, 

the data process in general remained the 

same, under the methodologies that we 

used to obtain appropriate claims data 

and accurate cost information in 

determining estimated service cost. For 

CY 2018, in this CY 2018 OPPS/ASC 

final rule with comment period, as we 

proposed, we are continuing to use 

geometric mean costs to calculate the 

relative weights on which the CY 2018 

OPPS payment rates are based. 

We used the methodology described 

in sections II.A.2.a. through II.A.2.c. of 

this final rule with comment period to 

calculate the costs we used to establish 

the relative payment weights used in 

calculating the OPPS payment rates for 

CY 2018 shown in Addenda A and B to 

this final rule with comment period 

(which are available via the Internet on 

the CMS Web site). We refer readers to 

section II.A.4. of this final rule with 

comment period for a discussion of the 

conversion of APC costs to scaled 

payment weights. 

For details of the claims process used 

in this final rule with comment period, 

we refer readers to the claims 

accounting narrative under supporting 

documentation for this CY 2018 OPPS/ 

ASC final rule with comment period on 

the CMS Web site at: http://

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

OutpatientPPS/index.html. 

a. Calculation of Single Procedure APC 

Criteria-Based Costs 

(1) Blood and Blood Products 

(a) Methodology 

Since the implementation of the OPPS 

in August 2000, we have made separate 

payments for blood and blood products 

through APCs rather than packaging 

payment for them into payments for the 

procedures with which they are 

administered. Hospital payments for the 

costs of blood and blood products, as 

well as for the costs of collecting, 

processing, and storing blood and blood 

products, are made through the OPPS 

payments for specific blood product 

APCs. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33571), we proposed to 

continue to establish payment rates for 

blood and blood products using our 

blood-specific CCR methodology, which 

utilizes actual or simulated CCRs from 

the most recently available hospital cost 

reports to convert hospital charges for 

blood and blood products to costs. This 

methodology has been our standard 

ratesetting methodology for blood and 

blood products since CY 2005. It was 

developed in response to data analysis 

indicating that there was a significant 

difference in CCRs for those hospitals 

with and without blood-specific cost 

centers, and past public comments 

indicating that the former OPPS policy 

of defaulting to the overall hospital CCR 

for hospitals not reporting a bloodspecific cost center often resulted in an 

underestimation of the true hospital 

costs for blood and blood products. 

Specifically, in order to address the 

differences in CCRs and to better reflect 

hospitals’ costs, we proposed to 

continue to simulate blood CCRs for 

each hospital that does not report a 

blood cost center by calculating the ratio 

of the blood-specific CCRs to hospitals’ 

overall CCRs for those hospitals that do 

report costs and charges for blood cost 

centers. We also proposed to apply this 

mean ratio to the overall CCRs of 

hospitals not reporting costs and 

charges for blood cost centers on their 

cost reports in order to simulate bloodspecific CCRs for those hospitals. We 

proposed to calculate the costs upon 

which the proposed CY 2018 payment 

rates for blood and blood products are 

based using the actual blood-specific 

CCR for hospitals that reported costs 

and charges for a blood cost center and 

a hospital-specific, simulated bloodspecific CCR for hospitals that did not 

report costs and charges for a blood cost 

center. 

We continue to believe that the 

hospital-specific, simulated bloodspecific CCR methodology better 

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

alternative methodologies, such as 

defaulting to the overall hospital CCR or 

applying an average blood-specific CCR 

across hospitals. Because this 

methodology takes into account the 

unique charging and cost accounting 

structure of each hospital, we believe 

that it yields more accurate estimated 

costs for these products. We continue to 

believe that this methodology in CY 

2018 would result in costs for blood and 

blood products that appropriately reflect 

the relative estimated costs of these 

products for hospitals without blood 

cost centers and, therefore, for these 

blood products in general. 

We note that, as discussed in section 

II.A.2.e. of the CYs 2014 through 2017 

OPPS/ASC final rules with comment 

period (78 FR 74861 through 74910, 79 

FR 66798 through 66810, 80 FR 70325 

through 70339, and 81 FR 79580 

through 79585, respectively), we 

defined a comprehensive APC (C–APC) 

as a classification for the provision of a 

primary service and all adjunctive 

services provided to support the 

delivery of the primary service. Under 

this policy, we include the costs of 

blood and blood products when 

calculating the overall costs of these 

C–APCs. In the CY 2018 OPPS/ASC 

proposed rule (82 FR 33571), we 

proposed to continue to apply the 

blood-specific CCR methodology 

described in this section when 

calculating the costs of the blood and 

blood products that appear on claims 

with services assigned to the C–APCs. 

Because the costs of blood and blood 

products would be reflected in the 

overall costs of the C–APCs (and, as a 

result, in the proposed payment rates of 

the C–APCs), we proposed to not make 

separate payments for blood and blood 

products when they appear on the same 

claims as services assigned to the 

C–APCs (we refer readers to the CY 

2015 OPPS/ASC final rule with 

comment period (79 FR 66796)). 

We also referred readers to 

Addendum B to the proposed rule 

(which is available via the Internet on 

the CMS Web site) for the proposed CY 

2018 payment rates for blood and blood 

products (which are identified with 

status indicator ‘‘R’’). For a more 

detailed discussion of the blood-specific 

CCR methodology, we refer readers to 

the CY 2005 OPPS proposed rule (69 FR 

50524 through 50525). For a full history 

of OPPS payment for blood and blood 

products, we refer readers to the CY 

2008 OPPS/ASC final rule with 

comment period (72 FR 66807 through 

66810). 

We invited public comments on our 

proposals. 

Comment: Several commenters 

continued to support using the bloodspecific CCR methodology to establish 

payment rates for blood and blood 

products, which utilizes actual or 

simulated CCRs from the most recently 

available hospital cost reports to convert 

hospital charges for blood and blood 

products to costs. The commenters also 

supported using a blood-specific APC 

with a separate APC for each blood and 

blood product service code. The 

commenters viewed the blood-specific 

CCR methodology as the best current 

methodology to report the costs of blood 

and blood products. 

Response: We appreciate the 

commenters’ support. 

Comment: Several commenters 

expressed concerns about reduced 

payment for several blood and blood 

products HCPCS codes, including 

HCPCS codes P9010 (Blood (whole), for 

transfusion, per unit), P9011 (Blood, 

split unit), P9012 (Cryoprecipitate, each 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59231 

unit), P9016 (Red blood cells, 

leukocytes reduced, each unit), P9023 

(Plasma, pooled multiple donor, 

solvent/detergent treated, frozen, each 

unit), P9035 (Platelets, pheresis, 

leukocytes reduced, each unit), P9043 

(Infusion, plasma protein fraction 

(human), 5%, 50 ml), P9048 (Infusion, 

plasma protein fraction (human), 5%, 

250 ml), P9055 (Platelets, leukocytes 

reduced, cmv-negative, apheresis/ 

pheresis, each unit), and P9060 (Fresh 

frozen plasma, donor retested, each 

unit). Commenters supported the higher 

payment rates for several HCPCS codes, 

including HCPCS codes P9019 

(Platelets, each unit) and P9034 

(Platelets, pheresis, each unit). 

Response: We used claims data from 

CY 2016 and the same blood-specific 

CCR methodology we used in previous 

years to calculate these proposed 

payment rates and believe the changes 

in costs for the services mentioned by 

these commenters are a result of normal 

variations in the claims data. 

Comment: Two commenters 

expressed concern that the proposed 

payment rate for HCPCS code P9070 

(Plasma, pooled multiple donor, 

pathogen reduced, frozen, each unit) 

does not accurately reflect the cost of 

the blood product. 

Response: HCPCS code P9070 was 

established on January 1, 2016, and for 

CY 2016 and CY 2017, we linked the 

payment of HCPCS code P9070 to a 

blood product, HCPCS code P9059 

(Fresh frozen plasma between 8–24 

hours of collection, each unit), that we 

believed would have a comparable cost 

to HCPCS code P9070. CY 2018 is the 

first year for which we have claims data 

that will allow us to directly determine 

the cost of HCPCS code P9070. In this 

case, the payment rate for HCPCS code 

P9070 in CY 2018 is lower than the CY 

2017 payment rate. However, we believe 

the CY 2018 payment rate is appropriate 

because it is based on actual claims data 

for HCPCS code P9070 rather than for 

HCPCS code P9059. 

Comment: Commenters requested that 

CMS immediately include the cost of 

newly implemented FDA blood safety 

measures for blood and blood products 

prior to receiving claims data that 

would contain the costs for the new 

safety measures. 

Response: As stated earlier in this 

section, the OPPS covers hospital 

payments for the costs of blood and 

blood products, as well as for the costs 

of collecting, processing, and storing 

blood and blood products. The cost of 

blood and blood products is determined 

using claims data and blood-specific 

CCRs from hospitals. To the extent that 

compliance with blood safety measures 

is included in hospital reporting of the 

cost of collecting, processing and storing 

blood and blood products, these costs 

would be reflected in the hospital rates. 

It is not possible to estimate the 

potential costs of new safety measures 

outside of claims data. 

Comment: Several commenters 

resubmitted the comments they made in 

response to a solicitation for public 

comments in the CY 2017 OPPS/ASC 

proposed rule (81 FR 45617 through 

45618) and summarized in the CY 2017 

OPPS/ASC final rule with comment 

period (81 FR 79577) on the current set 

of active HCPCS P-codes that describe 

blood products regarding how the code 

descriptors could be revised and 

updated (if necessary) to reflect the 

current blood products provided to 

hospital outpatients. 

The commenters supported a 

thorough examination of the current set 

of HCPCS P-codes for blood products as 

a necessary undertaking because the 

HCPCS P-codes were created several 

years ago. Several commenters 

recommended that CMS convene a 

stakeholder group that includes 

representatives of hospitals, blood 

banks, the American Red Cross, and 

others to discuss a framework to 

systematically review and revise the 

HCPCS P-codes for blood products. 

Commenters also suggested that CMS 

establish a ‘‘not otherwise classified 

(NOC)’’ code for blood products, which 

would allow hospitals to begin 

immediately billing for a new blood 

product that is not described by a 

specific HCPCS P-code. One commenter 

supported the use of broader 

descriptions for HCPCS P-codes when 

more granular language is no longer 

meaningful for differentiating between 

different types of blood and blood 

products, and where the costs and 

volume of the HCPCS P-codes are 

similar. Other commenters suggested 

specific modifications to the order, 

classification, and code descriptors of 

the blood and blood product HCPCS 

P-codes. 

Response: We appreciate the 

commenters’ detailed responses. The 

safety of the nation’s blood supply 

continues to be among the highest 

priorities, and we will work with the 

commenters and other stakeholders to 

ensure that any future updates to the 

HCPCS P-codes will support our goal of 

maintaining the safety of the blood 

supply. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to establish payment rates 

for blood and blood products using our 

blood-specific CCR methodology. 

Addendum B to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site) 

contains the final CY 2018 payment 

rates for blood and blood products 

(which are identified with status 

indicator ‘‘R’’). 

(b) Pathogen-Reduced Platelets and 

Rapid Bacterial Testing for Platelets 

In March 2016, the Food and Drug 

Administration (FDA) issued draft 

guidance for blood collection 

establishments and transfusion services 

entitled ‘‘Bacterial Risk Control 

Strategies for Blood Collection 

Establishments and Transfusion 

Services to Enhance the Safety and 

Availability of Platelets for Transfusion’’ 

(available at: https://www.fda.gov/ 

downloads/BiologicsBloodVaccines/ 

GuidanceComplianceRegulatory

Information/Guidances/Blood/ 

UCM425952.pdf). This draft guidance 

recommended, among other things, the 

use of rapid bacterial testing devices 

secondary to testing using a culturebased bacterial detection device or the 

implementation of pathogen-reduction 

technology for platelets to adequately 

control the risk of bacterial 

contamination of platelets. 

In the CY 2016 OPPS/ASC final rule 

with comment period (80 FR 70322), we 

established HCPCS code P9072 

(Platelets, pheresis, pathogen reduced, 

each unit). The CMS HCPCS Workgroup 

later revised HCPCS code P9072 to 

include the use of pathogen-reduction 

technology or rapid bacterial testing. 

Specifically, the descriptor for this code 

was revised, effective January 1, 2017, to 

read as follows: HCPCS code P9072 

(Platelets, pheresis, pathogen reduced or 

rapid bacterial tested, each unit). The 

payment rate for HCPCS code P9072 is 

based on a crosswalk to HCPCS code 

P9037 (Platelets, pheresis, leukocyte 

reduced, irradiated, each unit). We refer 

readers to the CY 2016 OPPS/ASC final 

rule with comment period for a further 

discussion of crosswalks for pathogenreduced blood products (80 FR 70323). 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33571 and 

33572), after the release of the CY 2017 

OPPS/ASC final rule with comment 

period, several blood and blood product 

stakeholders expressed concerns about 

the revised code descriptor for HCPCS 

code P9072. The stakeholders believed 

that the revision to HCPCS code P9072 

to describe both pathogen reduction and 

rapid bacterial testing was an 

inappropriate code descriptor. They 

stated that separate coding is needed to 

describe each service because each 

service is distinct. The stakeholders also 

noted that the code descriptor for 


sradovich on DSK3GMQ082PROD with RULES2
59232 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

HCPCS code P9072 results in hospitals 

receiving the same payment rate for 

platelets undergoing rapid bacterial 

testing that the hospitals receive for 

platelets treated with pathogen 

reduction technology, despite the fact 

that pathogen reduction is significantly 

more expensive than rapid bacterial 

testing. 

After review of the concerns 

expressed by the blood and blood 

product stakeholders, the CMS HCPCS 

Workgroup deactivated HCPCS code 

P9072 for Medicare reporting and 

replaced the code with two new HCPCS 

codes effective July 1, 2017. 

Specifically, effective July 1, 2017, 

HCPCS code Q9988 (Platelets, pheresis, 

pathogen reduced, each unit) is used to 

report the use of pathogen-reduction 

technology and HCPCS code Q9987 

(Pathogen(s) test for platelets) is used to 

report rapid bacterial testing or other 

pathogen tests for platelets, instead of 

HCPCS code P9072. We note that 

HCPCS code Q9987 should be reported 

to describe the test used for the 

detection of bacterial contamination in 

platelets as well as any other test that 

may be used to detect pathogen 

contamination. HCPCS code Q9987 

should not be used for reporting 

donation testing for infectious agents 

such as viruses. The coding changes 

associated with these codes were 

published on the CMS HCPCS Quarterly 

Update Web site, effective July 2017, at: 

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

HCPCSReleaseCodeSets/HCPCSQuarterly-Update.html. In addition, for 

OPPS, we announced the new HCPCS 

codes that were effective July 1, 2017 

through the July 2017 OPPS quarterly 

update Change Request (Transmittal 

3783, Change Request 10122, dated May 

26, 2017). We note that, effective July 1, 

2017, HCPCS code Q9988 is assigned to 

APC 9536 (Pathogen Reduced Platelets), 

with a payment rate of $647.12, and 

HCPCS code Q9987 is assigned to New 

Technology APC 1493, with a payment 

rate of $25.50. 

In the CY 2016 OPPS/ASC final rule 

with comment period (80 FR 70322 

through 70323), we reiterated that we 

calculate payment rates for blood and 

blood products using our blood-specific 

CCR methodology, which utilizes actual 

or simulated CCRs from the most 

recently available hospital cost reports 

to convert hospital charges for blood 

and blood products to costs. Because 

HCPCS code P9072 was new for CY 

2016, there were no claims data 

available on the charges and costs for 

this blood product upon which to apply 

our blood-specific CCR methodology. 

Therefore, we established an interim 

payment rates for this HCPCS code 

based on a crosswalk to existing blood 

product HCPCS code P9037, which we 

believed provided the best proxy for the 

costs of the new blood product. In 

addition, we stated that once we had 

claims data for HCPCS code P9072, we 

would calculate its payment rate using 

the claims data that should be available 

for the code beginning in CY 2018, 

which is our practice for other blood 

product HCPCS codes for which claims 

data have been available for 2 years. 

We stated in the proposed rule that, 

although our standard practice for new 

codes involves using claims data to set 

payment rates once claims data become 

available, we are concerned that there 

may have been confusion among the 

provider community about the services 

that HCPCS code P9072 described. That 

is, as early as 2016, there were 

discussions about changing the 

descriptor for HCPCS code P9072 to 

include the phrase ‘‘or rapid bacterial 

tested’’, which is a much less costly 

technology than pathogen reduction. In 

addition, as noted above, effective 

January 2017, the code descriptor for 

HCPCS code P9072 was, in fact, 

changed to also describe rapid bacterial 

testing of platelets and, effective July 1, 

2017, the descriptor for the temporary 

successor code for HCPCS code P9072 

(that is, HCPCS code Q9988) was 

changed again back to the original 

descriptor for HCPCS code P9072 that 

was in place for 2016. 

Based on the ongoing discussions 

involving changes to the original HCPCS 

code P9072 established in CY 2016, we 

believe that claims for pathogen reduced 

platelets may potentially reflect certain 

claims for rapid bacterial testing of 

platelets. The geometric mean costs 

based on submitted claims for HCPCS 

code P9072 based on available claims 

data from CY 2016 is $491.53, which is 

a 24-percent reduction from the CY 

2017 payment rate of $647.12. Because 

we believe that there may have been 

confusion related to ongoing 

discussions about changes to the 

original code descriptor for HCPCS code 

P9072, we believe it is appropriate to 

continue to crosswalk the payment 

amount for at least 1 additional year. 

Therefore, in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33571 and 33572), 

we proposed for CY 2018 to determine 

the payment rate for HCPCS code Q9988 

(the successor code to HCPCS code 

P9072) by continuing to use the 

payment rate that has been crosswalked 

from HCPCS code P9037 of $647.12. 

In the CY 2018 OPPS/ASC proposed 

rule, we solicited public comments on 

the proposed APC and status indicator 

assignments for HCPCS codes Q9987 

and Q9988 for the CY 2018 OPPS 

update. The proposed payment rates for 

HCPCS codes Q9987 and Q9988 were 

included in Addendum B to the 

proposed rule (which is available via 

the Internet on the CMS Web site). 

Comment: Commenters expressed 

their appreciation to CMS for working 

collaboratively with the American Red 

Cross and other stakeholders in the 

blood banking community to respond to 

their concerns about HCPCS code 

P9072. The commenters supported the 

actions of CMS to deactivate HCPCS 

code P9072 and replace it with HCPCS 

codes Q9987 and Q9988 to have coding 

options that more accurately reflect 

available technologies. The commenters 

also appreciated that separate payment 

for each code was established in the 

OPPS and is proposed to continue in CY 

2018. 

Response: We appreciate the support 

for our actions in CY 2017 and our 

proposal for CY 2018. 

Comment: One commenter requested 

that the description of HCPCS code 

Q9987 (Pathogen(s) test for platelets) be 

modified by adding the word 

‘‘secondary’’ to clarify in the procedure 

code descriptor that HCPCS code Q9987 

is intended to be used for secondary 

bacterial testing of platelets. 

Response: We believe the guidance 

we have provided through the CY 2018 

proposed rule (82 FR 33571 and 33572) 

and associated subregulatory guidance 

(Pub. 100–04 Medicare Claims 

Processing, Transmittal 3783, Change 

Request 10122) are sufficient for 

providers to understand how to 

appropriately report HCPCS code 

Q9987. We do not agree with the 

suggestion to modify the descriptor of 

HCPCS code Q9987, as we want the 

code to have the flexibility to be used 

to report new tests that may be 

developed in the future that are 

designed to identify pathogen 

contamination of platelets. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2018 proposal for 

reporting pathogen-reduced platelets 

and rapid bacterial testing for platelets. 

The only changes are to replace HCPCS 

code Q9987 (Pathogen(s) test for 

platelets) with HCPCS code P9100 

(Pathogen(s) test for platelets) and to 

replace HCPCS code Q9988 (Platelets, 

pheresis, pathogen-reduced, each unit) 

with HCPCS code P9073 (Platelets, 

pheresis, pathogen-reduced, each unit). 

Details of the replacement of HCPCS 

codes Q9987 and Q9988 with HCPCS 

codes P9100 and P9073, respectively, 

are found in Table 4 below. The final 

payment rates for HCPCS codes P9100 

and P9073 can be found in Addendum 

B to this final rule with comment period 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59233 

(which is available via the Internet on 

the CMS Web site). 

TABLE 4—REPLACEMENT CODES FOR HCPCS CODES Q9987 AND Q9988 AS OF JANUARY 1, 2018 

CY 2017 

HCPCS 

code 

CY 2018 

HCPCS 

code 

CY 2018 long descriptor Final CY 

2018 SI 

Final CY 

2018 APC 

Q9987 ............. P9100 Pathogen(s) test for platelets ......................................................................... S 1493 

Q9988 ............. P9073 Platelets, pheresis, pathogen-reduced, each unit .......................................... R 9536 

(2) Brachytherapy Sources 

Section 1833(t)(2)(H) of the Act 

mandates the creation of additional 

groups of covered OPD services that 

classify devices of brachytherapy 

consisting of a seed or seeds (or 

radioactive source) (‘‘brachytherapy 

sources’’) separately from other services 

or groups of services. The statute 

provides certain criteria for the 

additional groups. For the history of 

OPPS payment for brachytherapy 

sources, we refer readers to prior OPPS 

final rules, such as the CY 2012 OPPS/ 

ASC final rule with comment period (77 

FR 68240 through 68241). As we have 

stated in prior OPPS updates, we 

believe that adopting the general OPPS 

prospective payment methodology for 

brachytherapy sources is appropriate for 

a number of reasons (77 FR 68240). The 

general OPPS methodology uses costs 

based on claims data to set the relative 

payment weights for hospital outpatient 

services. This payment methodology 

results in more consistent, predictable, 

and equitable payment amounts per 

source across hospitals by averaging the 

extremely high and low values, in 

contrast to payment based on hospitals’ 

charges adjusted to costs. We believe 

that the OPPS methodology, as opposed 

to payment based on hospitals’ charges 

adjusted to cost, also would provide 

hospitals with incentives for efficiency 

in the provision of brachytherapy 

services to Medicare beneficiaries. 

Moreover, this approach is consistent 

with our payment methodology for the 

vast majority of items and services paid 

under the OPPS. We refer readers to the 

CY 2016 OPPS/ASC final rule with 

comment period (80 FR 70323 through 

70325) for further discussion of the 

history of OPPS payment for 

brachytherapy sources. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33572), for CY 2018, we 

proposed to use the costs derived from 

CY 2016 claims data to set the proposed 

CY 2018 payment rates for 

brachytherapy sources because CY 2016 

is the same year of data we proposed to 

use to set the proposed payment rates 

for most other items and services that 

would be paid under the CY 2018 OPPS. 

We proposed to base the payment rates 

for brachytherapy sources on the 

geometric mean unit costs for each 

source, consistent with the methodology 

that we proposed for other items and 

services paid under the OPPS, as 

discussed in section II.A.2. of the 

proposed rule. We also proposed to 

continue the other payment policies for 

brachytherapy sources that we finalized 

and first implemented in the CY 2010 

OPPS/ASC final rule with comment 

period (74 FR 60537). We proposed to 

pay for the stranded and nonstranded 

not otherwise specified (NOS) codes, 

HCPCS codes C2698 and C2699, at a 

rate equal to the lowest stranded or 

nonstranded prospective payment rate 

for such sources, respectively, on a per 

source basis (as opposed to, for 

example, a per mCi), which is based on 

the policy we established in the CY 

2008 OPPS/ASC final rule with 

comment period (72 FR 66785). We also 

proposed to continue the policy we first 

implemented in the CY 2010 OPPS/ASC 

final rule with comment period (74 FR 

60537) regarding payment for new 

brachytherapy sources for which we 

have no claims data, based on the same 

reasons we discussed in the CY 2008 

OPPS/ASC final rule with comment 

period (72 FR 66786; which was 

delayed until January 1, 2010 by section 

142 of Pub. L. 110–275). Specifically, 

this policy is intended to enable us to 

assign new HCPCS codes for new 

brachytherapy sources to their own 

APCs, with prospective payment rates 

set based on our consideration of 

external data and other relevant 

information regarding the expected 

costs of the sources to hospitals. 

The proposed CY 2018 payment rates 

for brachytherapy sources were 

included in Addendum B to the 

proposed rule (which is available via 

the Internet on the CMS Web site) and 

were identified with status indicator 

‘‘U’’. For CY 2018, we proposed to 

assign status indicator ‘‘E2’’ (Items and 

Services for Which Pricing Information 

and Claims Data Are Not Available) to 

HCPCS code C2645 (Brachytherapy 

planar, palladium-103, per square 

millimeter) because this code was not 

reported on CY 2016 claims. Therefore, 

we are unable to calculate a proposed 

payment rate based on the general OPPS 

ratesetting methodology described 

earlier. Although HCPCS code C2645 

became effective January 1, 2016, and 

although we would expect that if a 

hospital furnished a brachytherapy 

source described by this code in CY 

2016, HCPCS code C2645 should appear 

on the CY 2016 claims, there were no 

CY 2016 claims reporting this code 

available for the proposed rule. In 

addition, unlike our policy for new 

brachytherapy sources HCPCS codes, 

we did not consider external data to 

determine a proposed payment rate for 

HCPCS code C2645 for CY 2018. 

Therefore, we proposed to assign status 

indicator ‘‘E2’’ to HCPCS code C2645. 

In addition, we assigned status 

indicator ‘‘E2’’ to HCPCS code C2644 

(Brachytherapy, cesium-131 chloride, 

per square millimeter) because this code 

was not reported on any CY 2015 claims 

(that is, there were no Medicare claims 

submitted by any hospitals in 2015 that 

reported this HCPCS code). In our 

review of CY 2016 claims (which are 

used to set rates for CY 2018), we found 

that one hospital submitted one claim 

reporting HCPCS code C2644. 

Therefore, we proposed to assign status 

indicator ‘‘U’’ to HCPCS code C2644. 

We invited public comments on our 

proposals. 

Comment: One commenter suggested 

that CMS set the CY 2018 APC payment 

rate for HCPCS code C2636 

(Brachytherapy linear, non-stranded, 

palladium-103, per 1mm) at $26.99 per 

millimeter. 

Response: As noted in past 

rulemaking cycles and in the CY 2018 

OPPS/ASC proposed rule (82 FR 33572), 

we believe that adopting the general 

OPPS prospective payment 

methodology for brachytherapy sources 

is consistent with our payment 

methodology for the vast majority of 

items and services paid under the OPPS. 

Further, while we assign new HCPCS 

codes for new brachytherapy sources to 

their own APCs, with prospective 

payment rates set based on our 

consideration of external data and other 


sradovich on DSK3GMQ082PROD with RULES2
59234 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

relevant information regarding the 

expected costs of the sources to 

hospitals, HCPCS code C2636 is neither 

new nor lacks claim information. 

HCPCS code C2636 became effective 

July 1, 2007. The final CY 2018 APC 

payment rate for HCPCS code C2636 is 

$27.08 based on data for the 8 claims we 

received for the CY 2018 OPPS standard 

ratesetting process and can be found in 

Addendum B to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site). 

Comment: Some commenters 

suggested that HCPCS code C2645 

(Brachytherapy, planar, palladium-103) 

had been incorrectly assigned status 

indicator ‘‘E2’’ (Items and Services for 

Which Pricing Information and Claims 

Data Are Not Available). These 

commenters stated that CMS has 

considered external data and other 

relevant information where no claims 

data exist for new HCPCS codes for new 

brachytherapy sources. For example, 

commenters included the following 

excerpt from the CY 2008 OPPS/ASC 

final rule with comment period 

regarding CMS’ policy with respect to 

establishing a payment rate for HCPCS 

code C2637 (Brachytherapy nonstranded, ytterbium-169, per source) for 

which CMS lacked claims data: ‘‘if in 

public comments to the proposed rule 

or later in CYs 2007 or 2008, we would 

receive relevant and reliable 

information on the hospital cost for 

ytterbium-169 and information that this 

source is being marketed, we could 

establish a prospective payment rate for 

the source in the CY 2008 final rule 

with comment period or in a quarterly 

OPPS update, respectively’’ (72 FR 

66786). 

In addition, commenters noted that, 

for CY 2016 and CY 2017, HCPCS code 

C2645 was assigned an OPPS status 

indicator of ‘‘U’’ (Brachytherapy 

Sources, Paid under OPPS; separate 

APC payment) and a payment rate of 

$4.69 per mm2 and that the payment 

rate was based upon external pricing 

data previously supplied by the 

developer of the brachytherapy source 

described by HCPCS code C2645. The 

developer of the brachytherapy source 

noted that there were no outpatient 

claims from CY 2016 for HCPCS code 

C2645 because all of the cases in CY 

2016 that used the brachytherapy source 

were inpatient cases. However, the 

commenter noted its expectation that 

such source would begin to be used in 

the hospital outpatient department 

setting beginning approximately in mid2018. This commenter noted that the 

‘‘E2’’ status indicator would effectively 

render the outpatient payment rate as $0 

for CY 2018. The commenter supplied 

external invoices to support maintaining 

the current payment rate of $4.69 per 

mm2. 

Response: We note that the CY 2008 

final rule with comment period 

preamble language that the commenters 

referenced to support their argument 

that external data have been used in the 

past was in reference to a brachytherapy 

source for which there appeared to have 

been erroneous claims submitted since 

the claims were from 2006, but the 

brachytherapy source did not come to 

market until 2007. This is 

distinguishable from the situation with 

HCPCS code C2645 which has been on 

the market since August 29, 2014 and 

had a code effective date of January 1, 

2016. Nonetheless, as the commenters 

noted, there are no Medicare claims data 

available at this time. While this 

brachytherapy source is no longer 

‘‘new,’’ the absence of even a single 

Medicare claim in the outpatient 

hospital data leads us to agree with the 

commenter that using an external source 

of data would be appropriate at this 

time. Accordingly, for CY 2018, we are 

assigning status indicator ‘‘U’’ to HCPCS 

code C2645 and are using external data 

(invoice prices) and other relevant 

information to establish the APC 

payment rate for HCPCS code C2645. 

Specifically, we are setting the payment 

rate at $4.69 per mm2, the same rate that 

was in effect for CYs 2016 and 2017. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to assign status 

indicator ‘‘U’’ to HCPCS code C2636 

(Brachytherapy linear, non-stranded, 

palladium-103, per 1mm) and assigning 

an APC payment rate for HCPCS code 

C2636 at $27.08 based on the 8 claims 

we received for the CY 2018 OPPS 

standard ratesetting process. We also are 

finalizing our proposal to assign status 

indicator ‘‘U’’ to HCPCS code C2644 

(Brachytherapy, cesium-131 chloride, 

per millicurie) and are modifying our 

proposal to assign status indicator ‘‘E2’’ 

to HCPCS code C2645 (Brachytherapy 

planar, palladium-103, per square 

millimeter) and instead adopting a 

status indicator of ‘‘U’’ for CY 2018. The 

final CY 2018 payment rates for 

brachytherapy sources can be found in 

Addendum B to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site) and 

are identified with status indicator ‘‘U’’. 

We continue to invite hospitals and 

other parties to submit 

recommendations to us for new codes to 

describe new brachytherapy sources. 

Such recommendations should be 

directed to the Division of Outpatient 

Care, Mail Stop C4–01–26, Centers for 

Medicare and Medicaid Services, 7500 

Security Boulevard, Baltimore, MD 

21244. We will continue to add new 

brachytherapy source codes and 

descriptors to our systems for payment 

on a quarterly basis. 

b. Comprehensive APCs (C–APCs) for 

CY 2018 

(1) Background 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 74861 

through 74910), we finalized a 

comprehensive payment policy that 

packages payment for adjunctive and 

secondary items, services, and 

procedures into the most costly primary 

procedure under the OPPS at the claim 

level. The policy was finalized in CY 

2014, but the effective date was delayed 

until January 1, 2015, to allow 

additional time for further analysis, 

opportunity for public comment, and 

systems preparation. The 

comprehensive APC (C–APC) policy 

was implemented effective January 1, 

2015, with modifications and 

clarifications in response to public 

comments received regarding specific 

provisions of the C–APC policy (79 FR 

66798 through 66810). 

A C–APC is defined as a classification 

for the provision of a primary service 

and all adjunctive services provided to 

support the delivery of the primary 

service. We established C–APCs as a 

category broadly for OPPS payment and 

implemented 25 C–APCs beginning in 

CY 2015 (79 FR 66809 through 66810). 

In the CY 2016 OPPS/ASC final rule 

with comment period (80 FR 70332), we 

finalized 10 additional C–APCs to be 

paid under the existing C–APC payment 

policy and added one additional level to 

both the Orthopedic Surgery and 

Vascular Procedures clinical families. In 

the CY 2017 OPPS/ASC final rule with 

comment period (81 FR 79584 through 

79585), we finalized another 25 

C–APCs. 

Under this policy, we designate a 

service described by a HCPCS code 

assigned to a C–APC as the primary 

service when the service is identified by 

OPPS status indicator ‘‘J1’’. When such 

a primary service is reported on a 

hospital outpatient claim, taking into 

consideration the few exceptions that 

are discussed below, we make payment 

for all other items and services reported 

on the hospital outpatient claim as 

being integral, ancillary, supportive, 

dependent, and adjunctive to the 

primary service (hereinafter collectively 

referred to as ‘‘adjunctive services’’) and 

representing components of a complete 

comprehensive service (78 FR 74865 

and 79 FR 66799). Payments for 

adjunctive services are packaged into 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59235 

the payments for the primary services. 

This results in a single prospective 

payment for each of the primary, 

comprehensive services based on the 

costs of all reported services at the claim 

level. 

Services excluded from the C–APC 

policy under the OPPS include services 

that are not covered OPD services, 

services that cannot by statute be paid 

for under the OPPS, and services that 

are required by statute to be separately 

paid. This includes certain 

mammography and ambulance services 

that are not covered OPD services in 

accordance with section 

1833(t)(1)(B)(iv) of the Act; 

brachytherapy seeds, which also are 

required by statute to receive separate 

payment under section 1833(t)(2)(H) of 

the Act; pass-through payment drugs 

and devices, which also require separate 

payment under section 1833(t)(6) of the 

Act; self-administered drugs (SADs) that 

are not otherwise packaged as supplies 

because they are not covered under 

Medicare Part B under section 

1861(s)(2)(B) of the Act; and certain 

preventive services (78 FR 74865 and 79 

FR 66800 through 66801). A list of 

services excluded from the C–APC 

policy is included in Addendum J to 

this final rule with comment period 

(which is available via the Internet on 

the CMS Web site). 

The C–APC policy payment 

methodology set forth in the CY 2014 

OPPS/ASC final rule with comment 

period for the C–APCs and modified 

and implemented beginning in CY 2015 

is summarized as follows (78 FR 74887 

and 79 FR 66800): 

Basic Methodology. As stated in the 

CY 2015 OPPS/ASC final rule with 

comment period, we define the C–APC 

payment policy as including all covered 

OPD services on a hospital outpatient 

claim reporting a primary service that is 

assigned to status indicator ‘‘J1’’, 

excluding services that are not covered 

OPD services or that cannot by statute 

be paid for under the OPPS. Services 

and procedures described by HCPCS 

codes assigned to status indicator ‘‘J1’’ 

are assigned to C–APCs based on our 

usual APC assignment methodology by 

evaluating the geometric mean costs of 

the primary service claims to establish 

resource similarity and the clinical 

characteristics of each procedure to 

establish clinical similarity within each 

APC. 

In the CY 2016 OPPS/ASC final rule 

with comment period, we expanded the 

C–APC payment methodology to 

qualifying extended assessment and 

management encounters through the 

‘‘Comprehensive Observation Services’’ 

C–APC (C–APC 8011). Services within 

this APC are assigned status indicator 

‘‘J2’’. Specifically, we make a payment 

through C–APC 8011 for a claim that: 

• Does not contain a procedure 

described by a HCPCS code to which we 

have assigned status indicator ‘‘T’’ that 

is reported with a date of service on the 

same day or 1 day earlier than the date 

of service associated with services 

described by HCPCS code G0378; 

• Contains 8 or more units of services 

described by HCPCS code G0378 

(Observation services, per hour); 

• Contains services provided on the 

same date of service or 1 day before the 

date of service for HCPCS code G0378 

that are described by one of the 

following codes: HCPCS code G0379 

(Direct referral of patient for hospital 

observation care) on the same date of 

service as HCPCS code G0378; CPT code 

99281 (Emergency department visit for 

the evaluation and management of a 

patient (Level 1)); CPT code 99282 

(Emergency department visit for the 

evaluation and management of a patient 

(Level 2)); CPT code 99283 (Emergency 

department visit for the evaluation and 

management of a patient (Level 3)); CPT 

code 99284 (Emergency department 

visit for the evaluation and management 

of a patient (Level 4)); CPT code 99285 

(Emergency department visit for the 

evaluation and management of a patient 

(Level 5)) or HCPCS code G0380 (Type 

B emergency department visit (Level 1)); 

HCPCS code G0381 (Type B emergency 

department visit (Level 2)); HCPCS code 

G0382 (Type B emergency department 

visit (Level 3)); HCPCS code G0383 

(Type B emergency department visit 

(Level 4)); HCPCS code G0384 (Type B 

emergency department visit (Level 5)); 

CPT code 99291 (Critical care, 

evaluation and management of the 

critically ill or critically injured patient; 

first 30–74 minutes); or HCPCS code 

G0463 (Hospital outpatient clinic visit 

for assessment and management of a 

patient); and 

• Does not contain services described 

by a HCPCS code to which we have 

assigned status indicator ‘‘J1’’. 

The assignment of status indicator 

‘‘J2’’ to a specific combination of 

services performed in combination with 

each other allows for all other OPPS 

payable services and items reported on 

the claim (excluding services that are 

not covered OPD services or that cannot 

by statute be paid for under the OPPS) 

to be deemed adjunctive services 

representing components of a 

comprehensive service and resulting in 

a single prospective payment for the 

comprehensive service based on the 

costs of all reported services on the 

claim (80 FR 70333 through 70336). 

Services included under the C–APC 

payment packaging policy, that is, 

services that are typically adjunctive to 

the primary service and provided during 

the delivery of the comprehensive 

service, include diagnostic procedures, 

laboratory tests, and other diagnostic 

tests and treatments that assist in the 

delivery of the primary procedure; visits 

and evaluations performed in 

association with the procedure; 

uncoded services and supplies used 

during the service; durable medical 

equipment as well as prosthetic and 

orthotic items and supplies when 

provided as part of the outpatient 

service; and any other components 

reported by HCPCS codes that represent 

services that are provided during the 

complete comprehensive service (78 FR 

74865 and 79 FR 66800). 

In addition, payment for hospital 

outpatient department services that are 

similar to therapy services and 

delivered either by therapists or 

nontherapists is included as part of the 

payment for the packaged complete 

comprehensive service. These services 

that are provided during the 

perioperative period are adjunctive 

services and are deemed not to be 

therapy services as described in section 

1834(k) of the Act, regardless of whether 

the services are delivered by therapists 

or other nontherapist health care 

workers. We have previously noted that 

therapy services are those provided by 

therapists under a plan of care in 

accordance with section 1835(a)(2)(C) 

and section 1835(a)(2)(D) of the Act and 

are paid for under section 1834(k) of the 

Act, subject to annual therapy caps as 

applicable (78 FR 74867 and 79 FR 

66800). However, certain other services 

similar to therapy services are 

considered and paid for as hospital 

outpatient department services. 

Payment for these nontherapy 

outpatient department services that are 

reported with therapy codes and 

provided with a comprehensive service 

is included in the payment for the 

packaged complete comprehensive 

service. We note that these services, 

even though they are reported with 

therapy codes, are hospital outpatient 

department services and not therapy 

services. Therefore, the requirement for 

functional reporting under the 

regulations at 42 CFR 410.59(a)(4) and 

42 CFR 410.60(a)(4) does not apply. We 

refer readers to the July 2016 OPPS 

Change Request 9658 (Transmittal 3523) 

for further instructions on reporting 

these services in the context of a C–APC 

service. 

Items included in the packaged 

payment provided in conjunction with 

the primary service also include all 


sradovich on DSK3GMQ082PROD with RULES2
59236 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

drugs, biologicals, and 

radiopharmaceuticals, regardless of cost, 

except those drugs with pass-through 

payment status and SADs, unless they 

function as packaged supplies (78 FR 

74868 through 74869 and 74909 and 79 

FR 66800). We refer readers to Section 

50.2M, Chapter 15, of the Medicare 

Benefit Policy Manual for a description 

of our policy on SADs treated as 

hospital outpatient supplies, including 

lists of SADs that function as supplies 

and those that do not function as 

supplies. 

We define each hospital outpatient 

claim reporting a single unit of a single 

primary service assigned to status 

indicator ‘‘J1’’ as a single ‘‘J1’’ unit 

procedure claim (78 FR 74871 and 79 

FR 66801). Line item charges for 

services included on the C–APC claim 

are converted to line item costs, which 

are then summed to develop the 

estimated APC costs. These claims are 

then assigned one unit of the service 

with status indicator ‘‘J1’’ and later used 

to develop the geometric mean costs for 

the C–APC relative payment weights. 

(We note that we use the term 

‘‘comprehensive’’ to describe the 

geometric mean cost of a claim reporting 

‘‘J1’’ service(s) or the geometric mean 

cost of a C–APC, inclusive of all of the 

items and services included in the 

C–APC service payment bundle.) 

Charges for services that would 

otherwise be separately payable are 

added to the charges for the primary 

service. This process differs from our 

traditional cost accounting methodology 

only in that all such services on the 

claim are packaged (except certain 

services as described above). We apply 

our standard data trims, which exclude 

claims with extremely high primary 

units or extreme costs. 

The comprehensive geometric mean 

costs are used to establish resource 

similarity and, along with clinical 

similarity, dictate the assignment of the 

primary services to the C–APCs. We 

establish a ranking of each primary 

service (single unit only) to be assigned 

to status indicator ‘‘J1’’ according to its 

comprehensive geometric mean costs. 

For the minority of claims reporting 

more than one primary service assigned 

to status indicator ‘‘J1’’ or units thereof, 

we identify one ‘‘J1’’ service as the 

primary service for the claim based on 

our cost-based ranking of primary 

services. We then assign these multiple 

‘‘J1’’ procedure claims to the C–APC to 

which the service designated as the 

primary service is assigned. If the 

reported ‘‘J1’’ services on a claim map 

to different C–APCs, we designate the 

‘‘J1’’ service assigned to the C–APC with 

the highest comprehensive geometric 

mean cost as the primary service for that 

claim. If the reported multiple ‘‘J1’’ 

services on a claim map to the same 

C–APC, we designate the most costly 

service (at the HCPCS code level) as the 

primary service for that claim. This 

process results in initial assignments of 

claims for the primary services assigned 

to status indicator ‘‘J1’’ to the most 

appropriate C–APCs based on both 

single and multiple procedure claims 

reporting these services and clinical and 

resource homogeneity. 

Complexity Adjustments. We use 

complexity adjustments to provide 

increased payment for certain 

comprehensive services. We apply a 

complexity adjustment by promoting 

qualifying paired ‘‘J1’’ service code 

combinations or paired code 

combinations of ‘‘J1’’ services and 

certain add-on codes (as described 

further below) from the originating 

C–APC (the C–APC to which the 

designated primary service is first 

assigned) to the next higher paying 

C–APC in the same clinical family of 

C–APCs. We apply this type of 

complexity adjustment when the paired 

code combination represents a complex, 

costly form or version of the primary 

service according to the following 

criteria: 

• Frequency of 25 or more claims 

reporting the code combination 

(frequency threshold); and 

• Violation of the 2 times rule in the 

originating C–APC (cost threshold). 

These criteria identify paired code 

combinations that occur commonly and 

exhibit materially greater resource 

requirements than the primary service. 

The CY 2017 OPPS/ASC final rule with 

comment period (81 FR 79582) included 

a revision to the complexity adjustment 

eligibility criteria. Specifically, we 

finalized a policy to discontinue the 

requirement that a code combination 

(that qualifies for a complexity 

adjustment by satisfying the frequency 

and cost criteria thresholds described 

above) also not create a 2 times rule 

violation in the higher level or receiving 

APC. 

After designating a single primary 

service for a claim, we evaluate that 

service in combination with each of the 

other procedure codes reported on the 

claim assigned to status indicator ‘‘J1’’ 

(or certain add-on codes) to determine if 

there are paired code combinations that 

meet the complexity adjustment criteria. 

For a new HCPCS code, we determine 

initial C–APC assignment and 

qualification for a complexity 

adjustment using the best available 

information, crosswalking the new 

HCPCS code to a predecessor code(s) 

when appropriate. 

Once we have determined that a 

particular code combination of ‘‘J1’’ 

services (or combinations of ‘‘J1’’ 

services reported in conjunction with 

certain add-on codes) represents a 

complex version of the primary service 

because it is sufficiently costly, 

frequent, and a subset of the primary 

comprehensive service overall 

according to the criteria described 

above, we promote the claim including 

the complex version of the primary 

service as described by the code 

combination to the next higher cost 

C–APC within the clinical family, 

unless the primary service is already 

assigned to the highest cost APC within 

the 

C–APC clinical family or assigned to the 

only C–APC in a clinical family. We do 

not create new APCs with a 

comprehensive geometric mean cost 

that is higher than the highest geometric 

mean cost (or only) C–APC in a clinical 

family just to accommodate potential 

complexity adjustments. Therefore, the 

highest payment for any claim including 

a code combination for services 

assigned to a C–APC would be the 

highest paying C–APC in the clinical 

family (79 FR 66802). 

We package payment for all add-on 

codes into the payment for the C–APC. 

However, certain primary service addon combinations may qualify for a 

complexity adjustment. As noted in the 

CY 2016 OPPS/ASC final rule with 

comment period (80 FR 70331), all addon codes that can be appropriately 

reported in combination with a base 

code that describes a primary ‘‘J1’’ 

service are evaluated for a complexity 

adjustment. 

To determine which combinations of 

primary service codes reported in 

conjunction with an add-on code may 

qualify for a complexity adjustment for 

CY 2018, in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33575), we 

proposed to apply the frequency and 

cost criteria thresholds discussed above, 

testing claims reporting one unit of a 

single primary service assigned to status 

indicator ‘‘J1’’ and any number of units 

of a single add-on code for the primary 

‘‘J1’’ service. If the frequency and cost 

criteria thresholds for a complexity 

adjustment are met and reassignment to 

the next higher cost APC in the clinical 

family is appropriate (based on meeting 

the criteria outlined above), we make a 

complexity adjustment for the code 

combination; that is, we reassign the 

primary service code reported in 

conjunction with the add-on code to the 

next higher cost C–APC within the same 

clinical family of C–APCs. As 

previously stated, we package payment 

for add-on codes into the C–APC 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59237 

payment rate. If any add-on code 

reported in conjunction with the ‘‘J1’’ 

primary service code does not qualify 

for a complexity adjustment, payment 

for the add-on service continues to be 

packaged into the payment for the 

primary service and is not reassigned to 

the next higher cost C–APC. We listed 

the complexity adjustments proposed 

for ‘‘J1’’ and add-on code combinations 

for CY 2018, along with all of the other 

proposed complexity adjustments, in 

Addendum J to the proposed rule 

(which is available via the Internet on 

the CMS Web site). 

Addendum J to the proposed rule 

included the cost statistics for each code 

combination that would qualify for a 

complexity adjustment (including 

primary code and add-on code 

combinations). Addendum J to the 

proposed rule also contained summary 

cost statistics for each of the paired code 

combinations that describe a complex 

code combination that would qualify for 

a complexity adjustment and were 

proposed to be reassigned to the next 

higher cost C–APC within the clinical 

family. The combined statistics for all 

proposed reassigned complex code 

combinations were represented by an 

alphanumeric code with the first 4 

digits of the designated primary service 

followed by a letter. For example, the 

proposed geometric mean cost listed in 

Addendum J for the code combination 

described by complexity adjustment 

assignment 3320R, which is assigned to 

C–APC 5224 (Level 4 Pacemaker and 

Similar Procedures), included all paired 

code combinations that were proposed 

to be reassigned to C–APC 5224 when 

CPT code 33208 is the primary code. 

Providing the information contained in 

Addendum J to the proposed rule 

allowed stakeholders the opportunity to 

better assess the impact associated with 

the proposed reassignment of claims 

with each of the paired code 

combinations eligible for a complexity 

adjustment. 

Comment: Several commenters 

requested exceptions to the current 

complexity adjustment criteria of 25 or 

more claims reporting the code 

combination (frequency) and a violation 

of the 2 times rule in the originating 

C–APC (cost) to allow claims with code 

combinations that do not currently meet 

these criteria to be paid at the next 

higher paying C–APC. The C–APC 

complexity adjustments requested by 

the commenters are listed in Table 5 

below. We did not propose for claims 

with these code combinations to receive 

complexity adjustments because they 

failed to meet either the cost or 

frequency criteria. 

TABLE 5—C–APC COMPLEXITY ADJUSTMENTS REQUESTED BY THE COMMENTERS

Primary ‘‘J1’’ HCPCS code Secondary ‘‘J1’’ HCPCS code Primary APC 

assignment 

Requested 

complexity 

adjusted APC 

assignment 

20983 (Ablation therapy for reduction or eradication of 

1 or more bone tumors (e.g., metastasis including 

adjacent soft tissue when involved by tumor extension, percutaneous, including imaging guidance 

when performed; radio frequency)).

22513 (Percutaneous vertebral augmentation, including cavity creation (fracture reduction and bone biopsy included when performed) using mechanical 

device (e.g., kyphoplasty), 1 vertebral body, unilateral or bilateral cannulation, inclusive of all imaging 

guidance; thoracic).

5114 5115 

20983 (Ablation therapy for reduction or eradication of 

1 or more bone tumors (e.g., metastasis including 

adjacent soft tissue when involved by tumor extension, percutaneous, including imaging guidance 

when performed; radio frequency)).

22514 (Percutaneous vertebral augmentation, including cavity creation (fracture reduction and bone biopsy included when performed) using mechanical 

device (e.g., kyphoplasty), 1 vertebral body, unilateral or bilateral cannulation, inclusive of all imaging 

guidance; lumbar).

5114 5115 

28297 (Correction, hallux valgus (bunionectomy), with 

sesamoidectomy, when performed; with first metatarsal and medial cuneiform joint with arthrodesis, 

any method).

28285 (Correction, hammertoe (e.g., interphalangeal 

fusion, partial or total phalangectomy)).

5114 5115 

28297 (Correction, hallux valgus (bunionectomy), with 

sesamoidectomy, when performed; with first metatarsal and medial cuneiform joint with arthrodesis, 

any method).

28292 (Correction, hallux valgus (bunionectomy), with 

sesamoidectomy, when performed; with resection 

of proximal phalanx base, when performed, any 

method).

5114 5115 

28740 (Arthrodesis, midtarsal or tarsometatarsal, single joint).28285 (Correction, hammertoe (e.g., interphalangeal 

fusion, partial or total phalangectomy)).

5114 5115 

61885 (Insertion or replacement of cranial 

nuerostimulator pulse generator or receiver, direct 

or inductive coupling; with connection to a single 

electrode array).

61885 (Insertion or replacement of cranial 

nuerostimulator pulse generator or receiver, direct 

or inductive coupling; with connection to a single 

electrode array).

5463 5464 

28740 (Arthrodesis, midtarsal or tarsometatarsal, single joint).28292 (Correction, hallux valgus (bunionectomy), with 

sesamoidectomy, when performed; with resection 

of proximal phalanx base, when performed, any 

method).

5114 5115 

52234 (Cystourethroscopy, with biopsy(s)) .................. C9738 * (Adjunctive blue light cystoscopy with fluorescent imaging agent (List separately in addition to 

code for primary procedure)).

5374 5375 

52235 (Cystourethroscopy, with fulguration (including 

cryosurgery or laser surgery) of trigone, bladder 

neck, prostatic fossa, urethra, or periurethral 

glands).

C9738 * (Adjunctive blue light cystoscopy with fluorescent imaging agent (List separately in addition to 

code for primary procedure)).

5374 5375 

52240 (Cystourethroscopy with fulgration (including 

cryosurgery or laser surgery) or treatment of 

MINOR (less than 0.5 cm) lesion(s) with or without 

biopsy).

C9738 * (Adjunctive blue light cystoscopy with fluorescent imaging agent (List separately in addition to 

code for primary procedure)).

5375 5376 

* HCPCS code C9738 was identified in the proposed rule as HCPCS code C97XX. 


sradovich on DSK3GMQ082PROD with RULES2
59238 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

Other commenters requested various 

changes to the complexity adjustment 

criteria. One commenter requested that 

CMS amend the current cost criterion 

for a complexity adjustment to allow for 

code combinations that have qualified 

for a complexity adjustment in the 

previous year to qualify for a complexity 

adjustment for the subsequent year if 

the code combination is within 5 

percent of the cost criterion for the 

subsequent year. Another commenter 

requested that CMS eliminate the 

criterion that the code combination 

must create a violation of the 2 times 

rule in the originating C–APC in order 

to qualify for a complexity adjustment. 

Some commenters recommended that 

CMS create a complexity adjustment for 

endoscopic sinus surgery claims that 

include a drug or device code (C-code 

or a J-code), or more than two ‘‘J1’’ 

procedures. Other commenters 

requested that CMS revise its 

complexity adjustment methodology to 

account for the higher costs that 

essential hospitals incur when 

performing complex procedures and 

treating sicker patients. 

Response: We appreciate these 

comments. However, at this time, we do 

not believe changes to the C–APC 

complexity adjustment criteria are 

necessary or that we should make 

exceptions to the criteria to allow claims 

with the code combinations suggested 

by the commenters to receive 

complexity adjustments. As stated 

previously (81 FR 79582), we continue 

to believe that the complexity 

adjustment criteria, which require a 

frequency of 25 or more claims 

reporting a code combination and a 

violation of the 2 times rule in the 

originating C–APC in order to receive 

payment in the next higher cost C–APC 

within the clinical family, are adequate 

to determine if a combination of 

procedures represents a complex, costly 

subset of the primary service. If a code 

combination meets these criteria, the 

combination receives payment at the 

next higher cost C–APC. Code 

combinations that do not meet these 

criteria receive the C–APC payment rate 

associated with the primary ‘‘J1’’ 

service. 

A minimum of 25 claims is already 

very low for a national payment system. 

Lowering the minimum of 25 claims 

further could lead to unnecessary 

complexity adjustments for service 

combinations that are rarely performed. 

The complexity adjustment cost 

threshold compares the code 

combinations to the lowest cost 

significant procedure assigned to the 

APC. If the cost of the code combination 

does not exceed twice the cost of the 

lowest cost significant procedure within 

the APC, no complexity adjustment is 

made. Lowering or eliminating this 

threshold could remove so many claims 

from the accounting for the primary 

‘‘J1’’ service that the geometric mean 

costs attributed to the primary 

procedure could be skewed. 

Regarding the request for a code 

combination that qualified previously 

for a complexity adjustment to qualify 

for the subsequent year if the code 

combination is within 5 percent of the 

cost criterion for the subsequent year, 

we evaluate code combinations each 

year against our complexity adjustment 

criteria using the latest available data. 

We do not believe it is necessary to 

expand the ability for code 

combinations to meet the cost criterion 

in this manner. 

We also do not believe that it is 

necessary to adjust the complexity 

adjustment criteria to allow claims that 

include a drug or device code, more 

than two ‘‘J1’’ procedures, or procedures 

performed at certain hospitals to qualify 

for a complexity adjustment. As 

mentioned earlier, we believe the 

current criteria are adequate to 

determine if a combination of 

procedures represents a complex, costly 

subset of the primary service. 

Comment: Some commenters noted 

that there were certain code 

combinations that met the complexity 

adjustment criteria that were not 

included in Addendum J of the CY 2018 

OPPS/ASC proposed rule. Specifically, 

commenters noted that the 

combinations of procedures described 

by the following codes were not 

included in Addendum J: 

• CPT code 22510 (Percutaneous 

vertebroplasty (bone biopsy included 

when performed), 1 vertebral body, 

unilateral or bilateral injection, 

inclusive of all imaging guidance; 

cervicothoracic) and CPT code 22512 

(Percutaneous vertebroplasty (bone 

biopsy included when performed), 1 

vertebral body, unilateral or bilateral 

injection, inclusive of all imaging 

guidance; each additional 

cervicothoracic or lumbosacral vertebral 

body) for multi-level vertebroplasty in 

the cervicothoracic region); 

• CPT code 22511 (Percutaneous 

vertebroplasty (bone biopsy included 

when performed), 1 vertebral body, 

unilateral or bilateral injection, 

inclusive of all imaging guidance; 

lumbosacral) and CPT code 22512 

(Percutaneous vertebroplasty (bone 

biopsy included when performed), 1 

vertebral body, unilateral or bilateral 

injection, inclusive of all imaging 

guidance; each additional 

cervicothoracic or lumbosacral vertebral 

body); and 

• CPT code 22511 (Percutaneous 

vertebroplasty (bone biopsy included 

when performed), 1 vertebral body, 

unilateral or bilateral injection, 

inclusive of all imaging guidance; 

lumbosacral) and CPT code 20982 

(Ablation therapy for reduction or 

eradication of 1 or more bone tumors 

(e.g., metastasis), including adjacent soft 

tissue when involved by tumor 

extension, percutaneous, including 

imaging guidance when performed; 

radiofrequency). 

Response: These code combinations 

were inadvertently excluded from 

Addendum J to the CY 2018 OPPS/ASC 

proposed rule. These code combinations 

and all other code combinations that 

qualify for complexity adjustments are 

included in Addendum J to this final 

rule with comment period. 

Comment: One commenter stated that 

CMS should have included the 

following add-on CPT codes in the 

complexity adjustment evaluation: 

• CPT code 92978 (Endoluminal 

imaging of coronary vessel or graft using 

intravascular ultrasound (IVUS) or 

optical coherence tomography (OCT) 

during diagnostic evaluation and/or 

therapeutic intervention including 

imaging supervision, interpretation and 

report; initial vessel (List separately in 

addition to code for primary procedure); 

• CPT code 92979 (Endoluminal 

imaging of coronary vessel or graft using 

intravascular ultrasound (IVUS) or 

optical coherence tomography (OCT) 

during diagnostic evaluation and/or 

therapeutic intervention including 

imaging supervision, interpretation and 

report; each additional vessel (List 

separately in addition to code for 

primary procedure)); 

• CPT code 93571 (Intravascular 

Doppler velocity and/or pressure 

derived coronary flow reserve 

measurement (coronary vessel or graft) 

during coronary angiography including 

pharmacologically induced stress; 

initial vessel (List separately in addition 

to code for primary procedure)); and 

• CPT code 93572 ((Intravascular 

Doppler velocity and/or pressure 

derived coronary flow reserve 

measurement (coronary vessel or graft) 

during coronary angiography including 

pharmacologically induced stress; each 

additional vessel (List separately in 

addition to code for primary procedure)) 

in the complexity adjustment 

evaluation. 

Response: We note that CPT codes 

92978 and 93571 were both included in 

the complexity adjustment evaluation in 

Addendum J to the CY 2018 OPPS/ASC 

proposed rule. However, CPT codes 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59239 

92979 and 93572 are not add-on codes 

to primary ‘‘J1’’ services. As stated in 

the CY 2018 OPPS/ASC proposed rule, 

to determine the code combinations that 

qualify for complexity adjustments, we 

apply the established frequency and 

cost criteria thresholds and tests claims 

reporting one unit of a single primary 

service assigned to status indicator ‘‘J1’’ 

and any number of units of a single addon code for the primary ‘‘J1’’ service (82 

FR 33575). Accordingly, because CPT 

codes 92979 and 93572 are not add-on 

codes for any primary ‘‘J1’’ services, it 

would not have been appropriate to 

include them in our complexity 

adjustment evaluation. 

After consideration of the public 

comments we received, we are applying 

the complexity adjustment criteria as 

proposed. The finalized complexity 

adjustments for CY 2018 can be found 

in Addendum J to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site). 

(2) C–APCs for CY 2018 

For CY 2018 and subsequent years, in 

the CY 2018 OPPS/ASC proposed rule 

(82 FR 33576), we proposed to continue 

to apply the C–APC payment policy 

methodology made effective in CY 2015 

and updated with the implementation of 

status indicator ‘‘J2’’ in CY 2016. A 

discussion of the C–APC payment 

policy methodology can be found at 81 

FR 79583. 

As a result of our annual review of the 

services and APC assignments under the 

OPPS, we did not propose any 

additional C–APCs to be paid under the 

existing C–APC payment policy 

beginning in CY 2018. Table 4 of the 

proposed rule listed the proposed 

C–APCs for CY 2018, all of which were 

established in past rules. All C–APCs 

were displayed in Addendum J to the 

proposed rule (which is available via 

the Internet on the CMS Web site). 

Addendum J to the proposed rule also 

contained all of the data related to the 

C–APC payment policy methodology, 

including the list of proposed 

complexity adjustments and other 

information. 

Comment: Several commenters 

supported the proposed C–APCs for CY 

2018. 

Response: We appreciate the 

commenters’ support. 

Comment: Several commenters noted 

that CPT code 67027 (Implantation of 

intravitreal drug delivery system (e.g., 

ganciclovir implant), includes 

concomitant removal of vitreous) is 

assigned to a single-procedure C–APC 

(C–APC 5494 (Level 4 Intraocular 

Procedures)) with status indicator ‘‘J1’’. 

The commenters stated that the C–APC 

policy packages payment for adjunctive 

services into the payment for the 

primary ‘‘J1’’ procedure at the claim 

level, and that when the drug Retisert 

(described by HCPCS code J7311) is 

included on the claim with CPT code 

62707, payment for the drug is packaged 

into the C–APC payment. The 

commenters noted that the costs of 

claims for the procedure, including the 

drug (approximately $18,433), were 

more than twice the proposed CY 2018 

geometric mean cost for C–APC 5494 

(approximately $9,134) and that, as 

such, this represents a violation of the 

2 times rule. The commenters suggested 

that CMS address this issue by either 

separately paying for Retisert (described 

by HCPCS code J7311) or creating a 

unique APC for procedures with which 

HCPCS code J7311 may be billed. 

Response: As stated in the CY 2017 

OPPS/ASC final rule with comment 

period (81 FR 79612), section 1833(t)(2) 

of the Act provides that items and 

services within an APC group cannot be 

considered comparable with respect to 

the use of resources if the highest cost 

for an item or service in the APC group 

is more than 2 times greater than the 

lowest cost for an item or service within 

the same APC group (the 2 times rule). 

In accordance with section 1833(t)(2) of 

the Act and § 419.31 of the regulations, 

we annually review the items and 

services within an APC group to 

determine if there are any APC 

violations of the 2 times rule and 

whether there are any appropriate 

revisions to APC assignments that may 

be necessary or exceptions to be made. 

In determining the APCs with a 2 times 

rule violation, we consider only those 

HCPCS codes that are significant based 

on the number of claims. 

It is the cost of the primary item or 

service that drives assignment to an 

APC group. In this case, the primary 

service is described by CPT code 67027, 

which is the only CPT code assigned to 

C–APC 5494 (Level 4 Intraocular 

Procedures). The costs of drugs or other 

packaged ancillary items or services that 

may be used with a primary service are 

packaged into the costs of the primary 

service and are not separately paid. In 

this case, because CPT code 67027 is 

assigned to a C–APC, the costs of drugs, 

such as Retisert, and any other items or 

services that are billed with the ‘‘J1’’ 

service are packaged into the geometric 

mean cost for HCPCS code 67027 and 

are bundled into the C–APC payment. 

The geometric mean cost is based on 

reported costs for all hospitals paid 

under the OPPS; to the extent that 

Retisert or other items are billed with 

the primary service, those costs are also 

reflected in the cost of the primary 

service. Therefore, because the cost of 

the Retisert drug is packaged into the 

cost of CPT code 67027, assignment of 

HCPCS code 67027 to C–APC 5494 does 

not create a 2 times rule violation. 

In addition, with regard to the 

packaging of the drug Retisert based on 

the C–APC policy, as stated in previous 

rules (78 FR 74868 through 74869 and 

74909 and 79 FR 66800), items included 

in the packaged payment provided with 

the primary ‘‘J1’’ service include all 

drugs, biologicals, and 

radiopharmaceuticals, regardless of cost, 

except those drugs with pass-through 

payment status and SADs, unless they 

function as packaged supplies. 

Therefore, we believe that HCPCS code 

J3711 is appropriately packaged, and we 

are not providing separate payment for 

the drug. 

Comment: One commenter suggested 

that APC 5491 (Level 1 Intraocular 

Procedures) no longer be labeled a 

C–APC and instead be considered a 

traditional APC. The commenter noted 

that there was little cost difference for 

APC 5491 if it is considered a C–APC 

or a traditional APC and that no specific 

justification was given for making APC 

5491 a C–APC. The commenter 

suggested that only higher level 

Intraocular Procedure APCs have 

enough complexity to suggest that they 

should be classified as C–APCs. 

Response: We continue to believe that 

the procedures assigned to C–APC 5491 

are appropriately paid through a 

comprehensive APC. As stated in the 

CY 2017 OPPS/ASC final rule with 

comment period (81 FR 79584), 

procedures assigned to C–APCs are 

primary services (mostly major surgical 

procedures) that are typically the focus 

of the hospital outpatient stay. 

Therefore, we believe that these 

procedures are appropriately assigned to 

a C–APC. 

Comment: One commenter expressed 

concern that the proposal to continue to 

assign status indicator ‘‘J2’’ to CPT code 

99291 (Critical care, evaluation and 

management of the critically ill or 

critically injured patient; first 30–74 

minutes) and to assign it to C–APC 8011 

(Comprehensive Observation Services) 

when certain criteria are met would 

have negative effects on critical care 

(CPT codes 99291 and 99292 (Critical 

care, evaluation and management of the 

critically ill or critically injured patient; 

each additional 30 minutes)) provided 

in the intensive care unit ICU). 

Specifically, the commenter was 

concerned that the proposal would 

impact payment for tests that were 

ordered and furnished in the emergency 

room when they are appropriately 

repeated in the ICU and urged CMS to 


sradovich on DSK3GMQ082PROD with RULES2
59240 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

move with caution, and provide 

transparency and impact tables for 

hospitals, in continuing C–APC 8011. 

Response: We appreciate this 

comment and will continue to monitor 

the impact of this C–APC on critical 

care services. We note that in situations 

where a patient receives critical care 

services in the hospital outpatient 

setting and is subsequently transferred 

to the ICU as part of an appropriate 

hospital inpatient admission, payment 

for the services furnished in the hospital 

outpatient setting, including critical 

care services, may be bundled into the 

Part A hospital inpatient claim via the 

‘‘Payment Window for Outpatient 

Services Treated as Inpatient Services 

(also known as the 3-day payment rule), 

when certain criteria are met. In 

addition, when a patient receiving 

critical care services in the hospital 

outpatient setting is transferred to the 

ICU but is not admitted to the hospital 

as an inpatient, payment for all eligible 

services is made through C–APC 8011, 

when certain criteria are met. We also 

note that CPT code 99292 is an add-on 

code which is packaged under the OPPS 

and is not one of the codes eligible to 

trigger payment through C–APC 8011. 

After consideration of the public 

comments we received, we are 

finalizing the proposed C–APCs for CY 

2018. Table 6 below lists the final C– 

APCs for CY 2018, all of which were 

established in past rules. All C–APCs 

are displayed in Addendum J to this 

final rule with comment period (which 

is available via the Internet on the CMS 

Web site). Addendum J to this final rule 

with comment period also contains all 

of the data related to the C–APC 

payment policy methodology, including 

the list of complexity adjustments and 

other information for CY 2018. 

TABLE 6—CY 2018 C–APCS

C–APC CY 2018 APC title Clinical 

family 

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

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

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

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

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

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

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

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

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

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

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

5153 ............. Level 3 Airway Endoscopy .......................................................................................................................................... AENDO 

5154 ............. Level 4 Airway Endoscopy .......................................................................................................................................... AENDO 

5155 ............. Level 5 Airway Endoscopy .......................................................................................................................................... AENDO 

5164 ............. Level 4 ENT Procedures ............................................................................................................................................. ENTXX 

5165 ............. Level 5 ENT Procedures ............................................................................................................................................. ENTXX 

5166 ............. Cochlear Implant Procedure ........................................................................................................................................ COCHL 

5191 ............. Level 1 Endovascular Procedures ............................................................................................................................... VASCX 

5192 ............. Level 2 Endovascular Procedures ............................................................................................................................... VASCX 

5193 ............. Level 3 Endovascular Procedures ............................................................................................................................... VASCX 

5194 ............. Level 4 Endovascular Procedures ............................................................................................................................... VASCX 

5200 ............. Implantation Wireless PA Pressure Monitor ................................................................................................................ WPMXX 

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

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

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

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

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

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

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

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

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

5302 ............. Level 2 Upper GI Procedures ...................................................................................................................................... GIXXX 

5303 ............. Level 3 Upper GI Procedures ...................................................................................................................................... GIXXX 

5313 ............. Level 3 Lower GI Procedures ...................................................................................................................................... GIXXX 

5331 ............. Complex GI Procedures .............................................................................................................................................. GIXXX 

5341 ............. Abdominal/Peritoneal/Biliary and Related Procedures ................................................................................................ GIXXX 

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

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

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

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

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

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

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

5414 ............. Level 4 Gynecologic Procedures ................................................................................................................................. GYNXX 

5415 ............. Level 5 Gynecologic Procedures ................................................................................................................................. GYNXX 

5416 ............. Level 6 Gynecologic Procedures ................................................................................................................................. GYNXX 

5431 ............. Level 1 Nerve Procedures ........................................................................................................................................... NERVE 

5432 ............. Level 2 Nerve Procedures ........................................................................................................................................... NERVE 

5462 ............. Level 2 Neurostimulator & Related Procedures .......................................................................................................... NSTIM 

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

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

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

5491 ............. Level 1 Intraocular Procedures ................................................................................................................................... INEYE 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59241 

TABLE 6—CY 2018 C–APCS—Continued 

C–APC CY 2018 APC title Clinical 

family 

5492 ............. Level 2 Intraocular Procedures ................................................................................................................................... INEYE 

5493 ............. Level 3 Intraocular Procedures ................................................................................................................................... INEYE 

5494 ............. Level 4 Intraocular Procedures ................................................................................................................................... INEYE 

5495 ............. Level 5 Intraocular Procedures ................................................................................................................................... INEYE 

5503 ............. Level 3 Extraocular, Repair, and Plastic Eye Procedures .......................................................................................... EXEYE 

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

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

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

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

C–APC Clinical Family Descriptor Key: AENDO = Airway Endoscopy; AICDP = Automatic Implantable Cardiac Defibrillators, Pacemakers, and 

Related Devices; BREAS = Breast Surgery; COCHL = Cochlear Implant; EBIDX = Excision/Biopsy/Incision and Drainage; ENTXX = ENT Procedures; EPHYS = Cardiac Electrophysiology; EXEYE = Extraocular Ophthalmic Surgery; GIXXX = Gastrointestinal Procedures; GYNXX = 

Gynecologic Procedures; INEYE = Intraocular Surgery; LAPXX = Laparoscopic Procedures; NERVE = Nerve Procedures; NSTIM = 

Neurostimulators; ORTHO = Orthopedic Surgery; PUMPS = Implantable Drug Delivery Systems; RADTX = Radiation Oncology; SCTXX = Stem 

Cell Transplant; UROXX = Urologic Procedures; VASCX = Vascular Procedures; WPMXX = Wireless PA Pressure Monitor. 

(3) Brachytherapy Insertion Procedures 

In the CY 2017 OPPS/ASC final rule 

with comment period (81 FR 79584), we 

finalized 25 new C–APCs. Some of the 

HCPCS codes assigned to the C–APCs 

established for CY 2017 described 

surgical procedures for inserting 

brachytherapy catheters/needles and 

other related brachytherapy procedures 

such as the insertion of tandem and/or 

ovoids and the insertion of Heyman 

capsules. In the CY 2017 OPPS/ASC 

final rule with comment period (81 FR 

79583), we stated that we received 

public comments which noted that 

claims that included several insertion 

codes for brachytherapy devices often 

did not also contain a brachytherapy 

treatment delivery code (CPT codes 

77750 through 77799). The 

brachytherapy insertion codes that 

commenters asserted were not often 

billed with a brachytherapy treatment 

code included the following: 

• CPT code 57155 (Insertion of 

uterine tandem and/or vaginal ovoids 

for clinical brachytherapy); 

• CPT code 20555 (Placement of 

needles or catheters into muscle and/or 

soft tissue for subsequent interstitial 

radioelement application (at the time of 

or subsequent to the procedure)); 

• CPT code 31643 (Bronchoscopy, 

rigid or flexible, including fluoroscopic 

guidance, when performed; with 

placement of catheter(s) for intracavitary 

radioelement application); 

• CPT code 41019 (Placement of 

needles, catheters, or other device(s) 

into the head and/or neck region 

(percutaneous, transoral, or transnasal) 

for subsequent interstitial radioelement 

application); 

• CPT code 43241 

(Esophagogastroduodenoscopy, flexible, 

transoral; with insertion of intraluminal 

tube catheter); 

• CPT code 55920 (Placement of 

needles or catheters into pelvic organs 

and/or genitalia (except prostate) for 

subsequent interstitial radioelement 

application); and 

• CPT code 58346 (Insertion of 

Heyman capsules for clinical 

brachytherapy). 

The commenters concluded that 

brachytherapy delivery charges are 

being underrepresented in ratesetting 

under the C–APC methodology because 

a correctly coded claim should typically 

include an insertion and treatment 

delivery code combination. The 

commenters stated that the insertion 

procedure and brachytherapy treatment 

delivery generally occur on the same 

day or within the same week and 

therefore the services should appear on 

a claim together. In the CY 2017 OPPS/ 

ASC final rule with comment period, we 

indicated that we would not exclude 

claims from the CY 2017 ratesetting 

calculation because we generally do not 

remove claims from the claims 

accounting when stakeholders believe 

that hospitals included incorrect 

information on some claims (81 FR 

79583). However, we stated that we 

would examine the claims for the 

brachytherapy insertion codes in 

question and determine if any future 

adjustment to the methodology (or 

possibly code edits) would be 

appropriate. 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33577 

through 33578), we analyzed the claims 

that include brachytherapy insertion 

codes assigned to status indicator ‘‘J1’’ 

and that received payment through a 

C–APC, and we determined that several 

of these codes are frequently billed 

without an associated brachytherapy 

treatment code. As mentioned above, 

stakeholders have expressed concerns 

that using claims for ratesetting for 

brachytherapy insertion procedures that 

do not also include a brachytherapy 

treatment code may not capture all of 

the costs associated with the insertion 

procedure. To address this issue and 

base payment on claims for the most 

common clinical scenario, for CY 2018 

and subsequent years, we indicated in 

the CY 2018 OPPS/ASC proposed rule 

(82 FR 33578) that we were establishing 

a code edit that requires a 

brachytherapy treatment code when a 

brachytherapy insertion code is billed. 

As noted in section II.A.2.c. of the 

proposed rule and this final rule with 

comment period, we also proposed to 

delete composite APC 8001 (LDR 

Prostate Brachytherapy Composite) and 

assign HCPCS code 55875 

(Transperineal placement of needles or 

catheters into prostate for interstitial 

radioelement application, with or 

without cystoscopy) to status indicator 

‘‘J1’’ and to provide payment for this 

procedure through the C–APC payment 

methodology, similar to the payment 

methodology for other surgical insertion 

procedures related to brachytherapy. 

Specifically, when HCPCS code 55875 

is the primary service reported on a 

hospital outpatient claim, we proposed 

to package payments for all adjunctive 

services reported on the claim into the 

payment for HCPCS code 55875. We 

proposed to assign HCPCS code 55875 

to C–APC 5375 (Level 5 Urology and 

Related Services). The code edit for 

claims with brachytherapy services 

described above that will be effective 

January 1, 2018, will require the 

brachytherapy application HCPCS code 

77778 (Interstitial radiation source 

application; complex) to be included on 

the claim with the brachytherapy 

insertion procedure (HCPCS code 

55875). 

Comment: Several commenters 

opposed the implementation of a code 


sradovich on DSK3GMQ082PROD with RULES2
59242 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

edit that requires a brachytherapy 

treatment code when a brachytherapy 

insertion code is billed. These 

commenters noted that, in some cases, 

the insertion procedure and the 

brachytherapy treatment are performed 

on different days and reported on 

separate claims. The commenters also 

noted that the brachytherapy insertion 

procedure and radiation treatment 

delivery are not always performed in the 

same facility, in which case they would 

be on different claims. The commenters 

stated that this practice pattern is 

especially common in the treatment of 

breast cancer and related breast 

brachytherapy catheter codes. 

Response: We appreciate the 

commenters’ views. We intended to 

address the concerns raised by 

commenters in CY 2017 rulemaking 

regarding ratesetting for C–APCs for 

brachytherapy insertion procedures by 

establishing a code edit to require a 

brachytherapy treatment code when a 

brachytherapy insertion code is billed. 

This was largely based on information 

received from commenters last year, in 

which commenters had suggested that 

brachytherapy insertion procedures and 

brachytherapy radiation treatment are 

often performed on the same day or 

within the same week and are often 

billed on the same claim. However, 

based on comments received in 

response to the code edit, it appears that 

there may be some clinical scenarios 

where that is not the case. Accordingly, 

in light of the numerous comments 

opposing this code edit and the 

information provided by commenters 

that suggests that brachytherapy 

insertion and treatment services may be 

appropriately furnished on different 

dates and different claims, we have 

decided not to implement an edit which 

would require a brachytherapy 

treatment code when a brachytherapy 

insertion code is billed. As we have 

previously stated, we rely on hospitals 

to bill all HCPCS codes accurately in 

accordance with their code descriptors 

and CPT and CMS instructions, as 

applicable, and to report charges on 

claims and charges and costs on their 

Medicare hospital cost reports 

appropriately (77 FR 68324). We will 

continue to examine the issues 

involving ratesetting for brachytherapy 

insertion procedures assigned to 

C–APCs and welcome the public’s input 

regarding alternative payment policies 

that could appropriately address the 

issue while maintaining the C–APC 

policy. 

Comment: Some commenters 

requested that CMS discontinue the 

C–APC payment policy for all 

brachytherapy insertion codes identified 

in the CY 2018 OPPS/ASC proposed 

rule. These commenters expressed 

concerns that hospital billing practices 

for radiation oncology services are 

variable and inconsistent with the 

C–APC policy which packages services 

at the claim level. The commenters 

stated that, in some cases, needles or 

catheters are surgically placed prior to 

the brachytherapy treatment delivery, 

which consists of multiple fractions 

over several days or weeks and may be 

delivered at a different site of service. 

The commenters also requested that 

CMS continue the composite APC for 

Low Dose Rate Brachytherapy instead of 

assigning CPT code 55875 

(Transperineal placement of needles or 

catheters into prostate for interstitial 

radioelement application, with or 

without cystoscopy) to a C–APC (Level 

5 Urology and Related Services). The 

commenters stated that CPT codes 

55920 and 19298 should be assigned to 

a different C–APC if CMS maintained 

the C–APC payment policy for 

brachytherapy insertion procedures in 

CY 2018. 

Response: We continue to believe that 

the C–APC payment policy is 

appropriately applied to brachytherapy 

insertion procedures, including the 

procedure described by CPT code 

55875. These procedures, like other 

procedures assigned to C–APCs, are 

primary services (mostly major surgical 

procedures) that are typically the focus 

of the hospital outpatient stay. As 

mentioned previously, we welcome 

input on alternative payment policies to 

address concerns surrounding the 

variation in hospital billing practices for 

radiation oncology while maintaining 

the C–APC policy, and we will continue 

to monitor this issue. The APC 

assignments for CPT codes 55920 and 

19298 are discussed in greater detail in 

section XII.D.2. of this final rule with 

comment period. 

Comment: Some commenters 

requested that CMS continue to provide 

payment for the brachytherapy insertion 

procedures through the C–APC policy, 

but exclude all radiation oncology codes 

on the claim (defined as CPT codes 

77261 through 77799) and make 

separate payment for the brachytherapy 

treatment delivery and related planning 

and preparation services in addition to 

the C–APC payment for the 

brachytherapy insertion procedures. 

These commenters stated that this was 

similar to the C–APC policy for 

stereotactic radiosurgery (SRS) 

treatment. 

Response: The policy intent of 

C–APCs is to bundle payment for all 

services related and adjunctive to the 

primary ‘‘J1’’ procedure. We do not 

believe that providing separate payment 

for radiation oncology codes that are 

included on a claim with a 

brachytherapy insertion procedure 

assigned to status indicator ‘‘J1’’ is in 

accordance with the C–APC policy. 

With regard to the SRS treatment policy 

to pay separately for the planning and 

preparation procedures, as stated in the 

CY 2017 OPPS/ASC final rule with 

comment period (81 FR 79583), this 

policy is a temporary special exception 

to the C–APC packaging policy that 

packages all adjunctive services (with a 

few exceptions listed in Addendum J to 

this final rule with comment period). 

After consideration of the public 

comments we received, we are not 

establishing a code edit that requires a 

brachytherapy treatment code when a 

brachytherapy insertion code is billed. 

We are finalizing our proposal to delete 

composite APC 8001 (LDR Prostate 

Brachytherapy Composite) and assign 

HCPCS code 55875 (Transperineal 

placement of needles or catheters into 

prostate for interstitial radioelement 

application, with or without cystoscopy) 

to status indicator ‘‘J1’’ and to provide 

payment for this procedure through the 

C–APC payment methodology, similar 

to the payment methodology for other 

surgical insertion procedures related to 

brachytherapy. 

(4) C–APC 5627 (Level 7 Radiation 

Therapy) Stereotactic Radiosurgery 

(SRS) 

Stereotactic radiosurgery (SRS) is a 

type of radiation therapy that targets 

multiple beams of radiation to precisely 

deliver radiation to a brain tumor while 

sparing the surrounding normal tissue. 

SRS treatment can be delivered by 

Cobalt-60-based (also referred to as 

gamma knife) technology or robotic 

linear accelerator-based (LINAC)-based 

technology. As stated in the CY 2016 

OPPS/ASC final rule with comment 

period (80 FR 70336), section 634 of the 

American Taxpayer Relief Act (ATRA) 

of 2012 (Pub. L. 112–240) amended 

section 1833(t)(16) of the Act by adding 

a new subparagraph (D) to require that 

OPPS payments for Cobalt-60-based SRS 

be reduced to equal that of payments for 

LINAC-based SRS for covered OPD 

services furnished on or after April 1, 

2013. Because section 1833(t)(16)(D) of 

the Act requires equal payment for SRS 

treatment delivered by Cobalt-60-based 

or LINAC-based technology, the two 

types of services involving SRS delivery 

instruments (which are described by 

HCPCS code 77371 (Radiation treatment 

delivery, stereotactic radiosurgery 

[SRS], complete course of treatment 

cranial lesion(s) consisting of 1 session; 

multi-source Cobalt 60-based) and 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59243 

HCPCS code 77372 (Linear acceleratorbased)) are assigned to the same C–APC 

(C–APC 5627 Level 7 Radiation 

Therapy). 

In the CY 2016 OPPS/ASC final rule 

with comment period (80 FR 70336), we 

stated that we had identified differences 

in the billing patterns for SRS 

procedures delivered using Cobalt-60- 

based and LINAC-based technologies. In 

particular, our claims data analysis 

revealed that services involving SRS 

delivered by Cobalt-60-based 

technologies (as described by HCPCS 

code 77371) typically included SRS 

treatment planning services (for 

example, imaging studies, radiation 

treatment aids, and treatment planning) 

and the actual deliveries of SRS 

treatment on the same date of service 

and reported on the same claim. In 

contrast, claims data analysis results 

revealed that services involving SRS 

delivered by LINAC-based technologies 

(as described by HCPCS code 77372) 

frequently included services related to 

SRS treatment (for example, imaging 

studies, radiation treatment aids, and 

treatment planning) that were provided 

on different dates of service and 

reported on claims separate from the 

actual delivery of SRS treatment. 

We stated in the CY 2016 OPPS/ASC 

final rule with comment period (80 FR 

70336) that the intent of the C–APC 

policy is to package payment for all 

services adjunctive to the primary ‘‘J1’’ 

procedure and that we believed that all 

essential planning and preparation 

services related to the SRS treatment are 

adjunctive to the SRS treatment delivery 

procedure. Therefore, payment for these 

adjunctive services should be packaged 

into the C–APC payment for the SRS 

treatment instead of reported on a 

different claim and paid separately. To 

identify services that are adjunctive to 

the primary SRS treatment described by 

HCPCS codes 77371 and 77372, but 

reported on a different claim, we 

established modifier ‘‘CP’’ which 

became effective in CY 2016 and 

required the use of the modifier for CY 

2016 and CY 2017. 

To ensure appropriate ratesetting for 

the SRS C–APC, we believed it was 

necessary to unbundle payment for the 

adjunctive services for CY 2016 and CY 

2017. Therefore, we finalized a policy to 

change the payment for SRS treatment 

for the 10 SRS planning and preparation 

services identified in our claims data 

(HCPCS codes 70551, 70552, 70553, 

77011, 77014, 77280, 77285, 77290, 

77295, and 77336) that were reported 

differentially using HCPCS codes 77371 

and 77372 both on the same claim as the 

SRS services and on claims 1 month 

prior to the delivery of SRS services. 

These codes were removed from the 

geometric mean cost calculations for 

C–APC 5627. In addition, for CY 2016 

and CY 2017, we provided separate 

payment for the 10 planning and 

preparation services adjunctive to the 

delivery of the SRS treatment using 

either the Cobalt-60-based or LINACbased technology, even when the 

planning service was included on the 

same claim as the primary ‘‘J1’’ SRS 

treatment service. The use of the 

modifier ‘‘CP’’ was not required to 

identify these 10 planning and 

preparation codes. 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33564 and 

33465), the data collection period for 

SRS claims with modifier ‘‘CP’’ began 

on January 1, 2016 and concludes on 

December 31, 2017. Based on our 

analysis of preliminary data collected 

with modifier ‘‘CP’’, we have identified 

some additional services that are 

adjunctive to the primary SRS treatment 

and reported on a different claim 

outside of the 10 SRS planning and 

preparation codes that were removed 

from the SRS C–APC costs calculations 

and paid separately. 

However, the ‘‘CP’’ modifier has been 

used by a small number of providers 

since its establishment. In addition, our 

analysis showed that several of the 

HCPCS codes that were billed with 

modifier ‘‘CP’’ belonged to the group of 

10 SRS planning and preparation codes 

that we pay separately and do not 

require the use of modifier ‘‘CP’’. Also, 

some providers erroneously included 

the modifier when reporting the HCPCS 

code for the delivery of the LINACbased SRS treatment. As stated above, 

the data collection period for SRS 

claims with modifier ‘‘CP’’ was set to 

conclude on December 31, 2017. 

Accordingly, for CY 2018, we are 

deleting this modifier and discontinuing 

its required use. 

For CY 2018, we also proposed to 

continue to make separate payments for 

the 10 planning and preparation 

services adjunctive to the delivery of the 

SRS treatment using either the Cobalt60-based or LINAC-based technology 

when furnished to a beneficiary within 

1 month of the SRS treatment. The 

continued separate payment of these 

services will allow us to complete our 

analysis of the claims data including 

modifier ‘‘CP’’ from both CY 2016 and 

CY 2017 claims. As stated in the CY 

2017 OPPS/ASC final rule with 

comment period (81 FR 79583), we will 

consider in the future whether 

repackaging all adjunctive services 

(planning, preparation, and imaging, 

among others) back into cranial single 

session SRS is appropriate. 

We invited public comments on these 

proposals. 

Comment: Commenters generally 

supported the proposal to continue to 

make separate payments for the 

planning and preparation services 

adjunctive to the delivery of the SRS 

treatment and requested that CMS 

continue to pay separately for these 

services in the future. Commenters also 

supported the deletion of modifier 

‘‘CP’’. 

Response: We appreciate the 

commenters’ support. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to make separate 

payments for the 10 planning and 

preparation services adjunctive to the 

delivery of the SRS treatment using 

either the Cobalt-60-based or LINACbased technology when furnished to a 

beneficiary within 1 month of the SRS 

treatment. 

(5) Complexity Adjustment for Blue 

Light Cystoscopy Procedures 

As discussed in prior OPPS/ASC final 

rules with comment period, and most 

recently in the CY 2017 OPPS/ASC final 

rule with comment period (81 FR 

79668), we continue to believe that 

Cysview® (hexaminolevulinate HCl) 

(described by HCPCS code C9275) is a 

drug that functions as a supply in a 

diagnostic test or procedure and is 

therefore packaged with payment for the 

primary procedure. In addition, as 

discussed in section II.A.2.b.(1) of the 

CY 2018 OPPS/ASC proposed rule and 

this final rule with comment period, 

drugs that are not eligible for passthrough payment are always packaged 

when billed with a comprehensive 

service. To maintain the integrity of the 

OPPS, we believe it is generally not 

appropriate to allow exceptions to our 

drug packaging policy or comprehensive 

APC policy that would result in separate 

payment for the drug based on the 

product’s ASP+6 percent payment rate. 

While we did not propose in the CY 

2018 proposed rule to pay separately for 

Cysview®, we have heard concerns from 

stakeholders that the payment for blue 

light cystoscopy procedures involving 

Cysview® may be creating a barrier to 

beneficiaries receiving access to 

reasonable and necessary care for which 

there may not be a clinically comparable 

alternative. Therefore, as we stated in 

the proposed rule, we revisited our 

payment policy for blue light 

cystoscopy procedures. As described in 

more detail below, we believe certain 

code combinations for blue light 

cystoscopy procedures should be 

eligible to qualify for a complexity 


sradovich on DSK3GMQ082PROD with RULES2
59244 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

adjustment, given the unique properties 

of the procedure and resource costs. 

Traditionally, white light (or 

standard) cystoscopy, typically 

performed by urologists, has been the 

gold standard for diagnosing bladder 

cancer. Enhanced bladder cancer 

diagnostics, such as narrow band 

imaging or blue light cystoscopy, 

increase tumor detection in nonmuscle 

invasive bladder cancer over white light 

cystoscopy alone, thus enabling more 

precise tumor removal by the urologist. 

Blue light cystoscopy can only be 

performed after performance of white 

light cystoscopy. Because blue light 

cystoscopy requires specialized imaging 

equipment to view cellular uptake of the 

dye that is not otherwise used in white 

light cystoscopy procedures, some 

practitioners consider blue light 

cystoscopy to be a distinct and 

adjunctive procedure to white light 

cystoscopy. However, the current CPT 

coding structure for cystoscopy 

procedures does not identify blue light 

cystoscopy in the coding descriptions 

separate from white light cystoscopy. 

Therefore, the existing cystoscopy CPT 

codes do not distinguish cystoscopy 

procedures involving only white light 

cystoscopy from those involving both 

white and blue light cystoscopy, which 

require additional resources compared 

to white light cystoscopy alone. 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule, after discussion 

with our clinical advisors (including a 

urologist), we believe that blue light 

cystoscopy represents an additional 

elective but distinguishable service as 

compared to white light cystoscopy that, 

in some cases, may allow greater 

detection of bladder tumors in 

beneficiaries relative to white light 

cystoscopy alone. Given the additional 

equipment, supplies, operating room 

time, and other resources required to 

perform blue light cystoscopy in 

addition to white light cystoscopy, for 

CY 2018, in the proposed rule, we 

proposed to create a new HCPCS C-code 

to describe blue light cystoscopy and to 

allow for a complexity adjustment to 

APC 5374 (Level 4 Urology and Related 

Services) for certain code combinations 

in APC 5373 (Level 3 Urology and 

Related Services). (In the proposed rule, 

we cited HCPCS code ‘‘C97XX’’ as a 

placeholder for the new code. However, 

for ease of reading, hereafter in this 

section, we refer to the replacement 

code HCPCS code C9738 (Adjunctive 

blue light cystoscopy with fluorescent 

imaging agent (List separately in 

addition to code for primary procedure)) 

instead of the placeholder code.) 

Specifically, to determine which code 

pair combinations of a procedure 

described by proposed new HCPCS code 

C9738 and a cystoscopy procedure 

would qualify for a complexity 

adjustment, we first crosswalked the 

costs of the procedure described by 

HCPCS code C9275 

(Hexaminolevulinate hcl) to the 

procedure described by proposed new 

HCPCS code C9738 assigned status 

indicator ‘‘N’’. Next, we identified the 

procedure codes used to describe white 

light cystoscopy of the bladder which 

include the following CPT codes and 

APC assignments: 

• APC 5372 (Level 2 Urology and 

Related Services) 

b CPT code 52000 

• APC 5373 (Level 3 Urology and 

Related Services) 

b CPT code 52204 

b CPT code 52214 

b CPT code 52224 

• APC 5374 (Level 4 Urology and 

Related Services) 

b CPT code 52234 

b CPT code 52235 

• APC 5375 (Level 5 Urology and 

Related Services) 

b CPT code 52240 

Because APC 5372 is not a C–APC, 

cystoscopy procedures assigned to Level 

2 Urology are not eligible for a 

complexity adjustment, and therefore, 

we did not analyze these codes to 

determine whether they met the criteria 

for this adjustment. We modeled the 

data to determine which code pair 

combinations exceed the claim 

frequency and cost threshold in APC 

5373, APC 5374, and APC 5375, which 

are all C–APCs. In the proposed rule, we 

stated that the results of our analysis 

indicate that the code pair combination 

of procedures described by proposed 

new HCPCS code C9738 and cystoscopy 

procedures assigned to APC 5373 would 

be eligible for a complexity adjustment 

based on current criteria and cost data 

because they meet the frequency and 

cost criteria thresholds. Likewise, our 

results indicated that the combination of 

procedures described by proposed new 

HCPCS code C9738 and cystoscopy 

procedures assigned to APC 5374 and 

APC 5375 would not qualify for a 

complexity adjustment because they do 

not meet the frequency and cost criteria 

thresholds. 

We indicated in the proposed rule 

that, under the C–APC policy, blue light 

cystoscopy would be packaged, but 

when performed with a cystoscopy 

procedure in APC 5373 and reported 

with proposed new HCPCS code C9738 

in addition to the cystoscopy CPT code, 

there would be a complexity adjustment 

to the next higher level APC in the 

series, resulting in a higher payment 

than for the white light cystoscopy 

procedure alone. That is, if the code pair 

combination of proposed new HCPCS 

code C9738 with CPT code 52204, 

52214, or 52224 is reported on a claim, 

the claim will qualify for payment 

reassignment from APC 5373 to APC 

5374. We stated that we plan to track 

the utilization and the costs associated 

with white light/blue light cystoscopy 

procedure combinations that will 

receive a complexity adjustment. 

We invited public comments on our 

CY 2018 proposal to allow for a 

complexity adjustment when a white 

light cystoscopy procedure followed by 

a blue light cystoscopy procedure is 

performed. In addition, we sought 

public comments on whether alternative 

procedures, such as narrow band 

imaging, may be disadvantaged by this 

proposed policy. 

Comment: One commenter agreed that 

there are differences in resource 

utilization between cystoscopy 

procedures involving white light only 

and cystoscopy procedures involving 

both white light and blue light. 

However, the commenter recommended 

that a proposal to expand the 

cystoscopy CPT codes be submitted to 

the American Medical Association 

(AMA) to capture the resource 

distinction. The commenter stated that 

the use of CPT codes and HCPCS 

C-codes (for example, the proposed 

HCPCS code C9738) to capture 

cystoscopy procedures is duplicative, 

administratively burdensome, and can 

affect the quality of claims data. 

Response: We appreciate the 

commenter’s concerns. However, we 

proposed to establish this code based on 

programmatic need under the OPPS to 

accurately describe blue light 

cystoscopy procedures. Given that a 

CPT code that describes blue light 

cystoscopy with an optical imaging 

agent does not exist in the CY 2018 CPT 

code set published by the AMA, it is 

unclear to us why the commenter 

believes HCPCS code C9738 would be 

duplicative, administratively 

burdensome, or affect the quality of 

claims data. Moreover, it is the 

combination of two different procedures 

that trigger a complexity adjustment; 

therefore, two distinct CPT or HCPCS 

codes are necessary to effectuate a 

complexity adjustment. If the AMA 

establishes a CPT code that describes 

blue light cystoscopy with an optical 

imaging agent, we would consider 

recognizing that CPT code under the 

OPPS as a replacement for HCPCS code 

C9738. 

Comment: A few commenters 

generally supported the proposal to 

allow for a complexity adjustment for 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59245 

blue light cystoscopy with Cysview 

procedures. Many commenters, 

including several commenters with 

experience utilizing blue light 

cystoscopy with Cysview, shared their 

views on how this procedure has 

positively affected patient care 

management. These commenters 

recommended that CMS apply a 

complexity adjustment to all blue light 

cystoscopy with Cysview procedures 

performed in HOPDs to improve 

utilization and beneficiary access to 

care. Alternatively, the commenters 

recommended that CMS pay separately 

for Cysview to allow access in both 

white light and blue light cystoscopies 

in HOPD and ASC settings or establish 

a payment methodology conceptually 

similar to the device-intensive payment 

procedure for ASCs. The commenters 

suggested that a ‘‘device-intensive like’’ 

payment for a cystoscopy procedure 

performed in the ASC would be set 

based on the service cost and the drug 

cost (as determined by the 

manufacturer-reported average sales 

price). 

Response: We appreciate the 

commenters’ support. In developing the 

blue light cystoscopy procedure 

complexity adjustment payment 

proposal, we considered the unique 

properties and resources required to 

perform blue light cystoscopy with 

Cysview. As described in the proposal, 

we approximated the costs for the 

additional resources required to perform 

blue light cystoscopy by crosswalking 

the costs associated with HCPCS code 

C9275 to HCPCS code C9738. We then 

applied the established complexity 

adjustment criteria to determine which 

cystoscopy procedures, when performed 

with blue light cystoscopy, would 

qualify for a complexity adjustment. For 

this final rule with comment period, we 

repeated the analysis to determine 

which code pair combinations of 

HCPCS code C9738 with a cystoscopy 

procedure CPT code satisfied the 

complexity adjustment criteria. 

Consistent with the proposed rule 

results, based on the updated final rule 

with comment period claims data, the 

code pair combination of HCPCS code 

C9738 with CPT code 52204, 52214, or 

52224 each will qualify for a complexity 

adjusted payment from APC 5373 to 

APC 5374. Because APC 5372 is not a 

C–APC, cystoscopy procedures assigned 

to Level 2 Urology are not eligible for a 

complexity adjustment. Therefore, we 

did not analyze these codes to 

determine whether they were eligible 

for a complexity adjustment. Likewise, 

our analysis of the final rule claims data 

indicated that the combination of 

proposed HCPCS code C9738 and 

cystoscopy procedures assigned to APC 

5374 and APC 5375 would not qualify 

for a complexity adjustment because 

they do not meet the frequency and cost 

criteria thresholds. 

We did not propose and the 

commenters did not provide evidence to 

support waiving application of the 

complexity adjustment criteria and 

allowing for a complexity adjustment 

whenever a blue light cystoscopy 

procedure is performed with any white 

light cystoscopy procedure. To allow for 

a complexity adjustment under any 

circumstance would require a change to 

the complexity adjustment criteria, 

which we did not propose. Therefore, 

we are finalizing the blue light 

cystoscopy complexity adjustment 

proposal, without modification. In 

addition we are establishing HCPCS 

code C9738 (Adjunctive blue light 

cystoscopy with fluorescent imaging 

agent (List separately in addition to 

code for primary procedure)), which 

replaces proposed HCPCS code C97XX. 

For CY 2018, the code pair combination 

of HCPCS code C9738 with CPT code 

52204, 52214, or 52224 will qualify for 

a complexity adjusted payment from 

APC 5373 to APC 5374. 

With respect to the public comments 

on unpackaging Cysview to allow for 

separate payment in both the HOPD and 

ASC settings, as we stated in the 

background section for the proposal, we 

continue to believe that Cysview is a 

drug that functions as a supply in a 

diagnostic test or procedure and 

therefore is packaged with payment for 

the primary procedure. In the CY 2018 

OPPS/ASC proposed rule, we did not 

propose to make any changes to the 

‘‘drugs that function as a supply’’ 

packaging policy or make any 

corresponding proposals to pay 

separately for Cysview in the HOPD and 

ASC settings. Therefore, Cysview will 

remain packaged. 

With respect to the recommendation 

that we establish a payment 

methodology for blue light cystoscopy 

with Cysview procedures conceptually 

similar to the ASC device intensive 

payment policy, we did not propose 

revisions to the ASC device-intensive 

procedure policy. In addition, it is 

unclear to us exactly how such a policy 

would work and to what precise 

procedures in addition to blue light 

cystoscopy it might apply. Further, we 

believe that the C–APC payment 

adequately reflects the average resources 

expended by hospitals as reflected in 

hospital claims data. In addition, for 

especially costly cases, we believe our 

proposed policy appropriately 

recognizes the additional costs of blue 

light cystoscopy with white light 

cystoscopy through the complexity 

adjustment. We will continue to analyze 

the data and evaluate whether 

refinements to the C–APC policy, 

including the complexity adjustment 

criteria, should be considered in future 

rulemaking. 

Comment: A few commenters 

responded to the solicitation for public 

comments on whether an alternative 

procedure, such as narrow band 

imaging, would be disadvantaged by the 

blue light cystoscopy with Cysview 

complexity adjustment proposal. One 

commenter, the manufacturer of 

Cysview, requested that CMS not 

establish a complexity adjustment for 

narrow band imaging because this 

imaging does not require a drug, 

additional technology, or additional 

resource. The commenter stated that the 

equipment used in narrow band imaging 

cystoscopy procedures is not different 

than the equipment for white light 

cystoscopy and does not require more 

resource time, expense, or cost to the 

hospital because narrow band imaging 

technology is part of the standard 

equipment available for cystoscopic 

procedures. Another commenter, the 

developer of narrow band imaging, 

contended that the procedure shares 

many clinical and procedural 

similarities with blue light cystoscopy 

with Cysview procedures, and therefore 

narrow band imaging should be eligible 

for a complexity adjustment. In 

addition, the commenter expressed 

concern that a complexity adjustment 

for blue light cystoscopy with Cysview 

and not narrow band imaging would 

provide a financial incentive for 

providers to choose one technology over 

the other. However, the commenter did 

not provide cost information for narrow 

band imaging. 

Response: We appreciate the 

commenters’ responses. We do not 

believe that the information presented 

supports a complexity adjustment for 

narrow band imaging. The lack of cost 

information for narrow band imaging 

and the fact that narrow band imaging 

does not require use of a contrast agent 

(and, therefore, avoids the cost of 

contrast and the time associated with 

the administration of contrast) lead us to 

question whether the resource costs of 

narrow band imaging are the same as 

those of blue light cystoscopy with 

Cysview. For these reasons, we do not 

believe it is appropriate to modify the 

proposal to allow for a complexity 

adjustment when narrow band imaging 

is performed with white light 

cystoscopy. 

After consideration of the public 

comments we received, we are 


sradovich on DSK3GMQ082PROD with RULES2
59246 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

finalizing our proposal, without 

modification, to allow for a complexity 

adjustment when HCPCS code C9738 is 

reported on the same claim as CPT code 

52204, 52214, or 52224. The result of 

billing any one of these three code pair 

combinations is a payment reassignment 

from APC 5373 to APC 5374. 

(6) Analysis of C–APC Packaging Under 

the OPPS 

In the CY 2017 OPPS/ASC final rule 

with comment period (81 FR 79584), we 

accepted a recommendation made at the 

August 22, 2016 HOP Panel meeting to 

analyze the effects of C–APCs. The HOP 

panel recommendation did not 

elucidate specific concerns with the C– 

APC policy or provide detailed 

recommendations on particular aspects 

of the policy to analyze. Therefore, we 

took a broad approach in studying 

HCPCS codes and APCs subject to the 

C–APC policy to determine whether 

aberrant trends in the data existed. 

Overall, we observed no such 

aberrancies and believe that the C–APC 

policy is working as intended. 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33580), 

specifically, using OPPS claims data for 

the CY 2016 final rule with comment 

period, the CY 2017 final rule with 

comment period, and the CY 2018 

proposed rule, which reflect an 

observation period of CY 2014 to CY 

2016, we examined the effects of 

C–APCs and their impact on OPPS 

payments. We started with all hospital 

outpatient claims billed on the 13X 

claim-type and, from that, separately 

identified HCPCS codes and APCs that 

were subject to the comprehensive 

methodology in CYs 2015 and 2016 

(that is, HCPCS codes or APCs assigned 

status indicator ‘‘J1’’ or ‘‘J2’’). Next, we 

analyzed the claims to create a subset of 

claims that contain the HCPCS codes 

and APCs that were subject to the 

comprehensive methodology. Using the 

claims noted above, we analyzed claim 

frequency, line frequency, number of 

billing units, and the total OPPS 

payment between CYs 2014 and 2016 

for each HCPCS code and APC that had 

been previously identified. In reviewing 

the cost statistics for HCPCS codes for 

procedures with status indicator ‘‘S’’, 

‘‘T’’, or ‘‘V’’ in CY 2014 that were 

assigned to a C–APC in either CY 2015 

or CY 2016, overall, we observed an 

increase in claim line frequency, units 

billed, and Medicare payment, which 

suggest that the C–APC payment policy 

did not adversely affect access to care or 

reduce payments to hospitals. Decreases 

in these cost statistics would suggest our 

comprehensive packaging logic is not 

working as intended and/or the C–APC 

payment rates were inadequate, 

resulting in lower volume due to 

migration of services to other settings or 

the cessation of providing these 

services. Likewise, because the cost 

statistics of major separately payable 

codes (that is, HCPCS codes with status 

indicator ‘‘S’’, ‘‘T’’, or ‘‘V’’) that were 

packaged into a C–APC prospectively 

were consistent with the cost statistics 

of the codes packaged on the claim, in 

actuality, indicate that costs were 

appropriately redistributed, we believe 

the C–APC payment methodology is 

working as intended. 

Comment: A few commenters 

appreciated CMS’ analysis of C–APC 

packaging under the OPPS and urged 

CMS to continue to monitor the data 

and report on any changes in billing 

patterns or utilization for particular 

items or services. 

Response: We appreciate the 

commenters’ support. We will continue 

to monitor the impact of our C–APC 

policy on OPPS rate setting and evaluate 

if future adjustments are needed. 

c. Calculation of Composite APC 

Criteria-Based Costs 

As discussed in the CY 2008 OPPS/ 

ASC final rule with comment period (72 

FR 66613), we believe it is important 

that the OPPS enhance incentives for 

hospitals to provide necessary, high 

quality care as efficiently as possible. 

For CY 2008, we developed composite 

APCs to provide a single payment for 

groups of services that are typically 

performed together during a single 

clinical encounter and that result in the 

provision of a complete service. 

Combining payment for multiple, 

independent services into a single OPPS 

payment in this way enables hospitals 

to manage their resources with 

maximum flexibility by monitoring and 

adjusting the volume and efficiency of 

services themselves. An additional 

advantage to the composite APC model 

is that we can use data from correctly 

coded multiple procedure claims to 

calculate payment rates for the specified 

combinations of services, rather than 

relying upon single procedure claims 

which may be low in volume and/or 

incorrectly coded. Under the OPPS, we 

currently have composite policies for 

low dose rate (LDR) prostate 

brachytherapy, mental health services, 

and multiple imaging services. We refer 

readers to the CY 2008 OPPS/ASC final 

rule with comment period for a full 

discussion of the development of the 

composite APC methodology (72 FR 

66611 through 66614 and 66650 through 

66652) and the CY 2012 OPPS/ASC 

final rule with comment period (76 FR 

74163) for more recent background. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33580), for CY 2018 and 

subsequent years, we proposed to 

continue our composite APC payment 

policies for mental health services and 

multiple imaging services, as discussed 

below. As discussed in section II.A.2.b. 

of the proposed rule and this final rule 

with comment period, we proposed to 

assign CPT code 55875 (Transperineal 

placement of needs or catheters into 

prostate for interstitial radioelement 

application, with or without cystoscopy) 

a status indicator of ‘‘J1’’ and assign it 

to a C–APC. In conjunction with this 

proposal, we also proposed to delete the 

low dose rate (LDR) prostate 

brachytherapy composite APC for CY 

2018 and subsequent years. We refer 

readers to section II.A.2.b. of the CY 

2018 OPPS/ASC proposed rule and this 

final rule with comment period for our 

discussion on our low dose rate (LDR) 

prostate brachytherapy APC proposal 

for CY 2018 and subsequent years. 

(1) Mental Health Services Composite 

APC 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33580), we proposed to 

continue our longstanding policy of 

limiting the aggregate payment for 

specified less resource-intensive mental 

health services furnished on the same 

date to the payment for a day of partial 

hospitalization services provided by a 

hospital, which we consider to be the 

most resource intensive of all outpatient 

mental health services. We refer readers 

to the April 7, 2000 OPPS final rule 

with comment period (65 FR 18452 

through 18455) for the initial discussion 

of this longstanding policy and the CY 

2012 OPPS/ASC final rule with 

comment period (76 FR 74168) for more 

recent background. 

In the CY 2017 OPPS/ASC final rule 

with comment period (81 FR 79588 

through 79589), we finalized a policy to 

combine the existing Level 1 and Level 

2 hospital-based PHP APCs into a single 

hospital-based PHP APC and, thereby, 

discontinue APCs 5861 (Level 1 Partial 

Hospitalization (3 services) for HospitalBased PHPs) and 5862 (Level 2 Partial 

Hospitalization (4 or more services) for 

Hospital-Based PHPs) and replace them 

with APC 5863 (Partial Hospitalization 

(3 or more services per day)). For CY 

2018, and subsequent years, we 

proposed that when the aggregate 

payment for specified mental health 

services provided by one hospital to a 

single beneficiary on a single date of 

service, based on the payment rates 

associated with the APCs for the 

individual services, exceeds the 

maximum per diem payment rate for 

partial hospitalization services provided 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59247 

by a hospital, those specified mental 

health services would be paid through 

composite APC 8010 (Mental Health 

Services Composite) for CY 2018. In 

addition, we proposed to set the 

payment rate for composite APC 8010 

for CY 2018 at the same payment rate 

that we proposed for APC 5863, which 

is the maximum partial hospitalization 

per diem payment rate for a hospital, 

and that the hospital continue to be paid 

the payment rate for composite APC 

8010. Under this policy, the I/OCE 

would continue to determine whether to 

pay for these specified mental health 

services individually, or to make a 

single payment at the same payment 

rate established for APC 5863 for all of 

the specified mental health services 

furnished by the hospital on that single 

date of service. We stated that we 

continue to believe that the costs 

associated with administering a partial 

hospitalization program at a hospital 

represent the most resource intensive of 

all outpatient mental health services. 

Therefore, we do not believe that we 

should pay more for mental health 

services under the OPPS than the 

highest partial hospitalization per diem 

payment rate for hospitals. 

We did not receive any public 

comments on these proposals. 

Therefore, we are finalizing our CY 2018 

proposal, without modification, that 

when aggregate payment for specified 

mental health services provided by one 

hospital to a single beneficiary on a date 

of service, based on the payment rates 

with the APCs for the individual 

services, exceeds the maximum per 

diem payment rate for partial 

hospitalization services provided by a 

hospital, those specified mental health 

services will be paid through composite 

APC 8010 for CY 2018. In addition, we 

are finalizing our CY 2018 proposal, 

without modification, to set the 

payment rate for composite APC 8010 

for CY 2018 at the same payment rate 

that we established for APC 5863, which 

is the maximum partial hospitalization 

per diem payment rate for a hospital, 

and that the hospital continue to be paid 

the payment rate for composite APC 

8010. 

(2) Multiple Imaging Composite APCs 

(APCs 8004, 8005, 8006, 8007, and 

8008) 

Effective January 1, 2009, we provide 

a single payment each time a hospital 

submits a claim for more than one 

imaging procedure within an imaging 

family on the same date of service, in 

order to reflect and promote the 

efficiencies hospitals can achieve when 

performing multiple imaging procedures 

during a single session (73 FR 41448 

through 41450). We utilize three 

imaging families based on imaging 

modality for purposes of this 

methodology: (1) Ultrasound; (2) 

computed tomography (CT) and 

computed tomographic angiography 

(CTA); and (3) magnetic resonance 

imaging (MRI) and magnetic resonance 

angiography (MRA). The HCPCS codes 

subject to the multiple imaging 

composite policy and their respective 

families are listed in Table 12 of the CY 

2014 OPPS/ASC final rule with 

comment period (78 FR 74920 through 

74924). 

While there are three imaging 

families, there are five multiple imaging 

composite APCs due to the statutory 

requirement under section 1833(t)(2)(G) 

of the Act that we differentiate payment 

for OPPS imaging services provided 

with and without contrast. While the 

ultrasound procedures included under 

the policy do not involve contrast, both 

CT/CTA and MRI/MRA scans can be 

provided either with or without 

contrast. The five multiple imaging 

composite APCs established in CY 2009 

are: 

• APC 8004 (Ultrasound Composite); 

• APC 8005 (CT and CTA without 

Contrast Composite); 

• APC 8006 (CT and CTA with 

Contrast Composite); 

• APC 8007 (MRI and MRA without 

Contrast Composite); and 

• APC 8008 (MRI and MRA with 

Contrast Composite). 

We define the single imaging session 

for the ‘‘with contrast’’ composite APCs 

as having at least one or more imaging 

procedures from the same family 

performed with contrast on the same 

date of service. For example, if the 

hospital performs an MRI without 

contrast during the same session as at 

least one other MRI with contrast, the 

hospital will receive payment based on 

the payment rate for APC 8008, the 

‘‘with contrast’’ composite APC. 

We make a single payment for those 

imaging procedures that qualify for 

payment based on the composite APC 

payment rate, which includes any 

packaged services furnished on the 

same date of service. The standard 

(noncomposite) APC assignments 

continue to apply for single imaging 

procedures and multiple imaging 

procedures performed across families. 

For a full discussion of the development 

of the multiple imaging composite APC 

methodology, we refer readers to the CY 

2009 OPPS/ASC final rule with 

comment period (73 FR 68559 through 

68569). 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33581), we proposed, for CY 

2018 and subsequent years, to continue 

to pay for all multiple imaging 

procedures within an imaging family 

performed on the same date of service 

using the multiple imaging composite 

APC payment methodology. We stated 

that we continue to believe that this 

policy would reflect and promote the 

efficiencies hospitals can achieve when 

performing multiple imaging procedures 

during a single session. 

The proposed CY 2018 payment rates 

for the five multiple imaging composite 

APCs (APCs 8004, 8005, 8006, 8007, 

and 8008) were based on proposed 

geometric mean costs calculated from a 

partial year of CY 2016 claims available 

for the CY 2018 OPPS/ASC proposed 

rule that qualified for composite 

payment under the current policy (that 

is, those claims reporting more than one 

procedure within the same family on a 

single date of service). To calculate the 

proposed geometric mean costs, we 

used the same methodology that we 

used to calculate the final geometric 

mean costs for these composite APCs 

since CY 2014, as described in the CY 

2014 OPPS/ASC final rule with 

comment period (78 FR 74918). The 

imaging HCPCS codes referred to as 

‘‘overlap bypass codes’’ that we 

removed from the bypass list for 

purposes of calculating the proposed 

multiple imaging composite APC 

geometric mean costs, in accordance 

with our established methodology as 

stated in the CY 2014 OPPS/ASC final 

rule with comment period (78 FR 

74918), were identified by asterisks in 

Addendum N to the CY 2018 OPPS/ASC 

proposed rule (which is available via 

the Internet on the CMS Web site) and 

were discussed in more detail in section 

II.A.1.b. of the CY 2018 OPPS/ASC 

proposed rule. 

For the CY 2018 OPPS/ASC proposed 

rule, we were able to identify 

approximately 634,918 ‘‘single session’’ 

claims out of an estimated 1.7 million 

potential claims for payment through 

composite APCs from our ratesetting 

claims data, which represents 

approximately 36 percent of all eligible 

claims, to calculate the proposed CY 

2018 geometric mean costs for the 

multiple imaging composite APCs. 

Table 6 of the CY 2018 OPPS/ASC 

proposed rule listed the proposed 

HCPCS codes that would be subject to 

the multiple imaging composite APC 

policy and their respective families and 

approximate composite APC proposed 

geometric mean costs for CY 2018. 

Comment: One commenter supported 

the composite APC policy for imaging 

services and recommended that CMS 

pay composite imaging APCs separately 

when billed on a claim with a service 


sradovich on DSK3GMQ082PROD with RULES2
59248 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

that has been assigned a ‘‘J1’’ status 

indicator, that is, as a C–APC. 

Response: We appreciate the 

commenter’s support. Regarding the 

recommendation about paying for 

composite APCs separately when billed 

on a claim with a service that has been 

assigned a ‘‘J1’’ status indicator, 

procedures assigned to C–APCs are 

primary services that are typically the 

focus of the hospital outpatient stay. As 

discussed in section II.A.2.b. of this 

final rule with comment period, our C– 

APC policy packages payment for 

adjunctive and secondary items, 

services, and procedures, including 

diagnostic procedures, into the most 

costly procedure under the OPPS at the 

claim level. We believe that paying for 

composite APCs separately when billed 

with a service that has been assigned a 

‘‘J1’’ status indicator would be in 

conflict with the intent of our C–APC 

policy and would not be appropriate. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to continue the 

use of multiple imaging composite APCs 

to pay for services providing more than 

one imaging procedure from the same 

family on the same date, without 

modification. Table 7 below lists the 

HCPCS codes that will be subject to the 

multiple imaging composite APC policy 

and their respective families and 

approximate composite APC proposed 

geometric mean costs for CY 2018. 

TABLE 7—OPPS IMAGING FAMILIES AND MULTIPLE IMAGING PROCEDURE COMPOSITE APCS

CY 2018 APC 8004 (ultrasound composite) CY 2018 approximate APC geometric mean cost = $300 

Family 1—Ultrasound 

76700 ........................................................................................................ Us exam, abdom, complete. 

76705 ........................................................................................................ Echo exam of abdomen. 

76770 ........................................................................................................ Us exam abdo back wall, comp. 

76776 ........................................................................................................ Us exam k transpl w/Doppler. 

76831 ........................................................................................................ Echo exam, uterus.

76856 ........................................................................................................ Us exam, pelvic, complete. 

76857 ........................................................................................................ Us exam, pelvic, limited. 

CY 2018 APC 8005 (CT and CTA without contrast composite) * CY 2018 approximate APC geometric mean cost = $275 

Family 2—CT and CTA with and without Contrast 

70450 ........................................................................................................ Ct head/brain w/o dye. 

70480 ........................................................................................................ Ct orbit/ear/fossa w/o dye. 

70486 ........................................................................................................ Ct maxillofacial w/o dye. 

70490 ........................................................................................................ Ct soft tissue neck w/o dye. 

71250 ........................................................................................................ Ct thorax w/o dye.

72125 ........................................................................................................ Ct neck spine w/o dye. 

72128 ........................................................................................................ Ct chest spine w/o dye. 

72131 ........................................................................................................ Ct lumbar spine w/o dye. 

72192 ........................................................................................................ Ct pelvis w/o dye.

73200 ........................................................................................................ Ct upper extremity w/o dye. 

73700 ........................................................................................................ Ct lower extremity w/o dye. 

74150 ........................................................................................................ Ct abdomen w/o dye. 

74261 ........................................................................................................ Ct colonography, w/o dye. 

74176 ........................................................................................................ Ct angio abd & pelvis. 

CY 2018 APC 8006 (CT and CTA with contrast composite) CY 2018 approximate APC geometric mean cost = $501 

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

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

70470 ........................................................................................................ Ct head/brain w/o & w/dye. 

70481 ........................................................................................................ Ct orbit/ear/fossa w/dye. 

70482 ........................................................................................................ Ct orbit/ear/fossa w/o & w/dye. 

70488 ........................................................................................................ Ct maxillofacial w/o & w/dye. 

70491 ........................................................................................................ Ct soft tissue neck w/dye. 

70492 ........................................................................................................ Ct sft tsue nck w/o & w/dye. 

70496 ........................................................................................................ Ct angiography, head. 

70498 ........................................................................................................ Ct angiography, neck. 

71260 ........................................................................................................ Ct thorax w/dye. 

71270 ........................................................................................................ Ct thorax w/o & w/dye. 

71275 ........................................................................................................ Ct angiography, chest. 

72126 ........................................................................................................ Ct neck spine w/dye. 

72127 ........................................................................................................ Ct neck spine w/o & w/dye. 

72129 ........................................................................................................ Ct chest spine w/dye. 

72130 ........................................................................................................ Ct chest spine w/o & w/dye. 

72132 ........................................................................................................ Ct lumbar spine w/dye. 

72133 ........................................................................................................ Ct lumbar spine w/o & w/dye. 

72191 ........................................................................................................ Ct angiograph pelv w/o & w/dye. 

72193 ........................................................................................................ Ct pelvis w/dye. 

72194 ........................................................................................................ Ct pelvis w/o & w/dye. 

73201 ........................................................................................................ Ct upper extremity w/dye. 

73202 ........................................................................................................ Ct uppr extremity w/o & w/dye. 

73206 ........................................................................................................ Ct angio upr extrm w/o & w/dye. 

73701 ........................................................................................................ Ct lower extremity w/dye. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59249 

TABLE 7—OPPS IMAGING FAMILIES AND MULTIPLE IMAGING PROCEDURE COMPOSITE APCS—Continued 

73702 ........................................................................................................ Ct lwr extremity w/o & w/dye. 

73706 ........................................................................................................ Ct angio lwr extr w/o & w/dye. 

74160 ........................................................................................................ Ct abdomen w/dye. 

74170 ........................................................................................................ Ct abdomen w/o & w/dye. 

74175 ........................................................................................................ Ct angio abdom w/o & w/dye. 

74262 ........................................................................................................ Ct colonography, w/dye. 

75635 ........................................................................................................ Ct angio abdominal arteries. 

74177 ........................................................................................................ Ct angio abd & pelv w/contrast. 

74178 ........................................................................................................ Ct angio abd & pelv 1+ regns. 

* If a ‘‘without contrast’’ CT or CTA procedure is performed during the same session as a ‘‘with contrast’’ CT or CTA procedure, the I/OCE assigns the procedure to APC 8006 rather than APC 8005. 

CY 2018 APC 8007 (MRI and MRA without contrast composite) * CY 2018 approximate APC geometric mean cost = $556 

Family 3—MRI and MRA with and without Contrast 

70336 ........................................................................................................ Magnetic image, jaw joint. 

70540 ........................................................................................................ Mri orbit/face/neck w/o dye. 

70544 ........................................................................................................ Mr angiography head w/o dye. 

70547 ........................................................................................................ Mr angiography neck w/o dye. 

70551 ........................................................................................................ Mri brain w/o dye.

70554 ........................................................................................................ Fmri brain by tech. 

71550 ........................................................................................................ Mri chest w/o dye.

72141 ........................................................................................................ Mri neck spine w/o dye. 

72146 ........................................................................................................ Mri chest spine w/o dye. 

72148 ........................................................................................................ Mri lumbar spine w/o dye. 

72195 ........................................................................................................ Mri pelvis w/o dye. 

73218 ........................................................................................................ Mri upper extremity w/o dye. 

73221 ........................................................................................................ Mri joint upr extrem w/o dye. 

73718 ........................................................................................................ Mri lower extremity w/o dye. 

73721 ........................................................................................................ Mri jnt of lwr extre w/o dye. 

74181 ........................................................................................................ Mri abdomen w/o dye. 

75557 ........................................................................................................ Cardiac mri for morph. 

75559 ........................................................................................................ Cardiac mri w/stress img. 

C8901 ....................................................................................................... MRA w/o cont, abd. 

C8904 ....................................................................................................... MRI w/o cont, breast, uni. 

C8907 ....................................................................................................... MRI w/o cont, breast, bi. 

C8910 ....................................................................................................... MRA w/o cont, chest. 

C8913 ....................................................................................................... MRA w/o cont, lwr ext. 

C8919 ....................................................................................................... MRA w/o cont, pelvis. 

C8932 ....................................................................................................... MRA, w/o dye, spinal canal. 

C8935 ....................................................................................................... MRA, w/o dye, upper extr. 

CY 2018 APC 8008 (MRI and MRA with contrast composite) CY 2018 approximate APC geometric mean cost = $871 

70549 ........................................................................................................ Mr angiograph neck w/o & w/dye. 

70542 ........................................................................................................ Mri orbit/face/neck w/dye. 

70543 ........................................................................................................ Mri orbt/fac/nck w/o & w/dye. 

70545 ........................................................................................................ Mr angiography head w/dye. 

70546 ........................................................................................................ Mr angiograph head w/o & w/dye. 

70547 ........................................................................................................ Mr angiography neck w/o dye. 

70548 ........................................................................................................ Mr angiography neck w/dye. 

70552 ........................................................................................................ Mri brain w/dye. 

70553 ........................................................................................................ Mri brain w/o & w/dye. 

71551 ........................................................................................................ Mri chest w/dye. 

71552 ........................................................................................................ Mri chest w/o & w/dye. 

72142 ........................................................................................................ Mri neck spine w/dye. 

72147 ........................................................................................................ Mri chest spine w/dye. 

72149 ........................................................................................................ Mri lumbar spine w/dye. 

72156 ........................................................................................................ Mri neck spine w/o & w/dye. 

72157 ........................................................................................................ Mri chest spine w/o & w/dye. 

72158 ........................................................................................................ Mri lumbar spine w/o & w/dye. 

72196 ........................................................................................................ Mri pelvis w/dye. 

72197 ........................................................................................................ Mri pelvis w/o & w/dye. 

73219 ........................................................................................................ Mri upper extremity w/dye. 

73220 ........................................................................................................ Mri uppr extremity w/o & w/dye. 

73222 ........................................................................................................ Mri joint upr extrem w/dye. 

73223 ........................................................................................................ Mri joint upr extr w/o & w/dye. 

73719 ........................................................................................................ Mri lower extremity w/dye. 

73720 ........................................................................................................ Mri lwr extremity w/o & w/dye. 

73722 ........................................................................................................ Mri joint of lwr extr w/dye. 

73723 ........................................................................................................ Mri joint lwr extr w/o & w/dye. 

74182 ........................................................................................................ Mri abdomen w/dye.

74183 ........................................................................................................ Mri abdomen w/o & w/dye. 


sradovich on DSK3GMQ082PROD with RULES2
59250 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 7—OPPS IMAGING FAMILIES AND MULTIPLE IMAGING PROCEDURE COMPOSITE APCS—Continued 

75561 ........................................................................................................ Cardiac mri for morph w/dye. 

75563 ........................................................................................................ Card mri w/stress img & dye. 

C8900 ....................................................................................................... MRA w/cont, abd. 

C8902 ....................................................................................................... MRA w/o fol w/cont, abd. 

C8903 ....................................................................................................... MRI w/cont, breast, uni. 

C8905 ....................................................................................................... MRI w/o fol w/cont, brst, un. 

C8906 ....................................................................................................... MRI w/cont, breast, bi. 

C8908 ....................................................................................................... MRI w/o fol w/cont, breast. 

C8909 ....................................................................................................... MRA w/cont, chest. 

C8911 ....................................................................................................... MRA w/o fol w/cont, chest. 

C8912 ....................................................................................................... MRA w/cont, lwr ext. 

C8914 ....................................................................................................... MRA w/o fol w/cont, lwr ext. 

C8918 ....................................................................................................... MRA w/cont, pelvis.

C8920 ....................................................................................................... MRA w/o fol w/cont, pelvis. 

C8931 ....................................................................................................... MRA, w/dye, spinal canal. 

C8933 ....................................................................................................... MRA, w/o&w/dye, spinal canal. 

C8934 ....................................................................................................... MRA, w/dye, upper extremity. 

C8936 ....................................................................................................... MRA, w/o&w/dye, upper extr. 

* If a ‘‘without contrast’’ MRI or MRA procedure is performed during the same session as a ‘‘with contrast’’ MRI or MRA procedure, the I/OCE 

assigns the procedure to APC 8008 rather than APC 8007. 

3. Changes to Packaged Items and 

Services 

a. Background and Rationale for 

Packaging in the OPPS 

Like other prospective payment 

systems, the OPPS relies on the concept 

of averaging to establish a payment rate 

for services. The payment may be more 

or less than the estimated cost of 

providing a specific service or a bundle 

of specific services for a particular 

patient. The OPPS packages payments 

for multiple interrelated items and 

services into a single payment to create 

incentives for hospitals to furnish 

services most efficiently and to manage 

their resources with maximum 

flexibility. Our packaging policies 

support our strategic goal of using larger 

payment bundles in the OPPS to 

maximize hospitals’ incentives to 

provide care in the most efficient 

manner. For example, where there are a 

variety of devices, drugs, items, and 

supplies that could be used to furnish 

a service, some of which are more costly 

than others, packaging encourages 

hospitals to use the most cost-efficient 

item that meets the patient’s needs, 

rather than to routinely use a more 

expensive item, which often occurs if 

separate payment is provided for the 

item. 

Packaging also encourages hospitals 

to effectively negotiate with 

manufacturers and suppliers to reduce 

the purchase price of items and services 

or to explore alternative group 

purchasing arrangements, thereby 

encouraging the most economical health 

care delivery. Similarly, packaging 

encourages hospitals to establish 

protocols that ensure that necessary 

services are furnished, while 

scrutinizing the services ordered by 

practitioners to maximize the efficient 

use of hospital resources. Packaging 

payments into larger payment bundles 

promotes the predictability and 

accuracy of payment for services over 

time. Finally, packaging may reduce the 

importance of refining service-specific 

payment because packaged payments 

include costs associated with higher 

cost cases requiring many ancillary 

items and services and lower cost cases 

requiring fewer ancillary items and 

services. Because packaging encourages 

efficiency and is an essential component 

of a prospective payment system, 

packaging payments for items and 

services that are typically integral, 

ancillary, supportive, dependent, or 

adjunctive to a primary service has been 

a fundamental part of the OPPS since its 

implementation in August 2000. For an 

extensive discussion of the history and 

background of the OPPS packaging 

policy, we refer readers to the CY 2000 

OPPS final rule (65 FR 18434), the CY 

2008 OPPS/ASC final rule with 

comment period (72 FR 66580), the CY 

2014 OPPS/ASC final rule with 

comment period (78 FR 74925), the CY 

2015 OPPS/ASC final rule with 

comment period (79 FR 66817), the CY 

2016 OPPS/ASC final rule with 

comment period (80 FR 70343), and the 

CY 2017 OPPS/ASC final rule with 

comment period (81 FR 79592). As we 

continue to develop larger payment 

groups that more broadly reflect services 

provided in an encounter or episode of 

care, we have expanded the OPPS 

packaging policies. Most, but not 

necessarily all, items and services 

currently packaged in the OPPS are 

listed in 42 CFR 419.2(b). Our 

overarching goal is to make OPPS 

payments for all services paid under the 

OPPS more consistent with those of a 

prospective payment system and less 

like those of a per-service fee schedule, 

which pays separately for each coded 

item. As a part of this effort, we have 

continued to examine the payment for 

items and services provided under the 

OPPS to determine which OPPS 

services can be packaged to further 

achieve the objective of advancing the 

OPPS toward a more prospective 

payment system. 

For CY 2018, we examined the items 

and services currently provided under 

the OPPS, reviewing categories of 

integral, ancillary, supportive, 

dependent, or adjunctive items and 

services for which we believe payment 

would be appropriately packaged into 

payment of the primary service that they 

support. Specifically, we examined the 

HCPCS code definitions (including CPT 

code descriptors) and outpatient 

hospital billing patterns to determine 

whether there were categories of codes 

for which packaging would be 

appropriate according to existing OPPS 

packaging policies or a logical 

expansion of those existing OPPS 

packaging policies. In the CY 2018 

OPPS/ASC proposed rule (82 FR 33584 

through 33585), for CY 2018, we 

proposed to conditionally package the 

costs of selected newly identified 

ancillary services into payment with a 

primary service where we believe that 

the packaged item or service is integral, 

ancillary, supportive, dependent, or 

adjunctive to the provision of care that 

was reported by the primary service 

HCPCS code. Below we discuss the 

items and services that we proposed to 

package beginning in CY 2018. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59251 

b. Drug Administration Packaging 

Policy 

(1) Background of Drug Administration 

Packaging Policy 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 74942 

through 74945), we finalized a policy to 

unconditionally package procedures 

described by add-on codes. Procedures 

described by add-on codes represent an 

extension or continuation of a primary 

procedure, which means that they are 

typically supportive, dependent, or 

adjunctive to a primary service. The 

primary code defines the purpose and 

typical scope of the patient encounter 

and the add-on code describes 

incremental work, when the extent of 

the procedure encompasses a range 

rather than a single defined endpoint 

applicable to all patients. Given the 

dependent nature and adjunctive 

characteristics of procedures described 

by add-on codes and in light of 

longstanding OPPS packaging 

principles, we finalized a policy to 

unconditionally package add-on codes 

with the primary procedure. However, 

in response to stakeholder comments on 

the appropriateness of packaging drug 

administration add-on codes, we did not 

finalize our proposal to package drug 

administration add-on codes (78 FR 

74945). 

In the CY 2015 OPPS/ASC final rule 

with comment period (79 FR 66819 

through 66822), we conditionally 

packaged payment for ancillary services 

assigned to APCs with a geometric mean 

cost of less than or equal to $100 (prior 

to application of the conditional 

packaging status indicator). The 

ancillary services that we identified are 

primarily minor diagnostic tests and 

procedures that are often performed 

with a primary service, although there 

are instances where hospitals provide 

such services alone and without another 

primary service during the same 

encounter. Under this policy, we 

assigned the conditionally packaged 

services to status indicator ‘‘Q1’’, which 

indicates that the service is separately 

payable when not billed on the same 

claim as a HCPCS code assigned status 

indicator ‘‘S’’, ‘‘T’’, or ‘‘V’’. Exclusions 

to this ancillary service packaging 

policy include preventive services, 

certain psychiatric and counselingrelated services, and certain low-cost 

drug administration services. In the CY 

2015 OPPS/ASC final rule with 

comment period (79 FR 66819), we 

indicated that we did not propose to 

package certain low-cost drug 

administration services because we 

were examining various alternative 

payment policies for drug 

administration, including the associated 

drug administration add-on codes. 

(2) Packaging of Level 1 and Level 2 

Drug Administration Services 

As stated earlier, our overarching goal 

is to make OPPS payments for all 

services paid under the OPPS more 

consistent with those of a prospective 

payment system and less like those of a 

per-service fee schedule. To achieve this 

goal, it is important that we are 

consistent in our approach to packaging 

items and services under the established 

packaging categories. Although we 

excluded packaging of low-cost drug 

administration services from the 

ancillary services packaging policy in 

the CY 2015 rulemaking, separate 

payment for drug administration 

services is an example of inconsistent 

application of our packaging policy 

where we are continuing to pay 

separately for a service, regardless of 

cost and performance with another 

service. Given the frequency of drug 

administration in hospital outpatient 

care, in the CY 2018 OPPS/ASC 

proposed rule, we stated that we believe 

it is appropriate for us to reconsider 

whether payment for drug 

administration services with a geometric 

mean cost of less than or equal to $100 

(prior to application of the conditional 

packaging status indicator) should 

continue to be excluded from the 

ancillary services packaging policy. 

As part of our review of CY 2016 

claims data used for ratesetting in the 

CY 2018 OPPS/ASC proposed rule, we 

examined drug administration billing 

patterns and payment for drug 

administration services under the OPPS. 

Based on our analysis of CY 2016 claims 

data used for the CY 2018 proposed rule 

ratesetting, we found that the geometric 

mean cost for APC 5691 (Level 1 Drug 

Administration) is approximately $37 

and the geometric mean cost for APC 

5692 (Level 2 Drug Administration) is 

approximately $59. In addition, we 

observed that drug administration 

services in APC 5692 are frequently 

reported on the same claim with other 

separately payable services, such as an 

emergency department or clinic visit, 

while drug administration services in 

APC 5691 are sometimes reported with 

other separately payable services. 

Accordingly, Medicare data show that 

these drug administration services are 

currently being provided as part of 

another separately payable service for 

which two separate payments are made, 

and support that packaging these 

services, when they are reported with 

another separately payable service, is 

appropriate. Further, packaging for 

Levels 1 and 2 Drug Administration 

services is consistent with the ancillary 

packaging policy that was adopted in 

CY 2015, as noted earlier in this section. 

Therefore, given the low geometric 

mean costs of drug administration 

services in APC 5691 and APC 5692 as 

well as their associated billing patterns, 

we stated in the CY 2018 OPPS/ASC 

proposed rule that we believe that when 

these services are performed with 

another separately payable service, they 

should be packaged, but that they 

should be separately paid when 

performed alone. That is, we stated that 

we believe it is no longer necessary to 

exclude low-cost drug administration 

services from packaging under the 

ancillary services packaging policy 

adopted in CY 2015. 

In addition, as we examine payment 

differences between the hospital 

outpatient department and the 

physician office for similar services, 

under the OPPS, hospitals may receive 

separate payments for a clinic (office) 

visit and a drug administration service. 

In contrast, physicians are not eligible to 

receive payment for an office visit when 

a drug administration service is also 

provided. As a result, for furnishing the 

same drug administration service, 

hospitals receive an additional payment 

for which physician offices are not 

eligible. We stated in the proposed rule 

that we believe that conditional 

packaging of drug administration 

services would promote equitable 

payment between the physician office 

and the hospital outpatient hospital 

department. Accordingly, for CY 2018, 

we proposed to conditionally package 

payment for HCPCS codes describing 

drug administration services in APC 

5691 and APC 5692, except for add-on 

codes and preventive services, when 

these services are performed with 

another service. 

Because preventive services are 

excluded from our packaging policies, 

we proposed to continue to pay 

separately for Medicare Part B vaccine 

administration services. In addition, at 

that time, we did not propose to package 

any drug administration services in APC 

5693 (Level 3 Drug Administration) or 

APC 5694 (Level 4 Drug 

Administration), but indicated our 

interest in public comments pertaining 

to whether payment for the services in 

these APCs may be appropriate for 

packaging. The proposed status 

indicators for drug administration 

services in APC 5691 and APC 5692 

were listed in Table 7 of the proposed 

rule. 

Comment: Numerous commenters 

disagreed with CMS’ proposal to 

conditionally package low-cost drug 

administration services assigned to APC 


sradovich on DSK3GMQ082PROD with RULES2
59252 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

5691 and APC 5692. The commonly 

cited concerns among the commenters 

who opposed the proposal were as 

follows: 

• Low-cost drug administration 

services are dissimilar from other low 

cost ancillary services in that drug 

administration services are separate and 

distinct stand-alone services and not 

adjunctive, supportive, or dependent to 

a primary procedure. 

• The proposal would not promote 

equitable payment between the 

physician’s office and the hospital 

outpatient department because, in 

accordance with CMS guidelines, there 

are clinical circumstances where a 

physician may receive payment for both 

a drug administration service and an 

office visit. 

• Because all drugs are separately 

payable in the physician’s office, unlike 

under the OPPS, the proposal, if 

implemented, would exacerbate 

differences in payment between the 

hospital outpatient department and the 

physician office setting. Commenters 

expressed doubt that the full cost of a 

packaged drug administration service or 

drug would be appropriately and 

accurately reflected in the payment for 

another separately payable procedure. 

• Packaging drug administration 

services with other services could result 

in hospitals scheduling patients for 

multiple visits, thereby reducing access 

to care and quality of care. 

• Further analysis of the impact 

packaging drug administration services 

would have on APCs should be 

conducted prior to making a policy 

change. 

• In general, packaging discourages 

full reporting of hospital costs, which 

impacts the accuracy of cost data that 

are used to calculate OPPS payment 

rates. 

In addition, at the summer 2017 

meeting of the HOP Panel, the HOP 

Panel recommended that CMS not 

implement its proposal to package drug 

administration services described under 

APC 5691 (Level 1 Drug Administration) 

and APC 5692 (Level 2 Drug 

Administration). 

Response: We appreciate the detailed 

responses to our proposal and agree 

with the statements concerning the 

importance of payment accuracy to 

maintain access to care. However, we 

disagree that conditional packaging of 

low-level drug administration services, 

which are commonly furnished both in 

the hospital outpatient setting and in 

the physician office setting, would lead 

to payment inaccuracy for hospital rates 

for these services (which would include 

the packaged costs of these services) or 

to decreased access to drug 

administration services. As stated in the 

proposed rule, we believe it is no longer 

necessary to exclude low-cost drug 

administration services from packaging 

under the ancillary services packaging 

policy adopted in CY 2015, which is 

supported by our analysis of drug 

administration billing patterns. As 

described earlier in the introduction to 

this section, our analysis of CY 2016 

OPPS claims data showed that low-cost 

drug administration services are 

currently being provided as part of 

another separately payable service for 

which two separate payments are made, 

and supported a policy that packaging 

low-cost drug administration services, 

when they are reported with another 

separately payable service, is 

appropriate. In response to the 

commenters who raised concerns 

regarding potential behavioral changes 

by providers as a consequence of the 

proposal, we will continue to monitor 

the data for changes in drug 

administration billing patterns. 

Furthermore, regarding the comments 

that low-cost drug administration 

services are separate and distinct 

standalone services and not adjunctive, 

supportive, or dependent to a primary 

procedure, we disagree based on typical 

billing patterns for these services. As 

stated earlier in the introduction to this 

section, ancillary services are often 

performed with a primary service. 

Because these low-cost drug 

administration services are typically 

furnished with another primary service 

and are assigned to APCs with a 

geometric mean cost of less than or 

equal to $100 (prior to the application 

of the conditional packaging status 

indicator), we believe these services fall 

under the ancillary services packaging 

policy. 

In addition, as stated in the proposed 

rule, we believe that conditional 

packaging of drug administration 

services will promote equitable payment 

between the physician office and the 

hospital outpatient department. 

However, we clarify that while typically 

physicians are not eligible to receive 

payment for an office visit when a drug 

administration service is also provided, 

we acknowledge that Medicare will pay 

for both services when the office visit 

CPT code is reported with Modifier 25 

(Significant, separately identifiable 

evaluation and management services by 

the same physician on the day of the 

procedure). 

With respect to data availability and 

general requests for further CMS 

analysis, we believe that the data made 

available to the public as part of the 

proposed rule were appropriate, clear, 

and sufficient for interested parties to 

conduct analyses to evaluate facilityspecific impacts of the proposed policy. 

It is unclear what the commenters 

meant by requesting that CMS further 

analyze the effects of the proposal on 

APCs, as the commenters did not 

specify any particular analysis that CMS 

should conduct or data that CMS should 

provide that is not already available to 

the public. Because the OPPS is a 

budget neutral payment system, 

packaging a procedure does not remove 

its costs from ratesetting. 

With respect to commenters’ concerns 

on reporting of hospital costs for 

packaged services, we remind 

commenters that hospitals are expected 

to report all HCPCS codes that describe 

the services provided, regardless of 

whether or not those services are 

separately paid or their payment is 

packaged. The calculation of OPPS 

relative payment weights that reflect the 

relative resources required for HOPD 

services is the foundation of the OPPS. 

We rely on hospitals to bill all HCPCS 

codes accurately in accordance with 

their code descriptors and CPT and 

CMS instructions, as applicable, and to 

report charges on claims and charges 

and costs on their Medicare hospital 

cost report appropriately (77 FR 68324). 

Therefore, for the reasons stated 

above, we believe that it is appropriate, 

and a logical expansion of our ancillary 

services policy, to finalize our proposal 

to unconditionally package low-cost 

drug administration services assigned to 

APCs 5691 and 5692. Accordingly, we 

are not accepting the HOP Panel’s 

recommendation to not finalize our 

proposal. 

Comment: One commenter stated that 

the packaging proposal is a logical 

expansion of the current ancillary 

packaging policy but recommended a 1- 

year implementation delay to allow 

providers time to assess the 

administrative and fiscal impact. 

Response: We appreciate the 

commenter’s support. Packaging is a 

longstanding payment principle under 

the OPPS and CMS has packaged a 

number of items and services through 

the years and makes OPPS data 

available to all interested parties on its 

Web site. Therefore, we do not see a 

reason to delay implementation of the 

policy. With each proposed and final 

rule release, CMS posts on its Web site 

various public use files (PUFs), 

including payment rates and cost 

statistics for applicable items and 

procedures. Stakeholders interested in a 

more comprehensive analysis of OPPS 

claims data used to derive the CY 2018 

OPPS/ASC payment rates may purchase 

the ‘‘OPPS Limited Data Set’’ (LDS) that 

is available on the CMS Web site at: 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59253 

https://www.cms.gov/ResearchStatistics-Data-and-Systems/Files-forOrder/LimitedDataSets/Hospital

OPPS.html. We believe the information 

contained in the PUF and LDS files is 

sufficient to allow stakeholders to 

analyze the effects of our policies on 

their areas of interest. Therefore, we are 

finalizing our proposal to conditionally 

package low-cost drug administration 

services assigned to APC 5691 and APC 

5692, effective January 1, 2018. 

Comment: Some commenters believed 

that the proposal would conditionally 

package Medicare Part B vaccine 

administration. In addition, some 

commenters believed that if a hospital 

provides a low-cost drug administration 

service for a drug that is 

unconditionally packaged, CMS would 

make no payment to the hospital. 

Response: We believe that some 

commenters may have misunderstood 

the proposal. Consistent with our 

existing policy to exclude preventive 

services from packaging, administration 

of Part B vaccines—influenza, 

pneumococcal, and hepatitis B—are 

exempt from packaging and will 

continue to be paid separately. With 

respect to payment for a conditionally 

packaged low-cost drug administration 

service and an unconditionally 

packaged drug, the drug administration 

service is separately payable when not 

billed on the same claim as a HCPCS 

code with status indicator ‘‘S’’, ‘‘T’’, or 

‘‘V’’. Payment for the thresholdpackaged drug would be packaged with 

the payment for the highest paying 

separately payable procedure reported 

on the claim. For example, if a 

threshold-packaged drug, a low-cost 

drug administration service, and a clinic 

visit are reported on the same claim, 

payment for the drug and drug 

administration service would be 

packaged with the clinic visit payment. 

In summary, after consideration of the 

public comments we received, we are 

finalizing, without modification, the 

proposed policy to conditionally 

package low-cost drug administration 

services assigned to APC 5691 and APC 

5692. 

Because preventive services are 

excluded from our packaging policies, 

we are continuing to pay separately for 

Medicare Part B vaccine administration 

services. In addition, at this time, we are 

not packaging any drug administration 

services assigned to APC 5693 (Level 3 

Drug Administration) or APC 5694 

(Level 4 Drug Administration). The 

status indicators for drug administration 

services in APC 5691 and APC 5692 for 

CY 2018 are listed in Table 8 below. 

TABLE 8—CY 2018 STATUS INDICATORS FOR DRUG ADMINISTRATION SERVICES IN LEVEL 1 AND LEVEL 2 DRUG

ADMINISTRATION APCS

HCPCS code Short descriptor 

CY 2018 

status 

indicator 

APC 5691—Level 1 Drug Administration 

95115 ......................................................... Immunotherapy one injection .......................................................................................... Q1 

95117 ......................................................... Immunotherapy injections ............................................................................................... Q1 

95144 ......................................................... Antigen therapy services ................................................................................................ Q1 

95145 ......................................................... Antigen therapy services ................................................................................................ Q1 

95146 ......................................................... Antigen therapy services ................................................................................................ Q1 

95165 ......................................................... Antigen therapy services ................................................................................................ Q1 

95170 ......................................................... Antigen therapy services ................................................................................................ Q1 

96361 ......................................................... Hydrate iv infusion add-on .............................................................................................. S 

96366 ......................................................... Ther/proph/diag iv inf addon ........................................................................................... S 

96370 ......................................................... Sc ther infusion addl hr ................................................................................................... S 

96375 ......................................................... Tx/pro/dx inj new drug addon ......................................................................................... S 

96377 ......................................................... Application on-body injector ............................................................................................ Q1 

96379 ......................................................... Ther/prop/diag inj/inf proc ............................................................................................... Q1 

96423 ......................................................... Chemo ia infuse each addl hr ........................................................................................ S 

96549 ......................................................... Chemotherapy unspecified ............................................................................................. Q1 

G0008 ......................................................... Admin influenza virus vac ............................................................................................... S 

G0009 ......................................................... Admin pneumococcal vaccine ........................................................................................ S 

G0010 ......................................................... Admin hepatitis b vaccine ............................................................................................... S 

APC 5692—Level 2 Drug Administration 

90471 ......................................................... Immunization admin ........................................................................................................ Q1 

90473 ......................................................... Immune admin oral/nasal ............................................................................................... Q1 

95147 ......................................................... Antigen therapy services ................................................................................................ Q1 

95148 ......................................................... Antigen therapy services ................................................................................................ Q1 

95149 ......................................................... Antigen therapy services ................................................................................................ Q1 

96367 ......................................................... Tx/proph/dg addl seq iv inf ............................................................................................. S 

96371 ......................................................... Sc ther infusion reset pump ............................................................................................ Q1 

96372 ......................................................... Ther/proph/diag inj sc/im ................................................................................................ Q1 

96401 ......................................................... Chemo anti-neopl sq/im .................................................................................................. Q1 

96402 ......................................................... Chemo hormon antineopl sq/im ...................................................................................... Q1 

96405 ......................................................... Chemo intralesional up to 7 ............................................................................................ Q1 

96411 ......................................................... Chemo iv push addl drug ............................................................................................... S 

96415 ......................................................... Chemo iv infusion addl hr ............................................................................................... S 

96417 ......................................................... Chemo iv infus each addl seq ........................................................................................ S 


sradovich on DSK3GMQ082PROD with RULES2
59254 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

(3) Discussion of Comment Solicitation 

Regarding Unconditionally Packaging 

Drug Administration Add-On Codes 

With respect to drug administration 

add-on codes, as discussed in the CY 

2014 OPPS/ASC proposed rule (78 FR 

43573), we proposed to unconditionally 

package all drug administration services 

described by add-on codes. In response 

to the proposal, commenters objected to 

packaging drug administration add-on 

codes, which typically describe each 

additional hour of infusion or each 

additional intravenous push, among 

others, in addition to the initial drug 

administration service. The commenters 

believed that such a policy could 

disadvantage providers of longer drug 

administration services, which are often 

protocol-driven and are not necessarily 

dictated by the hospital, but by the 

characteristics of the specific drug or 

biological being administered to the 

patient. In response to these comments, 

we stated in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

74945) that, given the frequency of drug 

administration services in the hospital 

outpatient department and their use in 

such a wide variety of different drug 

treatment protocols for various diseases 

in all types of hospitals, further study of 

the payment methodology for these 

services was warranted at that time. 

Therefore, we did not finalize our 

proposal to package the drug 

administration add-on codes in CY 

2014. However, we stated we would 

continue to explore other payment 

options, including packaging and 

variations on packaging, in future years. 

In the CY 2018 OPPS/ASC proposed 

rule, we did not propose to package 

drug administration add-on codes for 

CY 2018 because we wanted stakeholder 

input on a payment methodology that 

supports the principles of a prospective 

payment system while ensuring patient 

access to prolonged infusion services. 

Instead, we solicited public comment on 

whether conditionally or 

unconditionally packaging such codes 

would create access to care issues or 

have other unintended consequences. 

Specifically, we requested public 

comments on the following: (1) Whether 

we should conditionally or 

unconditionally package drug 

administration services add-on codes; 

(2) how we should consider or 

incorporate the varied clinical drug 

protocols that result in different 

infusion times into a drug 

administration service add-on code 

payment proposal; and (3) other 

recommendations on an encounterbased payment approach for drug 

administration services that are 

described by add-on codes when 

furnished in the hospital outpatient 

department setting. 

Comment: Many commenters raised 

concerns about the appropriateness of 

packaging drug administration services 

add-on codes, given the variation in 

clinical treatment protocols. The 

commenters believed that packaging 

drug administration services add-on 

codes could create a barrier to access for 

drugs or biologicals with a long infusion 

time. Without explicit incremental 

payment for additional hours of 

infusion, some commenters suggested 

hospitals could discontinue offering the 

infusion. A few commenters suggested 

that CMS consider the creation of a drug 

administration C–APC for common drug 

administration encounters but did not 

provide details on what specific services 

should comprise the C–APC. 

Response: We appreciate the 

comments we received on this topic and 

will take them into consideration for 

future rulemaking. 

c. Analysis of Packaging of Pathology 

Services in the OPPS 

At the August 22, 2016 HOP Panel 

meeting, a stakeholder expressed 

concern regarding conditional 

packaging of multiple pathology 

services. When multiple conditionally 

packaged services are billed on the same 

claim, the costs of the lowest paying 

services are bundled into the cost of the 

highest paying service and payment is 

made based on the highest single 

payable service. The stakeholder 

requested that CMS create a pathology 

composite APC to more appropriately 

pay for claims with only multiple 

pathology services and no other 

separately payable service such as a 

surgical procedure or a clinic visit. The 

HOP panel recommended that CMS 

develop a composite APC for pathology 

services when multiple pathology 

services are provided on a claim with no 

other payable services. The HOP Panel 

also requested that CMS take into 

consideration the stakeholder 

presentation comments made at the 

August 22, 2016 HOP Panel meeting 

regarding hospital pathology 

laboratories as CMS evaluates 

conditional packaging to determine 

whether an accommodation can be 

made. Specifically, the stakeholder 

expressed concern with conditional 

packaging of pathology services, 

particularly when payment is limited to 

the single highest paying code, 

regardless of the number of services 

provided or specimens tested. 

In response to these HOP Panel 

requests and recommendation, we 

stated that we may consider the 

stakeholders’ request for a pathology 

composite APC as well as additional 

composite APCs for future rulemaking 

(81 FR 79588). In light of these requests 

and recommendation, in development 

of the CY 2018 OPPS/ASC proposed 

rule, we evaluated and considered a 

pathology composite APC when 

multiple pathology services are 

performed and billed without a 

separately payable service on the same 

claim. To understand the frequency of 

billing multiple pathology services and 

no other separately payable codes on the 

same claim by hospital outpatient 

departments, we examined currently 

available claims data to identify the 

frequency distribution of pathology 

codes within the CPT code range 88300 

to 88361. The claim frequency 

breakdown was displayed in Table 8 of 

the proposed rule (82 FR 33587). 

Based on our analysis of claims data 

for the proposed rule, the majority of 

pathology only OPPS claims are 

reported with one pathology code. 

Therefore, as we stated in the CY 2018 

OPPS/ASC proposed rule (82 FR 33588), 

we believe that it is neither a frequent 

occurrence nor a common occurrence 

for a provider to submit a claim for 

payment under the OPPS with multiple 

pathology services and no other 

separately payable service. 

With regard to the HOP Panel’s 

recommendation to develop a composite 

APC for pathology services when 

multiple pathology services are 

provided on a claim with no other 

payable services, we used CY 2016 

claims data available for the CY 2018 

OPPS/ASC proposed rule to model four 

hypothetical pathology composite APCs. 

That is, following our standard 

packaging methodology, we modeled 

four hypothetical pathology composite 

APCs based on the following clinical 

scenarios that were specifically 

requested by a stakeholder at the August 

2016 HOP Panel meeting: 

• Hypothetical Composite APC A: 

Claims that contain 2–4 pathology units 

(CPT codes 88302 through 88309) with 

or without special stains (CPT codes 

88312 through 88314); 

• Hypothetical Composite APC B: 

Claims that contain 5 or more pathology 

units (CPT codes 88302 through 88309) 

with or without special stains (CPT 

codes 88312 through 88314); 

• Hypothetical Composite APC C: 

Claims that contain 2–4 pathology units 

(CPT codes 88302 through 88309) with 

immunostains (CPT codes 88341, 88342, 

88346, 88350, 88360, 88361); and 

• Hypothetical Composite APC D: 

Claims that contain 5 or more pathology 

units (CPT codes 88302 through 88309) 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59255 

with immunostains (CPT codes 88341, 

88342, 88346, 88350, 88360, 88361). 

In addition, for the proposed rule, we 

evaluated the volume of services and 

costs for each hypothetical composite. 

Results from modeling the four 

composite scenarios showed low claim 

volume, which indicates that the 

suggested pathology code combinations 

are infrequently billed by hospital 

outpatient departments and which may 

mean that these are not likely clinical 

scenarios in hospital outpatient 

departments. A summary of the results 

from our composite analysis was 

presented in Table 9 of the proposed 

rule (82 FR 33587). We refer readers to 

Addendum B to the CY 2018 OPPS/ASC 

proposed rule (which is available via 

the Internet on the CMS Web site) for 

the CPT code descriptors. 

As we move toward larger payment 

bundles under the OPPS, the necessity 

of composite APCs diminishes. For 

example, in the CY 2018 OPPS/ASC 

proposed rule, we proposed to delete 

composite APC 8001 (LDR Prostate 

Brachytherapy Composite) and to 

provide payment for the component 

procedures through the C–APC payment 

methodology. Composite APCs were a 

precursor to C–APCs. In CY 2008, we 

implemented composite APCs to 

provide a single payment for groups of 

services that are typically performed 

together during a single clinical 

encounter and that result in the 

provision of a complete service (72 FR 

66650 through 66652). Because a C–APC 

would treat all individually reported 

codes as representing components of the 

comprehensive service, all of the 

elements of the composite service are 

included in the C–APC payment. In 

addition, given the infrequent 

occurrence of multiple pathology 

services on the same claim without a 

separately payable service, we do not 

believe a composite APC is necessary or 

warranted. 

Therefore, for CY 2018, we did not 

propose to create a pathology composite 

APC or additional composite APCs for 

stakeholder-requested services, such as 

X-ray services, respiratory services, 

cardiology services, or allergy testing 

services. However, we solicited public 

comments on our packaging policies, as 

discussed under section II.A.3.d. of this 

final rule with comment period. 

We did not receive any public 

comments on our analysis of packaging 

of pathology services. 

d. Summary of Public Comments and 

Our Responses Regarding Packaging of 

Items and Services Under the OPPS 

As previously noted, packaging is an 

inherent principle of a prospective 

payment system. The OPPS, like other 

prospective payment systems, relies on 

the concept of averaging, where the 

payment may be more or less than the 

estimated costs of providing a service or 

package of services for a particular 

patient, but with the exception of outlier 

cases, is adequate to ensure access to 

appropriate care. Packaging and 

bundling payments for multiple 

interrelated services into a single 

payment create incentives for providers 

to furnish services in the most efficient 

way by enabling hospitals to manage 

their resources with maximum 

flexibility, thereby encouraging longterm cost containment. Decisions about 

packaging and bundling payment 

involve a balance between ensuring 

some separate payment for individual 

services or items while establishing 

incentives for efficiency through larger 

units of payment. 

As the OPPS continues to move 

toward prospectively determined 

encounter-based payments and away 

from separate fee schedule-like 

payments, we continue to hear concerns 

from stakeholders that our packaging 

policies may be hampering patient 

access or resulting in other undesirable 

consequences. However, we have not 

observed significant fluctuations in our 

data that show a sharp decline of the 

volume of packaged items and services, 

nor have we heard from Medicare 

beneficiaries specifically about access 

issues or other concerns with packaged 

items and services. However, given that 

aggregate spending and utilization 

continue to increase for covered 

hospital outpatient services, it is unclear 

what, if any, adverse effect packaging 

has on beneficiary access to care. 

Specifically, in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33588), within the 

framework of existing packaging 

categories, such as drugs that function 

as supplies in a surgical procedure or 

diagnostic test or procedure, we 

expressed interest in stakeholder 

feedback on common clinical scenarios 

involving currently packaged HCPCS 

codes for which stakeholders believe 

packaged payment is not appropriate 

under the OPPS. Likewise, outside the 

framework of existing packaging 

categories, we expressed interest in 

stakeholder feedback on common 

clinical scenarios involving separately 

payable HCPCS codes for which 

payment would be most appropriately 

packaged under the OPPS. In the 

proposed rule, we solicited public 

comments from a broad cross-section of 

stakeholders, including beneficiaries, 

patient advocates, hospital providers, 

clinicians, manufacturers, and other 

interested parties. 

Comment: Commenters expressed a 

variety of views on packaging under the 

OPPS. The comments ranged from 

requests to unpackage most items and 

services that are either conditionally or 

unconditionally packaged under the 

OPPS, including drugs and devices, to 

specific requests to unpackage a specific 

drug or device. 

Response: We appreciate the 

comments received and will review 

them as we continue to explore and 

evaluate packaging policies that apply 

under the OPPS and take them into 

consideration for future rulemaking. 

4. Calculation of OPPS Scaled Payment 

Weights 

We established a policy in the CY 

2013 OPPS/ASC final rule with 

comment period (77 FR 68283) of using 

geometric mean-based APC costs to 

calculate relative payment weights 

under the OPPS. In the CY 2017 OPPS/ 

ASC final rule with comment period (81 

FR 79594 through 79595), we applied 

this policy and calculated the relative 

payment weights for each APC for CY 

2017 that were shown in Addenda A 

and B to that final rule with comment 

period (which were made available via 

the Internet on the CMS Web site) using 

the APC costs discussed in sections 

II.A.1. and II.A.2. of that final rule with 

comment period. For CY 2018, as we 

did for CY 2017, we proposed to 

continue to apply the policy established 

in CY 2013 and calculate relative 

payment weights for each APC for CY 

2018 using geometric mean-based APC 

costs (82 FR 33588). 

For CY 2012 and CY 2013, outpatient 

clinic visits were assigned to one of five 

levels of clinic visit APCs, with APC 

0606 representing a mid-level clinic 

visit. In the CY 2014 OPPS/ASC final 

rule with comment period (78 FR 75036 

through 75043), we finalized a policy 

that created alphanumeric HCPCS code 

G0463 (Hospital outpatient clinic visit 

for assessment and management of a 

patient), representing any and all clinic 

visits under the OPPS. HCPCS code 

G0463 was assigned to APC 0634 

(Hospital Clinic Visits). We also 

finalized a policy to use CY 2012 claims 

data to develop the CY 2014 OPPS 

payment rates for HCPCS code G0463 

based on the total geometric mean cost 

of the levels one through five CPT E/M 

codes for clinic visits previously 

recognized under the OPPS (CPT codes 

99201 through 99205 and 99211 through 

99215). In addition, we finalized a 

policy to no longer recognize a 

distinction between new and 

established patient clinic visits. 


sradovich on DSK3GMQ082PROD with RULES2
59256 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

For CY 2016, we deleted APC 0634 

and reassigned the outpatient clinic 

visit HCPCS code G0463 to APC 5012 

(Level 2 Examinations and Related 

Services) (80 FR 70351). In the CY 2018 

OPPS/ASC proposed rule (82 FR 33588), 

for CY 2018, as we did for CY 2017, we 

proposed to continue to standardize all 

of the relative payment weights to APC 

5012. We stated that we believe that 

standardizing relative payment weights 

to the geometric mean of the APC to 

which HCPCS code G0463 is assigned 

maintains consistency in calculating 

unscaled weights that represent the cost 

of some of the most frequently provided 

OPPS services. For CY 2018, as we did 

for CY 2017, we proposed to assign APC 

5012 a relative payment weight of 1.00 

and to divide the geometric mean cost 

of each APC by the geometric mean cost 

for APC 5012 to derive the unscaled 

relative payment weight for each APC. 

The choice of the APC on which to 

standardize the relative payment 

weights does not affect payments made 

under the OPPS because we scale the 

weights for budget neutrality. 

We did not receive any public 

comments on our proposal to use the 

geometric mean cost of APC 5012 to 

standardize relative payment weights 

for CY 2018. Therefore, we are finalizing 

our proposal and assigning APC 5012 

the relative payment weight of 1.00, and 

using the relative payment weight for 

APC 5012 to derive the unscaled 

relative payment weight for each APC 

for CY 2018. 

Section 1833(t)(9)(B) of the Act 

requires that APC reclassification and 

recalibration changes, wage index 

changes, and other adjustments be made 

in a budget neutral manner. Budget 

neutrality ensures that the estimated 

aggregate weight under the OPPS for CY 

2018 is neither greater than nor less 

than the estimated aggregate weight that 

would have been made without the 

changes. To comply with this 

requirement concerning the APC 

changes, in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33588), we 

proposed to compare the estimated 

aggregate weight using the CY 2017 

scaled relative payment weights to the 

estimated aggregate weight using the 

proposed CY 2018 unscaled relative 

payment weights. 

For CY 2017, we multiplied the CY 

2017 scaled APC relative payment 

weight applicable to a service paid 

under the OPPS by the volume of that 

service from CY 2016 claims to calculate 

the total relative payment weight for 

each service. We then added together 

the total relative payment weight for 

each of these services in order to 

calculate an estimated aggregate weight 

for the year. For CY 2018, we proposed 

to apply the same process using the 

estimated CY 2018 unscaled relative 

payment weights rather than scaled 

relative payment weights. We proposed 

to calculate the weight scalar by 

dividing the CY 2017 estimated 

aggregate weight by the unscaled CY 

2018 estimated aggregate weight. 

For a detailed discussion of the 

weight scalar calculation, we refer 

readers to the OPPS claims accounting 

document available on the CMS Web 

site at: http://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

HospitalOutpatientPPS/index.html. 

Click on the CY 2018 OPPS final rule 

link and open the claims accounting 

document link at the bottom of the page. 

We proposed to compare the 

estimated unscaled relative payment 

weights in CY 2018 to the estimated 

total relative payment weights in CY 

2017 using CY 2016 claims data, 

holding all other components of the 

payment system constant to isolate 

changes in total weight. Based on this 

comparison, we proposed to adjust the 

calculated CY 2018 unscaled relative 

payment weights for purposes of budget 

neutrality. We proposed to adjust the 

estimated CY 2018 unscaled relative 

payment weights by multiplying them 

by a proposed weight scalar of 1.328 to 

ensure that the proposed CY 2018 

relative payment weights are scaled to 

be budget neutral. The proposed CY 

2018 relative payment weights listed in 

Addenda A and B to the proposed rule 

(which are available via the Internet on 

the CMS Web site) were scaled and 

incorporated the recalibration 

adjustments discussed in sections II.A.1. 

and II.A.2. of the proposed rule. 

The final CY 2018 relative payment 

weights listed in Addenda A and B to 

the final rule with comment period 

(which are available via the Internet on 

the CMS Web site) were scaled and 

incorporate the recalibration 

adjustments discussed in sections II.A.1. 

and II.A.2. of this final rule with 

comment period. 

Section 1833(t)(14) of the Act 

provides the payment rates for certain 

SCODs. Section 1833(t)(14)(H) of the 

Act provides that additional 

expenditures resulting from this 

paragraph shall not be taken into 

account in establishing the conversion 

factor, weighting, and other adjustment 

factors for 2004 and 2005 under 

paragraph (9), but shall be taken into 

account for subsequent years. Therefore, 

the cost of those SCODs (as discussed in 

section V.B.2. of this final rule with 

comment period) is included in the 

budget neutrality calculations for the CY 

2018 OPPS. 

We did not receive any public 

comments on the proposed weight 

scalar calculation. Therefore, we are 

finalizing our proposal to use the 

calculation process described in the 

proposed rule, without modification, for 

CY 2018. Using updated final rule 

claims data, we are updating the 

estimated CY 2018 unscaled relative 

payment weights by multiplying them 

by a weight scalar of 1.4457 to ensure 

that the final CY 2018 relative payment 

weights are scaled to be budget neutral. 

B. Conversion Factor Update 

Section 1833(t)(3)(C)(ii) of the Act 

requires the Secretary to update the 

conversion factor used to determine the 

payment rates under the OPPS on an 

annual basis by applying the OPD fee 

schedule increase factor. For purposes 

of section 1833(t)(3)(C)(iv) of the Act, 

subject to sections 1833(t)(17) and 

1833(t)(3)(F) of the Act, the OPD fee 

schedule increase factor is equal to the 

hospital inpatient market basket 

percentage increase applicable to 

hospital discharges under section 

1886(b)(3)(B)(iii) of the Act. As stated in 

the CY 2018 OPPS/ASC proposed rule, 

in the FY 2018 IPPS/LTCH PPS 

proposed rule (82 FR 19931), consistent 

with current law, based on IHS Global, 

Inc.’s fourth quarter 2016 forecast of the 

FY 2018 market basket increase, the 

proposed FY 2018 IPPS market basket 

update was 2.9 percent. However, 

sections 1833(t)(3)(F) and 

1833(t)(3)(G)(v) of the Act, as added by 

section 3401(i) of the Patient Protection 

and Affordable Care Act of 2010 (Pub. 

L. 111–148) and as amended by section 

10319(g) of that law and further 

amended by section 1105(e) of the 

Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111– 

152), provide adjustments to the OPD 

fee schedule increase factor for CY 2018. 

Specifically, section 1833(t)(3)(F)(i) of 

the Act requires that, for 2012 and 

subsequent years, the OPD fee schedule 

increase factor under subparagraph 

(C)(iv) be reduced by the productivity 

adjustment described in section 

1886(b)(3)(B)(xi)(II) of the Act. Section 

1886(b)(3)(B)(xi)(II) of the Act defines 

the productivity adjustment as equal to 

the 10-year moving average of changes 

in annual economy-wide, private 

nonfarm business multifactor 

productivity (MFP) (as projected by the 

Secretary for the 10-year period ending 

with the applicable fiscal year, year, 

cost reporting period, or other annual 

period) (the ‘‘MFP adjustment’’). In the 

FY 2012 IPPS/LTCH PPS final rule (76 

FR 51689 through 51692), we finalized 

our methodology for calculating and 

applying the MFP adjustment, and then 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59257 

revised this methodology as discussed 

in the FY 2016 IPPS/LTCH PPS final 

rule (80 FR 49509). In the FY 2018 IPPS/ 

LTCH PPS proposed rule (82 FR 19931 

through 19932), the proposed MFP 

adjustment for FY 2018 was 0.4 

percentage point. 

In the CY 2018 OPPS/ASC proposed 

rule, we proposed that if more recent 

data became subsequently available 

after the publication of the proposed 

rule (for example, a more recent 

estimate of the market basket increase 

and the MFP adjustment), we would use 

such updated data, if appropriate, to 

determine the CY 2018 market basket 

update and the MFP adjustment, which 

are components in calculating the OPD 

fee schedule increase factor under 

sections 1833(t)(3)(C)(iv) and 

1833(t)(3)(F) of the Act, in this CY 2018 

OPPS/ASC final rule with comment 

period. Consistent with that proposal, 

and the FY 2018 IPPS/LTCH PPS final 

rule (82 FR 38177), we applied the final 

FY 2018 market basket percentage 

increase (2.7 percent) and the final FY 

2018 MFP adjustment (0.6 percent) to 

the OPD fee schedule increase factor for 

the CY 2018 OPPS. 

In addition, section 1833(t)(3)(F)(ii) of 

the Act requires that, for each of years 

2010 through 2019, the OPD fee 

schedule increase factor under section 

1833(t)(3)(C)(iv) of the Act be reduced 

by the adjustment described in section 

1833(t)(3)(G) of the Act. For CY 2018, 

section 1833(t)(3)(G)(v) of the Act 

provides a 0.75 percentage point 

reduction to the OPD fee schedule 

increase factor under section 

1833(t)(3)(C)(iv) of the Act. Therefore, in 

accordance with sections 

1833(t)(3)(F)(ii) and 1833(t)(3)(G)(v) of 

the Act, in the CY 2018 OPPS/ASC 

proposed rule, we proposed to apply a 

0.75 percentage point reduction to the 

OPD fee schedule increase factor for CY 

2018. 

We note that section 1833(t)(3)(F) of 

the Act provides that application of this 

subparagraph may result in the OPD fee 

schedule increase factor under section 

1833(t)(3)(C)(iv) of the Act being less 

than 0.0 percent for a year, and may 

result in OPPS payment rates being less 

than rates for the preceding year. As 

described in further detail below, we are 

applying an OPD fee schedule increase 

factor of 1.35 percent for the CY 2018 

OPPS (which is 2.7 percent, the final 

estimate of the hospital inpatient market 

basket percentage increase, less the final 

0.6 percentage point MFP adjustment, 

and less the 0.75 percentage point 

additional adjustment). 

Hospitals that fail to meet the 

Hospital OQR Program reporting 

requirements are subject to an 

additional reduction of 2.0 percentage 

points from the OPD fee schedule 

increase factor adjustment to the 

conversion factor that would be used to 

calculate the OPPS payment rates for 

their services, as required by section 

1833(t)(17) of the Act. For further 

discussion of the Hospital OQR 

Program, we refer readers to section 

XIII. of this final rule with comment 

period. 

In the CY 2018 OPPS/ASC proposed 

rule, we proposed to amend 42 CFR 

419.32(b)(1)(iv)(B) by adding a new 

paragraph (9) to reflect the requirement 

in section 1833(t)(3)(F)(i) of the Act that, 

for CY 2018, we reduce the OPD fee 

schedule increase factor by the MFP 

adjustment as determined by CMS, and 

to reflect the requirement in section 

1833(t)(3)(G)(v) of the Act, as required 

by section 1833(t)(3)(F)(ii) of the Act, 

that we reduce the OPD fee schedule 

increase factor by an additional 0.75 

percentage point for CY 2018. 

We did not receive any public 

comments on our proposal. Therefore, 

we are implementing our proposal 

without modification. 

To set the OPPS conversion factor for 

the CY 2018 OPPS/ASC proposed rule, 

we proposed to increase the CY 2017 

conversion factor of $75.001 by 1.75 

percent (82 FR 33589). In accordance 

with section 1833(t)(9)(B) of the Act, we 

proposed further to adjust the 

conversion factor for CY 2018 to ensure 

that any revisions made to the wage 

index and rural adjustment were made 

on a budget neutral basis. We proposed 

to calculate an overall budget neutrality 

factor of 0.9999 for wage index changes 

by comparing proposed total estimated 

payments from our simulation model 

using the proposed FY 2018 IPPS wage 

indexes to those payments using the FY 

2017 IPPS wage indexes, as adopted on 

a calendar year basis for the OPPS. 

For the CY 2018 OPPS/ASC proposed 

rule, we proposed to maintain the 

current rural adjustment policy, as 

discussed in section II.E. of this final 

rule with comment period. Therefore, 

the proposed budget neutrality factor for 

the rural adjustment was 1.0000. 

For the CY 2018 OPPS/ASC proposed 

rule, we proposed to continue 

previously established policies for 

implementing the cancer hospital 

payment adjustment described in 

section 1833(t)(18) of the Act, as 

discussed in section II.F. of this final 

rule with comment period. We proposed 

to calculate a CY 2018 budget neutrality 

adjustment factor for the cancer hospital 

payment adjustment by comparing 

estimated total CY 2018 payments under 

section 1833(t) of the Act, including the 

proposed CY 2018 cancer hospital 

payment adjustment, to estimated CY 

2018 total payments using the CY 2017 

final cancer hospital payment 

adjustment as required under section 

1833(t)(18)(B) of the Act. The CY 2018 

proposed estimated payments applying 

the proposed CY 2018 cancer hospital 

payment adjustment were less than 

estimated payments applying the CY 

2017 final cancer hospital payment 

adjustment. Therefore, we proposed to 

apply a budget neutrality adjustment 

factor of 1.0003 to the conversion factor 

for the cancer hospital payment 

adjustment. In accordance with section 

16002(b) of the 21st Century Cures Act, 

we stated in the proposed rule that we 

are applying a budget neutrality factor 

calculated as if the proposed cancer 

hospital adjustment target payment-tocost ratio was 0.90, not the 0.89 target 

payment-to-cost ratio we are applying as 

stated in section II.F. of the proposed 

rule. 

For the CY 2018 OPPS/ASC proposed 

rule, we estimated that proposed passthrough spending for drugs, biologicals, 

and devices for CY 2018 would equal 

approximately $26.2 million, which 

represented 0.04 percent of total 

projected CY 2018 OPPS spending. 

Therefore, the proposed conversion 

factor would be adjusted by the 

difference between the 0.26 percent 

estimate of pass-through spending for 

CY 2017 and the 0.04 percent estimate 

of proposed pass-through spending for 

CY 2018, resulting in a proposed 

adjustment for CY 2018 of 0.22 percent. 

Proposed estimated payments for 

outliers would remain at 1.0 percent of 

total OPPS payments for CY 2018. We 

estimated for the proposed rule that 

outlier payments would be 1.04 percent 

of total OPPS payments in CY 2017; the 

1.0 percent for proposed outlier 

payments in CY 2018 would constitute 

a 0.04 percent decrease in payment in 

CY 2018 relative to CY 2017. 

For the CY 2018 OPPS/ASC proposed 

rule, we also proposed that hospitals 

that fail to meet the reporting 

requirements of the Hospital OQR 

Program would continue to be subject to 

a further reduction of 2.0 percentage 

points to the OPD fee schedule increase 

factor. For hospitals that fail to meet the 

requirements of the Hospital OQR 

Program, we proposed to make all other 

adjustments discussed above, but use a 

reduced OPD fee schedule update factor 

of ¥0.25 percent (that is, the proposed 

OPD fee schedule increase factor of 1.75 

percent further reduced by 2.0 

percentage points). This would result in 

a proposed reduced conversion factor 

for CY 2018 of $74.953 for hospitals that 

fail to meet the Hospital OQR Program 

requirements (a difference of ¥1.530 in 


sradovich on DSK3GMQ082PROD with RULES2
59258 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

the conversion factor relative to 

hospitals that met the requirements). 

In summary, for CY 2018, we 

proposed to amend § 419.32(b)(1)(iv)(B) 

by adding a new paragraph (9) to reflect 

the reductions to the OPD fee schedule 

increase factor that are required for CY 

2018 to satisfy the statutory 

requirements of sections 1833(t)(3)(F) 

and (t)(3)(G)(v) of the Act. We proposed 

to use a reduced conversion factor of 

$74.953 in the calculation of payments 

for hospitals that fail to meet the 

Hospital OQR Program requirements (a 

difference of ¥1.530 in the conversion 

factor relative to hospitals that met the 

requirements). 

For CY 2018, we proposed to use a 

conversion factor of $76.483 in the 

calculation of the national unadjusted 

payment rates for those items and 

services for which payment rates are 

calculated using geometric mean costs; 

that is, the proposed OPD fee schedule 

increase factor of 1.75 percent for CY 

2018, the required proposed wage index 

budget neutrality adjustment of 

approximately 0.9999, the proposed 

cancer hospital payment adjustment of 

1.0003, and the proposed adjustment of 

0.22 percentage point of projected OPPS 

spending for the difference in the passthrough spending and outlier payments 

that resulted in a proposed conversion 

factor for CY 2018 of $76.483. 

We invited public comments on these 

proposals. However, we did not receive 

any public comments. Therefore, we are 

finalizing these proposals without 

modification, as discussed below. 

For CY 2018, we proposed to continue 

previously established policies for 

implementing the cancer hospital 

payment adjustment described in 

section 1833(t)(18) of the Act, as 

discussed in section II.F. of this final 

rule with comment period. Based on the 

updated claims data for this final rule 

with comment period used in 

calculating the cancer hospital payment 

adjustment in section II.F. of this final 

rule with comment period, the target 

PCR for the cancer hospital payment 

adjustment, which was 0.91 for CY 

2017, is 0.88 for CY 2018. Because we 

budget neutralize using the target PCR 

ratio prior to implementation of section 

16002 (b) of the 21st Century Cures Act, 

we are applying a budget neutrality 

adjustment factor of 1.0008 to the 

conversion factor for the cancer hospital 

payment adjustment for CY 2018. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33712), we estimated a 1.4 

percent adjustment to nondrug OPPS 

payment rates as a result of the 

proposed payment adjustment to 

separately payable nonpass-through 

drugs purchased under the 340B 

Program. As part of that proposed 

policy, we noted that our adjustment in 

the final rule could potentially change 

as a result of changes such as updated 

data, modifications to the estimate 

methodology, and other factors. 

Applying the final payment policy for 

drugs purchased under the 340B 

Program, as described in section V.B.7. 

of this final rule with comment period, 

results in an estimated reduction of 

approximately $1.6 billion in separately 

paid OPPS drug payments. To ensure 

budget neutrality under the OPPS after 

applying this alternative payment 

methodology for drugs purchased under 

the 340B Program, we applied an offset 

of approximately $1.6 billion into the 

OPPS conversion factor, which results 

in a final adjustment of 1.0319 to the 

OPPS conversion factor. 

As a result of these finalized policies, 

the OPD fee schedule increase factor for 

the CY 2018 OPPS is 1.35 percent 

(which is 2.7 percent, the estimate of the 

hospital inpatient market basket 

percentage increase, less the 0.6 

percentage point MFP adjustment, and 

less the 0.75 percentage point additional 

adjustment). For CY 2018, we are using 

a conversion factor of $78.636 in the 

calculation of the national unadjusted 

payment rates for those items and 

services for which payment rates are 

calculated using geometric mean costs; 

that is, the OPD fee schedule increase 

factor of 1.35 percent for CY 2018, the 

required wage index budget neutrality 

adjustment of approximately 0.9997, the 

cancer hospital payment adjustment of 

1.0008, the adjustment for drugs 

purchased under the 340B Program of 

1.0319, and the adjustment of 0.2 

percentage point of projected OPPS 

spending for the difference in the passthrough spending and outlier payments 

that result in a conversion factor for CY 

2018 of $78.636. 

C. Wage Index Changes 

Section 1833(t)(2)(D) of the Act 

requires the Secretary to determine a 

wage adjustment factor to adjust the 

portion of payment and coinsurance 

attributable to labor-related costs for 

relative differences in labor and laborrelated costs across geographic regions 

in a budget neutral manner (codified at 

42 CFR 419.43(a)). This portion of the 

OPPS payment rate is called the OPPS 

labor-related share. Budget neutrality is 

discussed in section II.B. of this final 

rule with comment period. 

The OPPS labor-related share is 60 

percent of the national OPPS payment. 

This labor-related share is based on a 

regression analysis that determined that, 

for all hospitals, approximately 60 

percent of the costs of services paid 

under the OPPS were attributable to 

wage costs. We confirmed that this 

labor-related share for outpatient 

services is appropriate during our 

regression analysis for the payment 

adjustment for rural hospitals in the CY 

2006 OPPS final rule with comment 

period (70 FR 68553). In the CY 2018 

OPPS/ASC proposed rule (82 FR 33590), 

we proposed to continue this policy for 

the CY 2018 OPPS. We refer readers to 

section II.H. of this final rule with 

comment period for a description and 

an example of how the wage index for 

a particular hospital is used to 

determine payment for the hospital. We 

did not receive any public comments on 

this proposal. Therefore, for the reasons 

discussed above and in the CY 2018 

OPPS/ASC proposed rule (82 FR 33590), 

we are finalizing our proposal to 

continue this policy as discussed above 

for the CY 2018 OPPS without 

modification. 

As discussed in the claims accounting 

narrative included with the supporting 

documentation for this final rule with 

comment period (which is available via 

the Internet on the CMS Web site), for 

estimating APC costs, we standardize 60 

percent of estimated claims costs for 

geographic area wage variation using the 

same FY 2018 pre-reclassified wage 

index that the IPPS uses to standardize 

costs. This standardization process 

removes the effects of differences in area 

wage levels from the determination of a 

national unadjusted OPPS payment rate 

and copayment amount. 

Under 42 CFR 419.41(c)(1) and 

419.43(c) (published in the OPPS April 

7, 2000 final rule with comment period 

(65 FR 18495 and 18545)), the OPPS 

adopted the final fiscal year IPPS postreclassified wage index as the calendar 

year wage index for adjusting the OPPS 

standard payment amounts for labor 

market differences. Therefore, the wage 

index that applies to a particular acute 

care, short-stay hospital under the IPPS 

also applies to that hospital under the 

OPPS. As initially explained in the 

September 8, 1998 OPPS proposed rule 

(63 FR 47576), we believe that using the 

IPPS wage index as the source of an 

adjustment factor for the OPPS is 

reasonable and logical, given the 

inseparable, subordinate status of the 

HOPD within the hospital overall. In 

accordance with section 1886(d)(3)(E) of 

the Act, the IPPS wage index is updated 

annually. 

The Affordable Care Act contained 

several provisions affecting the wage 

index. These provisions were discussed 

in the CY 2012 OPPS/ASC final rule 

with comment period (76 FR 74191). 

Section 10324 of the Affordable Care 

Act added section 1886(d)(3)(E)(iii)(II) 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59259 

to the Act, which defines a frontier State 

and amended section 1833(t) of the Act 

to add paragraph (19), which requires a 

frontier State wage index floor of 1.00 in 

certain cases, and states that the frontier 

State floor shall not be applied in a 

budget neutral manner. We codified 

these requirements at § 419.43(c)(2) and 

(3) of our regulations. For the CY 2018 

OPPS, we proposed to implement this 

provision in the same manner as we 

have since CY 2011 (82 FR 33591). 

Under this policy, the frontier State 

hospitals would receive a wage index of 

1.00 if the otherwise applicable wage 

index (including reclassification, the 

rural floor, and rural floor budget 

neutrality) is less than 1.00 (as 

discussed below and in the CY 2018 

OPPS/ASC proposed rule (82 FR 33591 

through 33592)), we proposed not to 

extend the imputed floor under the 

OPPS for CY 2018 and subsequent 

years, consistent with our proposal in 

the FY 2018 IPPS/LTCH PPS proposed 

rule (81 FR 19904 through 19905) not to 

extend the imputed floor under the IPPS 

for FY 2018 and subsequent fiscal 

years). Because the HOPD receives a 

wage index based on the geographic 

location of the specific inpatient 

hospital with which it is associated, we 

stated that the frontier State wage index 

adjustment applicable for the inpatient 

hospital also would apply for any 

associated HOPD. In the proposed rule 

(82 FR 33591), we referred readers to the 

FY 2011 through FY 2017 IPPS/LTCH 

PPS final rules for discussions regarding 

this provision, including our 

methodology for identifying which areas 

meet the definition of ‘‘frontier States’’ 

as provided for in section 

1886(d)(3)(E)(iii)(II) of the Act. We 

invited public comments on this 

proposal. 

We did not receive any public 

comments on this proposal. Therefore, 

for the reasons discussed above and in 

the CY 2018 OPPS/ASC proposed rule 

(82 FR 33591), we are finalizing our 

proposal to implement the frontier State 

floor under the OPPS in the same 

manner as we have since CY 2011. We 

note that, after we made our proposal in 

the FY 2018 IPPS/LTCH PPS proposed 

rule not to extend the imputed floor 

under the IPPS for FY 2018 and 

subsequent fiscal years (82 FR 19904 

through 19905), and our proposal in the 

CY 2018 OPPS/ASC proposed rule not 

to extend the imputed floor under the 

OPPS for CY 2018 and subsequent years 

(82 FR 33592), we decided in the FY 

2018 IPPS/LTCH PPS final rule not to 

finalize our proposal to discontinue the 

imputed floor under the IPPS (82 FR 

38138 through 38142). As discussed 

below, consistent with the FY 2018 

IPPS/LTCH PPS final rule, we are not 

finalizing our proposal to discontinue 

application of the imputed floor under 

the OPPS. This means that the 

applicable wage index, which can be 

superseded by the frontier State wage 

index if the applicable criteria are met, 

could also be affected by the imputed 

floor. We discuss our policy on the 

extension of the imputed floor under the 

IPPS as finalized in the FY 2018 IPPS/ 

LTCH PPS final rule (82 FR 38142), and 

under the OPPS as finalized in this rule, 

in more detail later in this section. 

In addition to the changes required by 

the Affordable Care Act, we note that 

the FY 2018 IPPS wage indexes 

continue to reflect a number of 

adjustments implemented over the past 

few years, including, but not limited to, 

reclassification of hospitals to different 

geographic areas, the rural floor 

provisions, an adjustment for 

occupational mix, and an adjustment to 

the wage index based on commuting 

patterns of employees (the out-migration 

adjustment). In the CY 2018 OPPS/ASC 

proposed rule, we referred readers to the 

FY 2018 IPPS/LTCH PPS proposed rule 

(82 FR 19898 through 19915) for a 

detailed discussion of all proposed 

changes to the FY 2018 IPPS wage 

indexes. We note that, in the FY 2018 

IPPS/LTCH PPS proposed rule (82 FR 

19905), we proposed not to apply the 

imputed floor to the IPPS wage index 

computations for FY 2018 and 

subsequent fiscal years. Consistent with 

this, we proposed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33592) not to 

extend the imputed floor policy under 

the OPPS beyond December 31, 2017 

(the date the imputed floor policy is set 

to expire under the OPPS). However, in 

the FY 2018 IPPS/LTCH PPS final rule, 

we did not finalize our proposal to 

discontinue the imputed floor under the 

IPPS, and instead decided to 

temporarily extend the imputed floor for 

an additional year through FY 2018, 

while we continue to assess the effects 

of this policy and whether to continue 

or discontinue the imputed floor for the 

long term. As discussed below, 

consistent with the FY 2018 IPPS/LTCH 

PPS final rule, we are not finalizing our 

proposal to discontinue application of 

the imputed floor under the OPPS, but 

are instead continuing the imputed floor 

policy under the OPPS for an additional 

year, through December 31, 2018. We 

refer readers to the FY 2018 IPPS/LTCH 

PPS proposed and final rules (82 FR 

19898 through 19915 and 82 FR 38129 

through 38157, respectively) for a 

detailed discussion of all proposed and 

final changes to the FY 2018 IPPS wage 

indexes (including our proposed and 

final policy regarding the imputed floor 

for FY 2018 and subsequent fiscal 

years). In addition, we refer readers to 

the CY 2005 OPPS final rule with 

comment period (69 FR 65842 through 

65844) and subsequent OPPS rules for a 

detailed discussion of the history of 

these wage index adjustments as 

applied under the OPPS. 

Summarized below are comments we 

received regarding the application of the 

rural and imputed floor policies under 

the OPPS, along with our responses. 

Comment: One commenter opposed 

applying budget neutrality for the rural 

floor under the OPPS on a national 

basis. The commenter believed applying 

budget neutrality on a national basis 

disadvantages hospitals in most States 

while benefiting hospitals in a few 

States that have taken advantage of the 

system where a rural hospital has a 

wage index higher than most or all 

urban hospitals in a State. The 

commenter stated that rural floor budget 

neutrality currently requires all wage 

indexes for hospitals throughout the 

nation to be reduced. However, 

hospitals in those States that have 

higher wage indexes because of the rural 

floor are not substantially affected by 

the wage index reductions. Therefore, 

the commenter supported calculating 

rural floor budget neutrality under the 

OPPS for each individual State. 

Response: We appreciate this 

comment. We acknowledge that the 

application of the wage index and 

applicable wage index adjustments to 

OPPS payment rates may create 

distributional payment variations, 

especially within a budget neutral 

system. However, we continue to 

believe it is reasonable and appropriate 

to continue the current policy of 

applying budget neutrality for the rural 

floor under the OPPS on a national 

basis, consistent with the IPPS. We 

believe that hospital inpatient and 

outpatient departments are subject to 

the same labor cost environment, and 

therefore, the wage index and any 

applicable wage index adjustments 

(including the rural floor and rural floor 

budget neutrality) should be applied in 

the same manner under the IPPS and 

OPPS. Furthermore, we believe that 

applying the rural floor and rural floor 

budget neutrality in the same manner 

under the IPPS and OPPS is reasonable 

and logical, given the inseparable, 

subordinate status of the HOPD within 

the hospital overall. In addition, we 

believe the application of different wage 

indexes and wage index adjustments 

under the IPPS and OPPS would add a 

level of administrative complexity that 

is overly burdensome and unnecessary. 


sradovich on DSK3GMQ082PROD with RULES2
59260 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

Therefore, we are continuing the current 

policy of applying budget neutrality for 

the rural floor under the OPPS on a 

national basis, consistent with the IPPS. 

Comment: One commenter supported 

the proposal to not apply the imputed 

floor to the IPPS wage index 

computations for FY 2018 and 

subsequent fiscal years when 

calculating the hospital wage indexes 

for the OPPS. 

Response: In the FY 2018 IPPS/LTCH 

PPS proposed rule (82 FR 19905), we 

proposed not to apply the imputed floor 

to the IPPS wage index computations for 

FY 2018 and subsequent fiscal years. 

Consistent with this proposal, we 

proposed in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33592) not to 

extend the imputed floor policy under 

the OPPS beyond December 31, 2017 

(the date the imputed floor policy is set 

to expire under the OPPS). As discussed 

in the FY 2018 IPPS/LTCH PPS final 

rule (82 FR 38138 through 38142), after 

consideration of the many comments we 

received both in support of and against 

our proposal to discontinue the imputed 

floor under the IPPS, we decided to 

temporarily extend the imputed floor for 

an additional year under the IPPS 

through FY 2018, while we continue to 

assess the effects of this policy and 

whether to continue or discontinue the 

imputed floor for the long term. 

Therefore, in the FY 2018 IPPS/LTCH 

PPS final rule, we extended the imputed 

floor policy under both the original 

methodology and the alternative 

methodology for an additional year, 

through September 30, 2018. We refer 

readers to the FY 2018 IPPS/LTCH PPS 

final rule (82 FR 38138 through 38142) 

for a detailed discussion of our final 

policy and rationale regarding 

application of the imputed floor under 

the IPPS for FY 2018. Given the 

inseparable, subordinate status of the 

HOPD within the hospital overall, we 

believe that using the IPPS wage index 

and wage index adjustments, including 

the imputed floor, as the source of an 

adjustment factor for the OPPS is 

reasonable and logical. Furthermore, as 

we previously stated, we believe that 

hospital inpatient and outpatient 

departments are subject to the same 

labor cost environment and, therefore, 

the wage index and any applicable wage 

index adjustments (including the 

imputed floor) should be applied in the 

same manner under the IPPS and OPPS. 

In addition, as discussed above, we 

believe the application of different wage 

index adjustments under the IPPS and 

OPPS would add a level of 

administrative complexity that is overly 

burdensome and unnecessary. Thus, as 

discussed further below, consistent with 

the FY 2018 IPPS/LTCH PPS final rule, 

we are not finalizing our proposal to 

discontinue application of the imputed 

floor under the OPPS, and instead are 

temporarily extending the imputed floor 

policy under the OPPS for an additional 

year. 

After consideration of the public 

comments we received and for the 

reasons discussed above, consistent 

with the FY 2018 IPPS/LTCH PPS final 

rule, we have decided to extend the 

imputed floor policy under the OPPS for 

an additional year, through December 

31, 2018, while we continue to assess 

the effects of this policy and whether to 

continue or discontinue the imputed 

floor for the long term. Therefore, we are 

not finalizing our proposal to 

discontinue the imputed floor policy 

under the OPPS. We continue to believe 

that using the final fiscal year IPPS postreclassified wage index, inclusive of any 

adjustments (including the imputed 

floor), as the wage index for the OPPS 

to determine the wage adjustments for 

both the OPPS payment rate and the 

copayment standardized amount is 

reasonable and logical, given the 

inseparable, subordinate status of the 

HOPD within the hospital overall. 

As discussed in the FY 2015 IPPS/ 

LTCH PPS final rule (79 FR 49951 

through 49963), the FY 2016 IPPS/LTCH 

PPS final rule (80 FR 49488 through 

49489 and 49494 through 49496), and 

the FY 2017 IPPS/LTCH PPS final rule 

(81 FR 56913), the Office of 

Management and Budget (OMB) issued 

revisions to the labor market area 

delineations on February 28, 2013 

(based on 2010 Decennial Census data), 

that included a number of significant 

changes such as new Core Based 

Statistical Areas (CBSAs), urban 

counties that became rural, rural 

counties that became urban, and 

existing CBSAs that were split apart 

(OMB Bulletin 13–01). This bulletin can 

be found at: https://obama

whitehouse.archives.gov/sites/default/ 

files/omb/bulletins/2013/b13-01.pdf. In 

the FY 2015 IPPS/LTCH PPS final rule 

(79 FR 49950 through 49985), we 

adopted the use of the OMB labor 

market area delineations contained in 

OMB Bulletin No. 13–01, effective 

October 1, 2014. In the FY 2017 IPPS/ 

LTCH PPS final rule (81 FR 56913), we 

adopted revisions to statistical areas 

contained in OMB Bulletin No. 15–01, 

issued on July 15, 2015, which provided 

updates to and superseded OMB 

Bulletin No. 13–01 that was issued on 

February 28, 2013. We believe that it is 

important for the OPPS to use the latest 

labor market area delineations available 

as soon as is reasonably possible in 

order to maintain a more accurate and 

up-to-date payment system that reflects 

the reality of population shifts and labor 

market conditions. Therefore, for 

purposes of the OPPS, in the CY 2017 

OPPS/ASC final rule with comment 

period (81 FR 79598), we adopted the 

revisions to the OMB statistical area 

delineations contained in OMB Bulletin 

No. 15–01, effective January 1, 2017, 

beginning with the CY 2017 OPPS wage 

indexes. 

CBSAs are made up of one or more 

constituent counties. Each CBSA and 

constituent county has its own unique 

identifying codes. The FY 2018 IPPS/ 

LTCH PPS proposed rule (82 FR 19898 

through 19899) and final rule (82 FR 

38130) discuss the two different lists of 

codes to identify counties: Social 

Security Administration (SSA) codes 

and Federal Information Processing 

Standard (FIPS) codes. Historically, 

CMS has listed and used SSA and FIPS 

county codes to identify and crosswalk 

counties to CBSA codes for purposes of 

the IPPS and OPPS wage indexes. 

However, the SSA county codes are no 

longer being maintained and updated, 

although the FIPS codes continue to be 

maintained by the U.S. Census Bureau. 

The Census Bureau’s most current 

statistical area information is derived 

from ongoing census data received since 

2010; the most recent data are from 

2015. In the FY 2018 IPPS/LTCH PPS 

proposed rule (81 FR 19898), for 

purposes of crosswalking counties to 

CBSAs for the IPPS wage index, we 

proposed to discontinue the use of the 

SSA county codes and begin using only 

the FIPS county codes. (We note that we 

finalized the proposal to discontinue 

use of SSA county codes and begin 

using only the FIPS county codes for 

purposes of crosswalking counties to 

CBSAs in the FY 2018 IPPS/LTCH PPS 

final rule (82 FR 38130)). Similarly, for 

the purposes of crosswalking counties to 

CBSAs for the OPPS wage index, in the 

CY 2018 OPPS/ASC proposed rule (82 

FR 33591), we proposed to discontinue 

the use of SSA county codes and begin 

using only the FIPS county codes. We 

invited public comments on this 

proposal. We did not receive any public 

comments on this proposal. Thus, for 

the reasons discussed above and in the 

CY 2018 OPPS/ASC proposed rule (82 

FR 33591), we are finalizing, without 

modification, our proposal to 

discontinue the use of SSA county 

codes and begin using only the FIPS 

county codes for the purposes of 

crosswalking counties to CBSAs for the 

OPPS wage index. 

The Census Bureau maintains a 

complete list of changes to counties or 

county equivalent entities on the Web 

site at: https://www.census.gov/geo/ 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59261 

reference/county-changes.html. In our 

proposed transition to using only FIPS 

codes for counties for the IPPS wage 

index, in the FY 2018 IPPS/LTCH PPS 

proposed rule (82 FR 19899), we 

proposed to update the FIPS codes used 

for crosswalking counties to CBSAs for 

the IPPS wage index effective October 1, 

2017, to incorporate changes to the 

counties or county equivalent entities 

included in the Census Bureau’s most 

recent list. We proposed to include 

these updates to calculate the area wage 

indexes in a manner that is generally 

consistent with the CBSA-based 

methodologies finalized in the FY 2005 

IPPS final rule and the FY 2015 IPPS/ 

LTCH PPS final rule. Based on 

information included in the Census 

Bureau’s Web site, since 2010, the 

Census Bureau has made the following 

updates to the FIPS codes for counties 

or county equivalent entities: 

• Petersburg Borough, AK (FIPS State 

County Code 02–195), CBSA 02, was 

created from part of former Petersburg 

Census Area (02–195) and part of 

Hoonah-Angoon Census Area (02–105). 

The CBSA code remains 02. 

• The name of La Salle Parish, LA 

(FIPS State County Code 22–059), CBSA 

14, is now LaSalle Parish, LA (FIPS 

State County Code 22–059). The CBSA 

code remains as 14. 

• The name of Shannon County, SD 

(FIPS State County Code 46–113), CBSA 

43, is now Oglala Lakota County, SD 

(FIPS State County Code 46–102). The 

CBSA code remains as 43. 

In the FY 2018 IPPS/LTCH PPS final 

rule (82 FR 38130), for the IPPS, we 

finalized our proposal to implement 

these FIPS code updates, effective 

October 1, 2017, beginning with the FY 

2018 wage indexes. We note that while 

the county update changes listed earlier 

changed the county names, the CBSAs 

to which these counties map did not 

change from the prior counties. 

Therefore, there is no impact or change 

to hospitals in these counties; they 

continue to be considered rural for the 

IPPS wage index under these changes. 

Consistent with the FY 2018 IPPS/LTCH 

PPS proposed rule, in the CY 2018 

OPPS/ASC proposed rule (82 FR 33592), 

we proposed to implement these 

revisions for purposes of the OPPS, 

effective January 1, 2018, beginning 

with the CY 2018 OPPS wage indexes. 

We stated that we believe it is important 

to use the latest counties or county 

equivalent entities in order to properly 

crosswalk hospitals from a county to a 

CBSA for purposes of the OPPS wage 

index. In addition, we stated we believe 

that using the latest FIPS codes will 

allow us to maintain a more accurate 

and up-to-date payment system that 

reflects the reality of population shifts 

and labor market conditions. We invited 

public comments on this proposal. 

We did not receive any public 

comments on this proposal. Therefore, 

for the reasons discussed above and in 

the CY 2018 OPPS/ASC proposed rule 

(82 FR 33591 through 33592), we are 

finalizing our proposal, without 

modification, to implement the FIPS 

code updates described above, effective 

January 1, 2018, beginning with the CY 

2018 OPPS wage indexes. Tables 2 and 

3 associated with the FY 2018 IPPS/ 

LTCH PPS final rule and the County to 

CBSA Crosswalk File and Urban CBSAs 

and Constituent Counties for Acute Care 

Hospitals File posted on the CMS Web 

site reflect these county changes. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33592), we proposed to use 

the FY 2018 hospital IPPS postreclassified wage index for urban and 

rural areas as the wage index for the 

OPPS to determine the wage 

adjustments for both the OPPS payment 

rate and the copayment standardized 

amount for CY 2018. Therefore, we 

stated in the proposed rule that any 

adjustments for the FY 2018 IPPS postreclassified wage index would be 

reflected in the final CY 2018 OPPS 

wage index. (We refer readers to the FY 

2018 IPPS/LTCH PPS proposed rule (82 

FR 19898 through 19915) and final rule 

(82 FR 38129 through 38157), and the 

proposed and final FY 2018 hospital 

wage index files posted on the CMS 

Web site.) We invited public comments 

on this proposal. As discussed above, 

we received public comments regarding 

the application of the rural and imputed 

floors under the OPPS. We refer readers 

to our earlier discussion of these 

comments and our responses. After 

consideration of these comments, for the 

reasons discussed above and in the CY 

2018 OPPS/ASC proposed rule (82 FR 

33592), we are finalizing this proposal 

without modification. As stated earlier, 

we continue to believe that using the 

final fiscal year IPPS post-reclassified 

wage index, inclusive of any 

adjustments, as the wage index for the 

OPPS to determine the wage 

adjustments for both the OPPS payment 

rate and the copayment standardized 

amount is reasonable and logical, given 

the inseparable, subordinate status of 

the HOPD within the hospital overall. 

Hospitals that are paid under the 

OPPS, but not under the IPPS, do not 

have an assigned hospital wage index 

under the IPPS. Therefore, for non-IPPS 

hospitals paid under the OPPS, it is our 

longstanding policy to assign the wage 

index that would be applicable if the 

hospital were paid under the IPPS, 

based on its geographic location and any 

applicable wage index adjustments. In 

the CY 2018 OPPS/ASC proposed rule, 

we proposed to continue this policy for 

CY 2018, and included a brief summary 

of the major proposed FY 2018 IPPS 

wage index policies and adjustments 

that we proposed to apply to these 

hospitals under the OPPS for CY 2018. 

These proposals are summarized below. 

We invited public comments on these 

proposals. 

It has been our longstanding policy to 

allow non-IPPS hospitals paid under the 

OPPS to qualify for the out-migration 

adjustment if they are located in a 

section 505 out-migration county 

(section 505 of the Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 (MMA)). 

Applying this adjustment is consistent 

with our policy of adopting IPPS wage 

index policies for hospitals paid under 

the OPPS. We note that, because nonIPPS hospitals cannot reclassify, they 

are eligible for the out-migration wage 

adjustment if they are located in a 

section 505 out-migration county. This 

is the same out-migration adjustment 

policy that applies if the hospital were 

paid under the IPPS. For CY 2018, we 

proposed to continue our policy of 

allowing non-IPPS hospitals paid under 

the OPPS to qualify for the outmigration adjustment if they are located 

in a section 505 out-migration county 

(section 505 of the MMA). We did not 

receive any public comments on this 

proposal. Therefore, for the reasons 

discussed above and in the CY 2018 

OPPS/ASC proposed rule (82 FR 33592), 

we are finalizing this proposal without 

modification. 

As stated earlier, in the FY 2015 IPPS/ 

LTCH PPS final rule, we adopted the 

OMB labor market area delineations 

issued by OMB in OMB Bulletin No. 

13–01 on February 28, 2013, based on 

standards published on June 28, 2010 

(75 FR 37246 through 37252) and the 

2010 Census data to delineate labor 

market areas for purposes of the IPPS 

wage index. For IPPS wage index 

purposes, for hospitals that were located 

in urban CBSAs in FY 2014 but were 

designated as rural under these revised 

OMB labor market area delineations, we 

generally assigned them the urban wage 

index value of the CBSA in which they 

were physically located for FY 2014 for 

a period of 3 fiscal years (79 FR 49957 

through 49960). To be consistent, we 

applied the same policy to hospitals 

paid under the OPPS but not under the 

IPPS so that such hospitals will 

maintain the wage index of the CBSA in 

which they were physically located for 

FY 2014 for 3 calendar years (until 

December 31, 2017). Because this 3-year 

transition will end at the end of CY 


sradovich on DSK3GMQ082PROD with RULES2
59262 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

2017, it will no longer be applied in CY 

2018. 

In addition, under the IPPS, the 

imputed floor policy was set to expire 

effective October 1, 2017. However, as 

discussed above and in the FY 2018 

IPPS/LTCH PPS final rule (82 FR 38138 

through 38142), we did not finalize our 

proposal not to extend the imputed floor 

policy under the IPPS for FY 2018 and 

subsequent fiscal years (82 FR 38132), 

and instead decided to extend the 

imputed floor policy for one additional 

year, through FY 2018. For purposes of 

the CY 2018 OPPS, we proposed not to 

extend the imputed floor policy beyond 

December 31, 2017. However, consistent 

with the FY 2018 IPPS/LTCH PPS final 

rule, as discussed above, we are 

extending the imputed floor policy 

under the OPPS for one additional year, 

through December 31, 2018. Therefore, 

for CY 2018, for hospitals paid under 

the OPPS but not under the IPPS, the 

imputed floor policy will continue to 

apply through December 31, 2018. 

For CMHCs, for CY 2018, we 

proposed to continue to calculate the 

wage index by using the postreclassification IPPS wage index based 

on the CBSA where the CMHC is 

located. As with OPPS hospitals and for 

the same reasons, for CMHCs previously 

located in urban CBSAs that were 

designated as rural under the revised 

OMB labor market area delineations in 

OMB Bulletin No. 13–01, we finalized a 

policy to maintain the urban wage index 

value of the CBSA in which they were 

physically located for CY 2014 for 3 

calendar years (until December 31, 

2017). Because this 3-year transition 

will end at the end of CY 2017, it will 

not be applied in CY 2018. Furthermore, 

in the CY 2018 OPPS/ASC proposed 

rule (82 FR 33592), we proposed that 

the wage index that applies to CMHCs 

would include the rural floor 

adjustment, but not the imputed floor 

adjustment, given that we had proposed 

not to extend the imputed floor policy 

under the OPPS beyond December 31, 

2017 (the expiration date for the 

imputed floor under the OPPS). We also 

proposed that the wage index that 

applies to CMHCs would not include 

the out-migration adjustment because 

that adjustment only applies to 

hospitals. We did not receive any public 

comments regarding these proposals, 

and are finalizing these proposals with 

the following modification. Because, as 

discussed above, we are extending the 

application of the imputed floor under 

the OPPS for an additional year, through 

December 31, 2018, the wage index that 

applies to CMHCs will continue to 

include the imputed floor adjustment 

through December 31, 2018. 

Table 2 associated with the FY 2018 

IPPS/LTCH PPS final rule (available via 

the Internet on the CMS Web site at: 

http://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

AcuteInpatientPPS/index.html) 

identifies counties eligible for the outmigration adjustment and IPPS 

hospitals that will receive the 

adjustment for FY 2018. We are 

including the out-migration adjustment 

information from Table 2 associated 

with the FY 2018 IPPS/LTCH PPS final 

rule as Addendum L to this final rule 

with comment period with the addition 

of non-IPPS hospitals that will receive 

the section 505 out-migration 

adjustment under the CY 2018 OPPS. 

Addendum L is available via the 

Internet on the CMS Web site. We refer 

readers to the CMS Web site for the 

OPPS at: http://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

HospitalOutpatientPPS/index.html. At 

this link, readers will find a link to the 

final FY 2018 IPPS wage index tables 

and Addendum L. 

D. Statewide Average Default CCRs 

In addition to using CCRs to estimate 

costs from charges on claims for 

ratesetting, CMS uses overall hospitalspecific CCRs calculated from the 

hospital’s most recent cost report to 

determine outlier payments, payments 

for pass-through devices, and monthly 

interim transitional corridor payments 

under the OPPS during the PPS year. 

MACs cannot calculate a CCR for some 

hospitals because there is no cost report 

available. For these hospitals, CMS uses 

the statewide average default CCRs to 

determine the payments mentioned 

earlier until a hospital’s MAC is able to 

calculate the hospital’s actual CCR from 

its most recently submitted Medicare 

cost report. These hospitals include, but 

are not limited to, hospitals that are 

new, hospitals that have not accepted 

assignment of an existing hospital’s 

provider agreement, and hospitals that 

have not yet submitted a cost report. 

CMS also uses the statewide average 

default CCRs to determine payments for 

hospitals that appear to have a biased 

CCR (that is, the CCR falls outside the 

predetermined ceiling threshold for a 

valid CCR) or for hospitals in which the 

most recent cost report reflects an allinclusive rate status (Medicare Claims 

Processing Manual (Pub. 100–04), 

Chapter 4, Section 10.11). 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33593), we proposed to 

update the default ratios for CY 2018 

using the most recent cost report data. 

We discussed our policy for using 

default CCRs, including setting the 

ceiling threshold for a valid CCR, in the 

CY 2009 OPPS/ASC final rule with 

comment period (73 FR 68594 through 

68599) in the context of our adoption of 

an outlier reconciliation policy for cost 

reports beginning on or after January 1, 

2009. For detail on our process for 

calculating the statewide average CCRs, 

we referred readers to the CY 2018 

OPPS proposed rule Claims Accounting 

Narrative that is posted on the CMS 

Web site. Table 10 published in the 

proposed rule (82 FR 33593 through 

33594) listed the proposed statewide 

average default CCRs for OPPS services 

furnished on or after January 1, 2018, 

based on proposed rule data. 

We did not receive any public 

comments on our proposal to use 

statewide average default CCRs if a 

MAC cannot calculate a CCR for a 

hospital and to use these CCRs to adjust 

charges to costs on claims data for 

setting the final CY 2018 OPPS relative 

payment weights. Therefore, we are 

finalizing our proposal without 

modification. 

Table 9 below lists the statewide 

average default CCRs for OPPS services 

furnished on or after January 1, 2018, 

based on final rule data. 

TABLE 9—CY 2018 STATEWIDE AVERAGE CCRS

State Urban/rural CY 2018 

default CCR 

Previous 

default CCR 

(CY 2017 

OPPS 

final rule) 

ALASKA ........................................................................ RURAL .......................................................................... 0.659 0.449 

ALASKA ........................................................................ URBAN ......................................................................... 0.218 0.237 

ALABAMA ..................................................................... RURAL .......................................................................... 0.190 0.196 

ALABAMA ..................................................................... URBAN ......................................................................... 0.155 0.158 

ARKANSAS .................................................................. RURAL .......................................................................... 0.186 0.196 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59263 

TABLE 9—CY 2018 STATEWIDE AVERAGE CCRS—Continued 

State Urban/rural CY 2018 

default CCR 

Previous 

default CCR 

(CY 2017 

OPPS 

final rule) 

ARKANSAS .................................................................. URBAN ......................................................................... 0.200 0.205 

ARIZONA ...................................................................... RURAL .......................................................................... 0.232 0.238 

ARIZONA ...................................................................... URBAN ......................................................................... 0.160 0.176 

CALIFORNIA ................................................................ RURAL .......................................................................... 0.181 0.179 

CALIFORNIA ................................................................ URBAN ......................................................................... 0.193 0.188 

COLORADO ................................................................. RURAL .......................................................................... 0.346 0.354 

COLORADO ................................................................. URBAN ......................................................................... 0.204 0.208 

CONNECTICUT ............................................................ RURAL .......................................................................... 0.324 0.402 

CONNECTICUT ............................................................ URBAN ......................................................................... 0.249 0.253 

DISTRICT OF COLUMBIA ........................................... URBAN ......................................................................... 0.279 0.286 

DELAWARE .................................................................. URBAN ......................................................................... 0.295 0.288 

FLORIDA ...................................................................... RURAL .......................................................................... 0.158 0.169 

FLORIDA ...................................................................... URBAN ......................................................................... 0.138 0.143 

GEORGIA ..................................................................... RURAL .......................................................................... 0.222 0.230 

GEORGIA ..................................................................... URBAN ......................................................................... 0.198 0.196 

HAWAII ......................................................................... RURAL .......................................................................... 0.332 0.338 

HAWAII ......................................................................... URBAN ......................................................................... 0.322 0.319 

IOWA ............................................................................ RURAL .......................................................................... 0.296 0.291 

IOWA ............................................................................ URBAN ......................................................................... 0.254 0.252 

IDAHO .......................................................................... RURAL .......................................................................... 0.339 0.341 

IDAHO .......................................................................... URBAN ......................................................................... 0.369 0.401 

ILLINOIS ....................................................................... RURAL .......................................................................... 0.214 0.241 

ILLINOIS ....................................................................... URBAN ......................................................................... 0.208 0.209 

INDIANA ....................................................................... RURAL .......................................................................... 0.299 0.272 

INDIANA ....................................................................... URBAN ......................................................................... 0.213 0.218 

KANSAS ....................................................................... RURAL .......................................................................... 0.264 0.269 

KANSAS ....................................................................... URBAN ......................................................................... 0.199 0.194 

KENTUCKY .................................................................. RURAL .......................................................................... 0.184 0.194 

KENTUCKY .................................................................. URBAN ......................................................................... 0.187 0.189 

LOUISIANA ................................................................... RURAL .......................................................................... 0.212 0.217 

LOUISIANA ................................................................... URBAN ......................................................................... 0.195 0.201 

MASSACHUSETTS ...................................................... RURAL .......................................................................... 0.322 0.316 

MASSACHUSETTS ...................................................... URBAN ......................................................................... 0.348 0.345 

MAINE .......................................................................... RURAL .......................................................................... 0.419 0.425 

MAINE .......................................................................... URBAN ......................................................................... 0.422 0.413 

MARYLAND .................................................................. RURAL .......................................................................... 0.258 0.264 

MARYLAND .................................................................. URBAN ......................................................................... 0.227 0.229 

MICHIGAN .................................................................... RURAL .......................................................................... 0.302 0.295 

MICHIGAN .................................................................... URBAN ......................................................................... 0.318 0.324 

MINNESOTA ................................................................ RURAL .......................................................................... 0.379 0.398 

MINNESOTA ................................................................ URBAN ......................................................................... 0.302 0.319 

MISSOURI .................................................................... RURAL .......................................................................... 0.220 0.222 

MISSOURI .................................................................... URBAN ......................................................................... 0.240 0.261 

MISSISSIPPI ................................................................ RURAL .......................................................................... 0.213 0.224 

MISSISSIPPI ................................................................ URBAN ......................................................................... 0.160 0.167 

MONTANA .................................................................... RURAL .......................................................................... 0.486 0.450 

MONTANA .................................................................... URBAN ......................................................................... 0.350 0.368 

NORTH CAROLINA ..................................................... RURAL .......................................................................... 0.206 0.216 

NORTH CAROLINA ..................................................... URBAN ......................................................................... 0.212 0.223 

NORTH DAKOTA ......................................................... RURAL .......................................................................... 0.366 0.411 

NORTH DAKOTA ......................................................... URBAN ......................................................................... 0.369 0.334 

NEBRASKA .................................................................. RURAL .......................................................................... 0.313 0.294 

NEBRASKA .................................................................. URBAN ......................................................................... 0.233 0.238 

NEW HAMPSHIRE ....................................................... RURAL .......................................................................... 0.307 0.320 

NEW HAMPSHIRE ....................................................... URBAN ......................................................................... 0.255 0.279 

NEW JERSEY .............................................................. URBAN ......................................................................... 0.200 0.195 

NEW MEXICO .............................................................. RURAL .......................................................................... 0.224 0.225 

NEW MEXICO .............................................................. URBAN ......................................................................... 0.284 0.280 

NEVADA ....................................................................... RURAL .......................................................................... 0.175 0.196 

NEVADA ....................................................................... URBAN ......................................................................... 0.114 0.123 

NEW YORK .................................................................. RURAL .......................................................................... 0.299 0.309 

NEW YORK .................................................................. URBAN ......................................................................... 0.303 0.292 

OHIO ............................................................................. RURAL .......................................................................... 0.280 0.292 

OHIO ............................................................................. URBAN ......................................................................... 0.203 0.207 

OKLAHOMA ................................................................. RURAL .......................................................................... 0.215 0.231 

OKLAHOMA ................................................................. URBAN ......................................................................... 0.169 0.180 

OREGON ...................................................................... RURAL .......................................................................... 0.290 0.280 

OREGON ...................................................................... URBAN ......................................................................... 0.336 0.344 


sradovich on DSK3GMQ082PROD with RULES2
59264 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 9—CY 2018 STATEWIDE AVERAGE CCRS—Continued 

State Urban/rural CY 2018 

default CCR 

Previous 

default CCR 

(CY 2017 

OPPS 

final rule) 

PENNSYLVANIA .......................................................... RURAL .......................................................................... 0.267 0.274 

PENNSYLVANIA .......................................................... URBAN ......................................................................... 0.173 0.179 

PUERTO RICO ............................................................. URBAN ......................................................................... 0.577 0.527 

RHODE ISLAND ........................................................... URBAN ......................................................................... 0.276 0.291 

SOUTH CAROLINA ...................................................... RURAL .......................................................................... 0.170 0.185 

SOUTH CAROLINA ...................................................... URBAN ......................................................................... 0.191 0.190 

SOUTH DAKOTA ......................................................... RURAL .......................................................................... 0.391 0.383 

SOUTH DAKOTA ......................................................... URBAN ......................................................................... 0.242 0.229 

TENNESSEE ................................................................ RURAL .......................................................................... 0.173 0.181 

TENNESSEE ................................................................ URBAN ......................................................................... 0.174 0.180 

TEXAS .......................................................................... RURAL .......................................................................... 0.205 0.214 

TEXAS .......................................................................... URBAN ......................................................................... 0.168 0.177 

UTAH ............................................................................ RURAL .......................................................................... 0.391 0.349 

UTAH ............................................................................ URBAN ......................................................................... 0.304 0.315 

VIRGINIA ...................................................................... RURAL .......................................................................... 0.177 0.191 

VIRGINIA ...................................................................... URBAN ......................................................................... 0.215 0.226 

VERMONT .................................................................... RURAL .......................................................................... 0.393 0.426 

VERMONT .................................................................... URBAN ......................................................................... 0.378 0.340 

WASHINGTON ............................................................. RURAL .......................................................................... 0.256 0.271 

WASHINGTON ............................................................. URBAN ......................................................................... 0.323 0.294 

WISCONSIN ................................................................. RURAL .......................................................................... 0.348 0.354 

WISCONSIN ................................................................. URBAN ......................................................................... 0.308 0.290 

WEST VIRGINIA .......................................................... RURAL .......................................................................... 0.253 0.266 

WEST VIRGINIA .......................................................... URBAN ......................................................................... 0.297 0.285 

WYOMING .................................................................... RURAL .......................................................................... 0.407 0.429 

WYOMING .................................................................... URBAN ......................................................................... 0.327 0.311 

E. Adjustment for Rural Sole 

Community Hospitals (SCHs) and 

Essential Access Community Hospitals 

(EACHs) Under Section 1833(t)(13)(B) of 

the Act for CY 2018 

In the CY 2006 OPPS final rule with 

comment period (70 FR 68556), we 

finalized a payment increase for rural 

sole community hospitals (SCHs) of 7.1 

percent for all services and procedures 

paid under the OPPS, excluding drugs, 

biologicals, brachytherapy sources, and 

devices paid under the pass-through 

payment policy in accordance with 

section 1833(t)(13)(B) of the Act, as 

added by section 411 of the Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 (MMA) (Pub. 

L. 108–173). Section 1833(t)(13) of the 

Act provided the Secretary the authority 

to make an adjustment to OPPS 

payments for rural hospitals, effective 

January 1, 2006, if justified by a study 

of the difference in costs by APC 

between hospitals in rural areas and 

hospitals in urban areas. Our analysis 

showed a difference in costs for rural 

SCHs. Therefore, for the CY 2006 OPPS, 

we finalized a payment adjustment for 

rural SCHs of 7.1 percent for all services 

and procedures paid under the OPPS, 

excluding separately payable drugs and 

biologicals, brachytherapy sources, and 

devices paid under the pass-through 

payment policy, in accordance with 

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

In the CY 2007 OPPS/ASC final rule 

with comment period (71 FR 68010 and 

68227), for purposes of receiving this 

rural adjustment, we revised § 419.43(g) 

of the regulations to clarify that 

essential access community hospitals 

(EACHs) also are eligible to receive the 

rural SCH adjustment, assuming these 

entities otherwise meet the rural 

adjustment criteria. Currently, two 

hospitals are classified as EACHs, and 

as of CY 1998, under section 4201(c) of 

Public Law 105–33, a hospital can no 

longer become newly classified as an 

EACH. 

This adjustment for rural SCHs is 

budget neutral and applied before 

calculating outlier payments and 

copayments. We stated in the CY 2006 

OPPS final rule with comment period 

(70 FR 68560) that we would not 

reestablish the adjustment amount on an 

annual basis, but we may review the 

adjustment in the future and, if 

appropriate, would revise the 

adjustment. We provided the same 7.1 

percent adjustment to rural SCHs, 

including EACHs, again in CYs 2008 

through 2017. Further, in the CY 2009 

OPPS/ASC final rule with comment 

period (73 FR 68590), we updated the 

regulations at § 419.43(g)(4) to specify, 

in general terms, that items paid at 

charges adjusted to costs by application 

of a hospital-specific CCR are excluded 

from the 7.1 percent payment 

adjustment. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33594 through 33595), for 

the CY 2018 OPPS, we proposed to 

continue our policy of a 7.1 percent 

payment adjustment that is done in a 

budget neutral manner for rural SCHs, 

including EACHs, for all services and 

procedures paid under the OPPS, 

excluding separately payable drugs and 

biologicals, devices paid under the passthrough payment policy, and items paid 

at charges reduced to costs. 

Comment: Commenters supported the 

proposed payment adjustment for rural 

SCHs and EACHs, and stated that this 

adjustment would support access to care 

in rural areas and provide additional 

resources for rural SCHs and EACHs. 

Response: We appreciate the 

commenters’ support. 

After consideration of the public 

comments we received, we are 

finalizing the proposal for CY 2017 to 

continue our policy of a 7.1 percent 

payment adjustment that is done in a 

budget neutral manner for rural SCHs, 

including EACHs, for all services and 

procedures paid under the OPPS, 

excluding separately payable drugs and 

biologicals, devices paid under the passthrough payment policy, and items paid 

at charges reduced to costs. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59265 

F. Payment Adjustment for Certain 

Cancer Hospitals for CY 2018 

1. Background 

Since the inception of the OPPS, 

which was authorized by the Balanced 

Budget Act of 1997 (BBA) (Pub. L. 105– 

33), Medicare has paid the 11 hospitals 

that meet the criteria for cancer 

hospitals identified in section 

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

OPPS for covered outpatient hospital 

services. These cancer hospitals are 

exempted from payment under the IPPS. 

With the Medicare, Medicaid and 

SCHIP Balanced Budget Refinement Act 

of 1999 (Pub. L. 106–113), Congress 

established section 1833(t)(7) of the Act, 

‘‘Transitional Adjustment to Limit 

Decline in Payment,’’ to determine 

OPPS payments to cancer and children’s 

hospitals based on their pre-BBA 

payment amount (often referred to as 

‘‘held harmless’’). 

As required under section 

1833(t)(7)(D)(ii) of the Act, a cancer 

hospital receives the full amount of the 

difference between payments for 

covered outpatient services under the 

OPPS and a ‘‘pre-BBA amount.’’ That is, 

cancer hospitals are permanently held 

harmless to their ‘‘pre-BBA amount,’’ 

and they receive transitional outpatient 

payments (TOPs) or hold harmless 

payments to ensure that they do not 

receive a payment that is lower in 

amount under the OPPS than the 

payment amount they would have 

received before implementation of the 

OPPS, as set forth in section 

1833(t)(7)(F) of the Act. The ‘‘pre-BBA 

amount’’ is the product of the hospital’s 

reasonable costs for covered outpatient 

services occurring in the current year 

and the base payment-to-cost ratio (PCR) 

for the hospital defined in section 

1833(t)(7)(F)(ii) of the Act. The ‘‘preBBA amount’’ and the determination of 

the base PCR are defined at 42 CFR 

419.70(f). TOPs are calculated on 

Worksheet E, Part B, of the Hospital 

Cost Report or the Hospital Health Care 

Complex Cost Report (Form CMS–2552– 

96 or Form CMS–2552–10, respectively) 

as applicable each year. Section 

1833(t)(7)(I) of the Act exempts TOPs 

from budget neutrality calculations. 

Section 3138 of the Affordable Care 

Act amended section 1833(t) of the Act 

by adding a new paragraph (18), which 

instructs the Secretary to conduct a 

study to determine if, under the OPPS, 

outpatient costs incurred by cancer 

hospitals described in section 

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

to APC groups exceed outpatient costs 

incurred by other hospitals furnishing 

services under section 1833(t) of the 

Act, as determined appropriate by the 

Secretary. Section 1833(t)(18)(A) of the 

Act requires the Secretary to take into 

consideration the cost of drugs and 

biologicals incurred by cancer hospitals 

and other hospitals. Section 

1833(t)(18)(B) of the Act provides that, 

if the Secretary determines that cancer 

hospitals’ costs are higher than those of 

other hospitals, the Secretary shall 

provide an appropriate adjustment 

under section 1833(t)(2)(E) of the Act to 

reflect these higher costs. In 2011, after 

conducting the study required by 

section 1833(t)(18)(A) of the Act, we 

determined that outpatient costs 

incurred by the 11 specified cancer 

hospitals were greater than the costs 

incurred by other OPPS hospitals. For a 

complete discussion regarding the 

cancer hospital cost study, we refer 

readers to the CY 2012 OPPS/ASC final 

rule with comment period (76 FR 74200 

through 74201). 

Based on these findings, we finalized 

a policy to provide a payment 

adjustment to the 11 specified cancer 

hospitals that reflects their higher 

outpatient costs as discussed in the CY 

2012 OPPS/ASC final rule with 

comment period (76 FR 74202 through 

74206). Specifically, we adopted a 

policy to provide additional payments 

to the cancer hospitals so that each 

cancer hospital’s final PCR for services 

provided in a given calendar year is 

equal to the weighted average PCR 

(which we refer to as the ‘‘target PCR’’) 

for other hospitals paid under the OPPS. 

The target PCR is set in advance of the 

calendar year and is calculated using 

the most recently submitted or settled 

cost report data that are available at the 

time of final rulemaking for the calendar 

year. The amount of the payment 

adjustment is made on an aggregate 

basis at cost report settlement. We note 

that the changes made by section 

1833(t)(18) of the Act do not affect the 

existing statutory provisions that 

provide for TOPs for cancer hospitals. 

The TOPs are assessed as usual after all 

payments, including the cancer hospital 

payment adjustment, have been made 

for a cost reporting period. For CYs 2012 

and 2013, the target PCR for purposes of 

the cancer hospital payment adjustment 

was 0.91. For CY 2014, the target PCR 

for purposes of the cancer hospital 

payment adjustment was 0.89. For CY 

2015, the target PCR was 0.90. For CY 

2016, the target PCR was 0.92, as 

discussed in the CY 2016 OPPS/ASC 

final rule with comment period (80 FR 

70362 through 70363). For CY 2017, the 

target PCR was 0.91, as discussed in the 

CY 2017 OPPS/ASC final rule with 

comment period (81 FR 79603 through 

7960). 

2. Proposed and Finalized Policy for CY 

2018 

Section 16002(b) of the 21st Century 

Cures Act (Pub. L. 114–255) amended 

section 1833(t)(18) of the Act by adding 

subparagraph (C), which requires that in 

applying 42 CFR 419.43(i), that is, the 

payment adjustment for certain cancer 

hospitals, for services furnished on or 

after January 1, 2018, the target PCR 

adjustment be reduced by 1.0 

percentage point less than what would 

otherwise apply. Section 16002(b) also 

provides that, in addition to the 

percentage reduction, the Secretary may 

consider making an additional 

percentage point reduction to the target 

PCR that takes into account payment 

rates for applicable items and services 

described under section 1833(t)(21)(C) 

of the Act for hospitals that are not 

cancer hospitals described under 

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

Further, in making any budget 

neutrality adjustment under section 

1833(t) of the Act, the Secretary shall 

not take into account the reduced 

expenditures that result from 

application of section 1833(t)(18)(C) of 

the Act. In the CY 2018 OPPS/ASC 

proposed rule (82 FR 33595), for CY 

2018, we proposed to provide additional 

payments to the 11 specified cancer 

hospitals so that each cancer hospital’s 

final PCR is equal to the weighted 

average PCR (or ‘‘target PCR’’) for the 

other OPPS hospitals using the most 

recent submitted or settled cost report 

data that were available at the time of 

the development of the proposed rule, 

reduced by 1.0 percentage point to 

comply with section 16002(b) of the 

21st Century Cures Act. We did not 

propose an additional reduction beyond 

the 1.0 percentage point reduction 

required by section 16002(b) for CY 

2018. To calculate the proposed CY 

2018 target PCR, we used the same 

extract of cost report data from HCRIS, 

as discussed in section II.A. of the 

proposed rule, used to estimate costs for 

the CY 2018 OPPS. Using these cost 

report data, we included data from 

Worksheet E, Part B, for each hospital, 

using data from each hospital’s most 

recent cost report, whether as submitted 

or settled. 

We then limited the dataset to the 

hospitals with CY 2016 claims data that 

we used to model the impact of the 

proposed CY 2018 APC relative 

payment weights (3,701 hospitals) 

because it is appropriate to use the same 

set of hospitals that we are using to 

calibrate the modeled CY 2018 OPPS. 

The cost report data for the hospitals in 

this dataset were from cost report 

periods with fiscal year ends ranging 


sradovich on DSK3GMQ082PROD with RULES2
59266 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

from 2013 to 2016. We then removed 

the cost report data of the 49 hospitals 

located in Puerto Rico from our dataset 

because we do not believe that their cost 

structure reflects the costs of most 

hospitals paid under the OPPS and, 

therefore, their inclusion may bias the 

calculation of hospital-weighted 

statistics. We also removed the cost 

report data of 16 hospitals because these 

hospitals had cost report data that were 

not complete (missing aggregate OPPS 

payments, missing aggregate cost data, 

or missing both), so that all cost reports 

in the study would have both the 

payment and cost data necessary to 

calculate a PCR for each hospital, 

leading to a proposed analytic file of 

3,636 hospitals with cost report data. 

Using this smaller dataset of cost 

report data, we estimated that, on 

average, the OPPS payments to other 

hospitals furnishing services under the 

OPPS were approximately 90 percent of 

reasonable cost (weighted average PCR 

of 0.90). Therefore, after applying the 

1.0 percentage point reduction as 

required by section 16002(b) of the 21st 

Century Cures Act, we proposed that the 

payment amount associated with the 

cancer hospital payment adjustment to 

be determined at cost report settlement 

would be the additional payment 

needed to result in a proposed target 

PCR equal to 0.89 for each cancer 

hospital. 

Table 11 of the proposed rule 

indicated the proposed estimated 

percentage increase in OPPS payments 

to each cancer hospital for CY 2018 due 

to the cancer hospital payment 

adjustment policy. We stated in the 

proposed rule that the actual amount of 

the CY 2018 cancer hospital payment 

adjustment for each cancer hospital will 

be determined at cost report settlement 

and will depend on each hospital’s CY 

2018 payments and costs. We noted that 

the requirements contained in section 

1833(t)(18) of the Act do not affect the 

existing statutory provisions that 

provide for TOPs for cancer hospitals. 

The TOPs will be assessed as usual after 

all payments, including the cancer 

hospital payment adjustment, have been 

made for a cost reporting period. 

Comment: Several commenters 

supported the proposed cancer hospital 

payment adjustment for CY 2018. 

Response: We appreciate the 

commenters’ support. 

After consideration of the public 

comments we received, we are 

finalizing our cancer hospital payment 

adjustment methodology as proposed. 

For this final rule with comment period, 

we are using the most recent cost report 

data through June 30, 2017 to update the 

adjustment. This update yields a target 

PCR of 0.88. We limited the dataset to 

the hospitals with CY 2016 claims data 

that we used to model the impact of the 

CY 2018 APC relative payment weights 

(3,724 hospitals) because it is 

appropriate to use the same set of 

hospitals that we are using to calibrate 

the modeled CY 2018 OPPS. The cost 

report data for the hospitals in this 

dataset were from cost report periods 

with fiscal year ends ranging from 2012 

to 2017. We then removed the cost 

report data of the 49 hospitals located in 

Puerto Rico from our dataset because we 

do not believe that their cost structure 

reflects the costs of most hospitals paid 

under the OPPS and, therefore, their 

inclusion may bias the calculation of 

hospital-weighted statistics. We also 

removed the cost report data of 14 

hospitals because these hospitals had 

cost report data that were not complete 

(missing aggregate OPPS payments, 

missing aggregate cost data, or missing 

both), so that all cost reports in the 

study would have both the payment and 

cost data necessary to calculate a PCR 

for each hospital, leading to an analytic 

file of 3,661 hospitals with cost report 

data. 

Using this smaller dataset of cost 

report data, we estimated a target PCR 

of 0.89. Therefore, after applying the 1.0 

percentage point reduction as required 

by section 16002(b) of the 21st Century 

Cures Act, we are finalizing that the 

payment amount associated with the 

cancer hospital payment adjustment to 

be determined at cost report settlement 

will be the additional payment needed 

to result in a PCR equal to 0.88 for each 

cancer hospital. Table 10 below 

indicates the estimated percentage 

increase in OPPS payments to each 

cancer hospital for CY 2018 due to the 

cancer hospital payment adjustment 

policy. We note that the requirements 

contained in section 1833(t)(18) of the 

Act do not affect the existing statutory 

provisions that provide for TOPs for 

cancer hospitals. The TOPs will be 

assessed as usual after all payments, 

including the cancer hospital payment 

adjustment, have been made for a cost 

reporting period. 

TABLE 10—ESTIMATED CY 2018 HOSPITAL-SPECIFIC PAYMENT ADJUSTMENT FOR CANCER HOSPITALS TO BE PROVIDED

AT COST REPORT SETTLEMENT

Provider No. Hospital name 

Estimated 

percentage 

increase in 

OPPS 

payments 

for CY 2018 

due to 

payment 

adjustment 

050146 ...................................................... City of Hope Comprehensive Cancer Center .............................................................. 31.5 

050660 ...................................................... USC Norris Cancer Hospital ........................................................................................ 16.4 

100079 ...................................................... Sylvester Comprehensive Cancer Center ................................................................... 22.9 

100271 ...................................................... H. Lee Moffitt Cancer Center & Research Institute ..................................................... 21.7 

220162 ...................................................... Dana-Farber Cancer Institute ...................................................................................... 44.2 

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

330354 ...................................................... Roswell Park Cancer Institute ...................................................................................... 20.0 

360242 ...................................................... James Cancer Hospital & Solove Research Institute .................................................. 27.5 

390196 ...................................................... Fox Chase Cancer Center ........................................................................................... 7.6 

450076 ...................................................... M.D. Anderson Cancer Center .................................................................................... 74.9 

500138 ...................................................... Seattle Cancer Care Alliance ....................................................................................... 52.2 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59267 

G. Hospital Outpatient Outlier 

Payments 

1. Background 

The OPPS provides outlier payments 

to hospitals to help mitigate the 

financial risk associated with high-cost 

and complex procedures, where a very 

costly service could present a hospital 

with significant financial loss. As 

explained in the CY 2015 OPPS/ASC 

final rule with comment period (79 FR 

66832 through 66834), we set our 

projected target for aggregate outlier 

payments at 1.0 percent of the estimated 

aggregate total payments under the 

OPPS for the prospective year. Outlier 

payments are provided on a service-byservice basis when the cost of a service 

exceeds the APC payment amount 

multiplier threshold (the APC payment 

amount multiplied by a certain amount) 

as well as the APC payment amount 

plus a fixed-dollar amount threshold 

(the APC payment plus a certain amount 

of dollars). In CY 2017, the outlier 

threshold was met when the hospital’s 

cost of furnishing a service exceeded 

1.75 times (the multiplier threshold) the 

APC payment amount and exceeded the 

APC payment amount plus $3,825 (the 

fixed-dollar amount threshold) (81 FR 

79604 through 79606). If the cost of a 

service exceeds both the multiplier 

threshold and the fixed-dollar 

threshold, the outlier payment is 

calculated as 50 percent of the amount 

by which the cost of furnishing the 

service exceeds 1.75 times the APC 

payment amount. Beginning with CY 

2009 payments, outlier payments are 

subject to a reconciliation process 

similar to the IPPS outlier reconciliation 

process for cost reports, as discussed in 

the CY 2009 OPPS/ASC final rule with 

comment period (73 FR 68594 through 

68599). 

It has been our policy to report the 

actual amount of outlier payments as a 

percent of total spending in the claims 

being used to model the OPPS. Our 

estimate of total outlier payments as a 

percent of total CY 2016 OPPS 

payments, using CY 2016 claims 

available for this proposed rule, is 

approximately 1.0 percent of the total 

aggregated OPPS payments. Therefore, 

for CY 2016, we estimate that we paid 

the outlier target of 1.0 percent of total 

aggregated OPPS payments. 

As stated in the proposed rule, using 

CY 2016 claims data and CY 2017 

payment rates, we estimated that the 

aggregate outlier payments for CY 2017 

would be approximately 1.0 percent of 

the total CY 2017 OPPS payments. 

Using an updated claims dataset and 

OPPS ancillary CCRs, we estimate that 

we paid approximately 1.11 percent of 

the total CY 2017 OPPS payments, in 

OPPS outliers. We provided estimated 

CY 2018 outlier payments for hospitals 

and CMHCs with claims included in the 

claims data that we used to model 

impacts in the Hospital-Specific 

Impacts—Provider-Specific Data file on 

the CMS Web site at: https://

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

PPS/index.html. 

2. Outlier Calculation for CY 2018 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33596), for CY 2018, we 

proposed to continue our policy of 

estimating outlier payments to be 1.0 

percent of the estimated aggregate total 

payments under the OPPS. We proposed 

that a portion of that 1.0 percent, an 

amount equal to less than 0.01 percent 

of outlier payments (or 0.0001 percent 

of total OPPS payments) would be 

allocated to CMHCs for PHP outlier 

payments. This is the amount of 

estimated outlier payments that would 

result from the proposed CMHC outlier 

threshold as a proportion of total 

estimated OPPS outlier payments. As 

discussed in section VIII.C. of the 

proposed rule, we proposed to continue 

our longstanding policy that if a 

CMHC’s cost for partial hospitalization 

services, paid under APC 5853 (Partial 

Hospitalization for CMHCs), exceeds 

3.40 times the payment rate for 

proposed APC 5853, the outlier 

payment would be calculated as 50 

percent of the amount by which the cost 

exceeds 3.40 times the proposed APC 

5853 payment rate. For further 

discussion of CMHC outlier payments, 

we refer readers to section VIII.D. of the 

proposed rule. 

To ensure that the estimated CY 2018 

aggregate outlier payments would equal 

1.0 percent of estimated aggregate total 

payments under the OPPS, we proposed 

that the hospital outlier threshold be set 

so that outlier payments would be 

triggered when a hospital’s cost of 

furnishing a service exceeds 1.75 times 

the APC payment amount and exceeds 

the APC payment amount plus $4,325. 

We calculated the proposed fixeddollar threshold of $4,325 using the 

standard methodology most recently 

used for CY 2017 (81 FR 79604 through 

79605). For purposes of estimating 

outlier payments for the proposed rule, 

we used the hospital-specific overall 

ancillary CCRs available in the April 

2017 update to the Outpatient ProviderSpecific File (OPSF). The OPSF 

contains provider-specific data, such as 

the most current CCRs, which are 

maintained by the MACs and used by 

the OPPS Pricer to pay claims. The 

claims that we use to model each OPPS 

update lag by 2 years. 

In order to estimate the CY 2018 

hospital outlier payments for the 

proposed rule, we inflated the charges 

on the CY 2016 claims using the same 

inflation factor of 1.104055 that we used 

to estimate the IPPS fixed-dollar outlier 

threshold for the FY 2018 IPPS/LTCH 

PPS proposed rule (82 FR 20173). We 

used an inflation factor of 1.05074 to 

estimate CY 2017 charges from the CY 

2016 charges reported on CY 2016 

claims. The methodology for 

determining this charge inflation factor 

is discussed in the FY 2017 IPPS/LTCH 

PPS final rule (81 FR 57286). As we 

stated in the CY 2005 OPPS final rule 

with comment period (69 FR 65845), we 

believe that the use of these charge 

inflation factors are appropriate for the 

OPPS because, with the exception of the 

inpatient routine service cost centers, 

hospitals use the same ancillary and 

outpatient cost centers to capture costs 

and charges for inpatient and outpatient 

services. 

As noted in the CY 2007 OPPS/ASC 

final rule with comment period (71 FR 

68011), we are concerned that we could 

systematically overestimate the OPPS 

hospital outlier threshold if we did not 

apply a CCR inflation adjustment factor. 

Therefore, we proposed to apply the 

same CCR inflation adjustment factor 

that we proposed to apply for the FY 

2018 IPPS outlier calculation to the 

CCRs used to simulate the proposed CY 

2018 OPPS outlier payments to 

determine the fixed-dollar threshold. 

Specifically, for CY 2018, we proposed 

to apply an adjustment factor of 

0.979187 to the CCRs that were in the 

April 2017 OPSF to trend them forward 

from CY 2017 to CY 2018. The 

methodology for calculating this 

proposed adjustment was discussed in 

the FY 2018 IPPS/LTCH PPS proposed 

rule (82 FR 20173). 

To model hospital outlier payments 

for the proposed rule, we applied the 

overall CCRs from the April 2017 OPSF 

after adjustment (using the proposed 

CCR inflation adjustment factor of 

0.979187 to approximate CY 2018 CCRs) 

to charges on CY 2016 claims that were 

adjusted (using the proposed charge 

inflation factor of 1.104055 to 

approximate CY 2018 charges). We 

simulated aggregated CY 2018 hospital 

outlier payments using these costs for 

several different fixed-dollar thresholds, 

holding the 1.75 multiplier threshold 

constant and assuming that outlier 

payments would continue to be made at 

50 percent of the amount by which the 

cost of furnishing the service would 

exceed 1.75 times the APC payment 

amount, until the total outlier payments 


sradovich on DSK3GMQ082PROD with RULES2
59268 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

equaled 1.0 percent of aggregated 

estimated total CY 2018 OPPS 

payments. We estimated that a proposed 

fixed-dollar threshold of $4,325, 

combined with the proposed multiplier 

threshold of 1.75 times the APC 

payment rate, would allocate 1.0 

percent of aggregated total OPPS 

payments to outlier payments. For 

CMHCs, we proposed that, if a CMHC’s 

cost for partial hospitalization services, 

paid under APC 5853, exceeds 3.40 

times the payment rate for APC 5853, 

the outlier payment would be calculated 

as 50 percent of the amount by which 

the cost exceeds 3.40 times the APC 

5853 payment rate. 

Section 1833(t)(17)(A) of the Act, 

which applies to hospitals as defined 

under section 1886(d)(1)(B) of the Act, 

requires that hospitals that fail to report 

data required for the quality measures 

selected by the Secretary, in the form 

and manner required by the Secretary 

under section 1833(t)(17)(B) of the Act, 

incur a 2.0 percentage point reduction 

to their OPD fee schedule increase 

factor; that is, the annual payment 

update factor. The application of a 

reduced OPD fee schedule increase 

factor results in reduced national 

unadjusted payment rates that will 

apply to certain outpatient items and 

services furnished by hospitals that are 

required to report outpatient quality 

data and that fail to meet the Hospital 

OQR Program requirements. For 

hospitals that fail to meet the Hospital 

OQR Program requirements, we 

proposed to continue the policy that we 

implemented in CY 2010 that the 

hospitals’ costs will be compared to the 

reduced payments for purposes of 

outlier eligibility and payment 

calculation. For more information on 

the Hospital OQR Program, we referred 

readers to section XIII. of the proposed 

rule. 

We did not receive any public 

comments on our hospital outpatient 

outlier payment methodology. 

Therefore, we are finalizing our 

proposal to continue our policy of 

estimating outlier payments to be 1.0 

percent of the estimated aggregate total 

payments under the OPPS and to use 

our established methodology to set the 

OPPS outlier fixed-dollar loss threshold 

for CY 2018. 

3. Final Outlier Calculation 

Consistent with historical practice, we 

used updated data for this final rule 

with comment period for outlier 

calculations. For CY 2018, we are 

applying the overall CCRs from the July 

2017 OPSF file after adjustment (using 

the CCR inflation adjustment factor of 

0.9856 to approximate CY 2018 CCRs) to 

charges on CY 2016 claims that were 

adjusted using a charge inflation factor 

of 1.0936 to approximate CY 2018 

charges. These are the same CCR 

adjustment and charge inflation factors 

that were used to set the IPPS fixeddollar thresholds for the FY 2018 IPPS/ 

LTCH PPS final rule (82 FR 38527). We 

simulated aggregated CY 2018 hospital 

outlier payments using these costs for 

several different fixed-dollar thresholds, 

holding the 1.75 multiple threshold 

constant and assuming that outlier 

payments will continue to be made at 50 

percent of the amount by which the cost 

of furnishing the service would exceed 

1.75 times the APC payment amount, 

until the total outlier payment equaled 

1.0 percent of aggregated estimated total 

CY 2018 OPPS payments. We estimate 

that a fixed-dollar threshold of $4,150, 

combined with the multiple threshold 

of 1.75 times the APC payment rate, will 

allocate 1.0 percent of aggregated total 

OPPS payments to outlier payments. We 

note that the difference in our 

calculation of the final fixed-dollar 

threshold of $4,150 and the proposed 

fixed-dollar threshold of $4,350 is 

largely attributed to finalized proposals 

related to reducing payments for drugs 

purchased under the 340B drug program 

for CY 2018, as discussed in section 

V.B.7. of this final rule with comment 

period. 

For CMHCs, if a CMHC’s cost for 

partial hospitalization services, paid 

under APC 5853, exceeds 3.40 times the 

payment rate, the outlier payment will 

be calculated as 50 percent of the 

amount by which the cost exceeds 3.40 

times APC 5853. 

H. Calculation of an Adjusted Medicare 

Payment From the National Unadjusted 

Medicare Payment 

The basic methodology for 

determining prospective payment rates 

for HOPD services under the OPPS is set 

forth in existing regulations at 42 CFR 

part 419, subparts C and D. For this CY 

2018 OPPS/ASC final rule with 

comment period, the payment rate for 

most services and procedures for which 

payment is made under the OPPS is the 

product of the conversion factor 

calculated in accordance with section 

II.B. of this final rule with comment 

period and the relative payment weight 

determined under section II.A. of this 

final rule with comment period. 

Therefore, the national unadjusted 

payment rate for most APCs contained 

in Addendum A to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site) and 

for most HCPCS codes to which separate 

payment under the OPPS has been 

assigned in Addendum B to this final 

rule with comment period (which is 

available via the Internet on the CMS 

Web site) was calculated by multiplying 

the CY 2018 scaled weight for the APC 

by the CY 2018 conversion factor. We 

note that this is the same methodology 

proposed in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33598), on which 

we did not receive any public 

comments. 

We note that section 1833(t)(17) of the 

Act, which applies to hospitals as 

defined under section 1886(d)(1)(B) of 

the Act, requires that hospitals that fail 

to submit data required to be submitted 

on quality measures selected by the 

Secretary, in the form and manner and 

at a time specified by the Secretary, 

incur a reduction of 2.0 percentage 

points to their OPD fee schedule 

increase factor, that is, the annual 

payment update factor. The application 

of a reduced OPD fee schedule increase 

factor results in reduced national 

unadjusted payment rates that apply to 

certain outpatient items and services 

provided by hospitals that are required 

to report outpatient quality data and 

that fail to meet the Hospital OQR 

Program (formerly referred to as the 

Hospital Outpatient Quality Data 

Reporting Program (HOP QDRP)) 

requirements. For further discussion of 

the payment reduction for hospitals that 

fail to meet the requirements of the 

Hospital OQR Program, we refer readers 

to section XIII. of this final rule with 

comment period. 

We demonstrate below the steps on 

how to determine the APC payments 

that will be made in a calendar year 

under the OPPS to a hospital that fulfills 

the Hospital OQR Program requirements 

and to a hospital that fails to meet the 

Hospital OQR Program requirements for 

a service that has any of the following 

status indicator assignments: ‘‘J1’’, ‘‘J2’’, 

‘‘P’’, ‘‘Q1’’, ‘‘Q2’’, ‘‘Q3’’, ‘‘Q4’’, ‘‘R’’, ‘‘S’’, 

‘‘T’’, ‘‘U’’, or ‘‘V’’ (as defined in 

Addendum D1 to this final rule with 

comment period, which is available via 

the Internet on the CMS Web site), in a 

circumstance in which the multiple 

procedure discount does not apply, the 

procedure is not bilateral, and 

conditionally packaged services (status 

indicator of ‘‘Q1’’ and ‘‘Q2’’) qualify for 

separate payment. We note that, 

although blood and blood products with 

status indicator ‘‘R’’ and brachytherapy 

sources with status indicator ‘‘U’’ are 

not subject to wage adjustment, they are 

subject to reduced payments when a 

hospital fails to meet the Hospital OQR 

Program requirements. 

Individual providers interested in 

calculating the payment amount that 

they will receive for a specific service 

from the national unadjusted payment 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59269 

rates presented in Addenda A and B to 

this final rule with comment period 

(which are available via the Internet on 

the CMS Web site) should follow the 

formulas presented in the following 

steps. For purposes of the payment 

calculations below, we refer to the 

national unadjusted payment rate for 

hospitals that meet the requirements of 

the Hospital OQR Program as the ‘‘full’’ 

national unadjusted payment rate. We 

refer to the national unadjusted 

payment rate for hospitals that fail to 

meet the requirements of the Hospital 

OQR Program as the ‘‘reduced’’ national 

unadjusted payment rate. The reduced 

national unadjusted payment rate is 

calculated by multiplying the reporting 

ratio of 0.980 times the ‘‘full’’ national 

unadjusted payment rate. The national 

unadjusted payment rate used in the 

calculations below is either the full 

national unadjusted payment rate or the 

reduced national unadjusted payment 

rate, depending on whether the hospital 

met its Hospital OQR Program 

requirements in order to receive the full 

CY 2018 OPPS fee schedule increase 

factor. 

Step 1. Calculate 60 percent (the 

labor-related portion) of the national 

unadjusted payment rate. Since the 

initial implementation of the OPPS, we 

have used 60 percent to represent our 

estimate of that portion of costs 

attributable, on average, to labor. We 

refer readers to the April 7, 2000 OPPS 

final rule with comment period (65 FR 

18496 through 18497) for a detailed 

discussion of how we derived this 

percentage. During our regression 

analysis for the payment adjustment for 

rural hospitals in the CY 2006 OPPS 

final rule with comment period (70 FR 

68553), we confirmed that this laborrelated share for hospital outpatient 

services is appropriate. 

The formula below is a mathematical 

representation of Step 1 and identifies 

the labor-related portion of a specific 

payment rate for a specific service. 

X is the labor-related portion of the 

national unadjusted payment rate. 

X = .60 * (national unadjusted payment 

rate). 

Step 2. Determine the wage index area 

in which the hospital is located and 

identify the wage index level that 

applies to the specific hospital. We note 

that, under the CY 2018 OPPS policy for 

continuing to use the OMB labor market 

area delineations based on the 2010 

Decennial Census data for the wage 

indexes used under the IPPS, a hold 

harmless policy for the wage index may 

apply, as discussed in section II.C. of 

this final rule with comment period. 

The wage index values assigned to each 

area reflect the geographic statistical 

areas (which are based upon OMB 

standards) to which hospitals are 

assigned for FY 2018 under the IPPS, 

reclassifications through the 

Metropolitan Geographic Classification 

Review Board (MGCRB), section 

1886(d)(8)(B) ‘‘Lugar’’ hospitals, 

reclassifications under section 

1886(d)(8)(E) of the Act, as defined in 

§ 412.103 of the regulations, and 

hospitals designated as urban under 

section 601(g) of Public Law 98–21. For 

further discussion of the changes to the 

FY 2018 IPPS wage indexes, as applied 

to the CY 2018 OPPS, we refer readers 

to section II.C. of this final rule with 

comment period. We are continuing to 

apply a wage index floor of 1.00 to 

frontier States, in accordance with 

section 10324 of the Affordable Care Act 

of 2010. 

Step 3. Adjust the wage index of 

hospitals located in certain qualifying 

counties that have a relatively high 

percentage of hospital employees who 

reside in the county, but who work in 

a different county with a higher wage 

index, in accordance with section 505 of 

Public Law 108–173. Addendum L to 

this final rule with comment period 

(which is available via the Internet on 

the CMS Web site) contains the 

qualifying counties and the associated 

wage index increase developed for the 

FY 2018 IPPS, which are listed in Table 

2 in the FY 2018 IPPS/LTCH PPS final 

rule available via the Internet on the 

CMS Web site at: http://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/ 

index.html. (Click on the link on the left 

side of the screen titled ‘‘FY 2018 IPPS 

Final Rule Home Page’’ and select ‘‘FY 

2018 Final Rule Tables.’’) This step is to 

be followed only if the hospital is not 

reclassified or redesignated under 

section 1886(d)(8) or section 1886(d)(10) 

of the Act. 

Step 4. Multiply the applicable wage 

index determined under Steps 2 and 3 

by the amount determined under Step 1 

that represents the labor-related portion 

of the national unadjusted payment rate. 

The formula below is a mathematical 

representation of Step 4 and adjusts the 

labor-related portion of the national 

unadjusted payment rate for the specific 

service by the wage index. 

Xa is the labor-related portion of the 

national unadjusted payment rate 

(wage adjusted). 

Xa = .60 * (national unadjusted payment 

rate) * applicable wage index. 

Step 5. Calculate 40 percent (the 

nonlabor-related portion) of the national 

unadjusted payment rate and add that 

amount to the resulting product of Step 

4. The result is the wage index adjusted 

payment rate for the relevant wage 

index area. 

The formula below is a mathematical 

representation of Step 5 and calculates 

the remaining portion of the national 

payment rate, the amount not 

attributable to labor, and the adjusted 

payment for the specific service. 

Y is the nonlabor-related portion of the 

national unadjusted payment rate. 

Y = .40 * (national unadjusted payment 

rate). 

Adjusted Medicare Payment = Y + Xa. 

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

forth in the regulations at § 412.92, or an 

EACH, which is considered to be an 

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

of the Act, and located in a rural area, 

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

being located in a rural area under 

§ 412.103, multiply the wage index 

adjusted payment rate by 1.071 to 

calculate the total payment. 

The formula below is a mathematical 

representation of Step 6 and applies the 

rural adjustment for rural SCHs. 

Adjusted Medicare Payment (SCH or 

EACH) = Adjusted Medicare 

Payment * 1.071. 

We are providing examples below of 

the calculation of both the full and 

reduced national unadjusted payment 

rates that will apply to certain 

outpatient items and services performed 

by hospitals that meet and that fail to 

meet the Hospital OQR Program 

requirements, using the steps outlined 

above. For purposes of this example, we 

used a provider that is located in 

Brooklyn, New York that is assigned to 

CBSA 35614. This provider bills one 

service that is assigned to APC 5071 

(Level 1 Excision/Biopsy/Incision and 

Drainage). The CY 2018 full national 

unadjusted payment rate for APC 5071 

is approximately $572.81. The reduced 

national unadjusted payment rate for 

APC 5071 for a hospital that fails to 

meet the Hospital OQR Program 

requirements is approximately $561.35. 

This reduced rate is calculated by 

multiplying the reporting ratio of 0.980 

by the full unadjusted payment rate for 

APC 5071. 

The FY 2018 wage index for a 

provider located in CBSA 35614 in New 

York is 1.2876. The labor-related 

portion of the full national unadjusted 

payment is approximately $442.53 (.60 

* $572.81 * 1.2876). The labor-related 

portion of the reduced national 

unadjusted payment is approximately 

$433.68 (.60 * $561.35 * 1.2876). The 

nonlabor-related portion of the full 

national unadjusted payment is 

approximately $229.12 (.40 * $572.81). 

The nonlabor-related portion of the 


sradovich on DSK3GMQ082PROD with RULES2
59270 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

reduced national unadjusted payment is 

approximately $224.54 (.40 * $561.35). 

The sum of the labor-related and 

nonlabor-related portions of the full 

national adjusted payment is 

approximately $671.65 ($442.53 + 

$229.12). The sum of the portions of the 

reduced national adjusted payment is 

approximately $658.22 ($433.68 + 

$224.54). 

I. Beneficiary Copayments 

1. Background 

Section 1833(t)(3)(B) of the Act 

requires the Secretary to set rules for 

determining the unadjusted copayment 

amounts to be paid by beneficiaries for 

covered OPD services. Section 

1833(t)(8)(C)(ii) of the Act specifies that 

the Secretary must reduce the national 

unadjusted copayment amount for a 

covered OPD service (or group of such 

services) furnished in a year in a 

manner so that the effective copayment 

rate (determined on a national 

unadjusted basis) for that service in the 

year does not exceed a specified 

percentage. As specified in section 

1833(t)(8)(C)(ii)(V) of the Act, the 

effective copayment rate for a covered 

OPD service paid under the OPPS in CY 

2006, and in calendar years thereafter, 

shall not exceed 40 percent of the APC 

payment rate. 

Section 1833(t)(3)(B)(ii) of the Act 

provides that, for a covered OPD service 

(or group of such services) furnished in 

a year, the national unadjusted 

copayment amount cannot be less than 

20 percent of the OPD fee schedule 

amount. However, section 

1833(t)(8)(C)(i) of the Act limits the 

amount of beneficiary copayment that 

may be collected for a procedure 

performed in a year to the amount of the 

inpatient hospital deductible for that 

year. 

Section 4104 of the Affordable Care 

Act eliminated the Medicare Part B 

coinsurance for preventive services 

furnished on and after January 1, 2011, 

that meet certain requirements, 

including flexible sigmoidoscopies and 

screening colonoscopies, and waived 

the Part B deductible for screening 

colonoscopies that become diagnostic 

during the procedure. Our discussion of 

the changes made by the Affordable 

Care Act with regard to copayments for 

preventive services furnished on and 

after January 1, 2011, may be found in 

section XII.B. of the CY 2011 OPPS/ASC 

final rule with comment period (75 FR 

72013). 

2. OPPS Copayment Policy 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33599), for CY 2018, we 

proposed to determine copayment 

amounts for new and revised APCs 

using the same methodology that we 

implemented beginning in CY 2004. 

(We refer readers to the November 7, 

2003 OPPS final rule with comment 

period (68 FR 63458).) In addition, we 

proposed to use the same standard 

rounding principles that we have 

historically used in instances where the 

application of our standard copayment 

methodology would result in a 

copayment amount that is less than 20 

percent and cannot be rounded, under 

standard rounding principles, to 20 

percent. (We refer readers to the CY 

2008 OPPS/ASC final rule with 

comment period (72 FR 66687) in which 

we discuss our rationale for applying 

these rounding principles.) The 

proposed national unadjusted 

copayment amounts for services payable 

under the OPPS that would be effective 

January 1, 2018 were included in 

Addenda A and B to the proposed rule 

(which are available via the Internet on 

the CMS Web site). 

We did not receive any public 

comments on the proposed copayment 

amounts for new and revised APCs 

using the same methodology we 

implemented beginning in CY 2004 or 

the standard rounding principles we 

apply to our copayment amounts. 

Therefore, we are finalizing our 

proposed copayment policies, without 

modification. 

As discussed in section XIII.E. of this 

final rule with comment period, for CY 

2018, the Medicare beneficiary’s 

minimum unadjusted copayment and 

national unadjusted copayment for a 

service to which a reduced national 

unadjusted payment rate applies will 

equal the product of the reporting ratio 

and the national unadjusted copayment, 

or the product of the reporting ratio and 

the minimum unadjusted copayment, 

respectively, for the service. 

We note that OPPS copayments may 

increase or decrease each year based on 

changes in the calculated APC payment 

rates due to updated cost report and 

claims data, and any changes to the 

OPPS cost modeling process. However, 

as described in the CY 2004 OPPS final 

rule with comment period, the 

development of the copayment 

methodology generally moves 

beneficiary copayments closer to 20 

percent of OPPS APC payments (68 FR 

63458 through 63459). 

In the CY 2004 OPPS final rule with 

comment period (68 FR 63459), we 

adopted a new methodology to calculate 

unadjusted copayment amounts in 

situations including reorganizing APCs, 

and we finalized the following rules to 

determine copayment amounts in CY 

2004 and subsequent years. 

• When an APC group consists solely 

of HCPCS codes that were not paid 

under the OPPS the prior year because 

they were packaged or excluded or are 

new codes, the unadjusted copayment 

amount would be 20 percent of the APC 

payment rate. 

• If a new APC that did not exist 

during the prior year is created and 

consists of HCPCS codes previously 

assigned to other APCs, the copayment 

amount is calculated as the product of 

the APC payment rate and the lowest 

coinsurance percentage of the codes 

comprising the new APC. 

• If no codes are added to or removed 

from an APC and, after recalibration of 

its relative payment weight, the new 

payment rate is equal to or greater than 

the prior year’s rate, the copayment 

amount remains constant (unless the 

resulting coinsurance percentage is less 

than 20 percent). 

• If no codes are added to or removed 

from an APC and, after recalibration of 

its relative payment weight, the new 

payment rate is less than the prior year’s 

rate, the copayment amount is 

calculated as the product of the new 

payment rate and the prior year’s 

coinsurance percentage. 

• If HCPCS codes are added to or 

deleted from an APC and, after 

recalibrating its relative payment 

weight, holding its unadjusted 

copayment amount constant results in a 

decrease in the coinsurance percentage 

for the reconfigured APC, the 

copayment amount would not change 

(unless retaining the copayment amount 

would result in a coinsurance rate less 

than 20 percent). 

• If HCPCS codes are added to an 

APC and, after recalibrating its relative 

payment weight, holding its unadjusted 

copayment amount constant results in 

an increase in the coinsurance 

percentage for the reconfigured APC, the 

copayment amount would be calculated 

as the product of the payment rate of the 

reconfigured APC and the lowest 

coinsurance percentage of the codes 

being added to the reconfigured APC. 

We noted in the CY 2004 OPPS final 

rule with comment period that we 

would seek to lower the copayment 

percentage for a service in an APC from 

the prior year if the copayment 

percentage was greater than 20 percent. 

We noted that this principle was 

consistent with section 1833(t)(8)(C)(ii) 

of the Act, which accelerates the 

reduction in the national unadjusted 

coinsurance rate so that beneficiary 

liability will eventually equal 20 

percent of the OPPS payment rate for all 

OPPS services to which a copayment 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59271 

applies, and with section 1833(t)(3)(B) 

of the Act, which achieves a 20-percent 

copayment percentage when fully 

phased in and gives the Secretary the 

authority to set rules for determining 

copayment amounts for new services. 

We further noted that the use of this 

methodology would, in general, reduce 

the beneficiary coinsurance rate and 

copayment amount for APCs for which 

the payment rate changes as the result 

of the reconfiguration of APCs and/or 

recalibration of relative payment 

weights (68 FR 63459). 

3. Calculation of an Adjusted 

Copayment Amount for an APC Group 

As we stated in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33600), 

individuals interested in calculating the 

national copayment liability for a 

Medicare beneficiary for a given service 

provided by a hospital that met or failed 

to meet its Hospital OQR Program 

requirements should follow the 

formulas presented in the following 

steps. 

Step 1. Calculate the beneficiary 

payment percentage for the APC by 

dividing the APC’s national unadjusted 

copayment by its payment rate. For 

example, using APC 5071, $114.57 is 

approximately 20 percent of the full 

national unadjusted payment rate of 

$572.81. For APCs with only a 

minimum unadjusted copayment in 

Addenda A and B to this final rule with 

comment period rule (which are 

available via the Internet on the CMS 

Web site), the beneficiary payment 

percentage is 20 percent. 

The formula below is a mathematical 

representation of Step 1 and calculates 

the national copayment as a percentage 

of national payment for a given service. 

B is the beneficiary payment percentage. 

B = National unadjusted copayment for 

APC/national unadjusted payment 

rate for APC. 

Step 2. Calculate the appropriate 

wage-adjusted payment rate for the APC 

for the provider in question, as 

indicated in Steps 2 through 4 under 

section II.H. of this final rule with 

comment period. Calculate the rural 

adjustment for eligible providers as 

indicated in Step 6 under section II.H. 

of this final rule with comment period. 

Step 3. Multiply the percentage 

calculated in Step 1 by the payment rate 

calculated in Step 2. The result is the 

wage-adjusted copayment amount for 

the APC. 

The formula below is a mathematical 

representation of Step 3 and applies the 

beneficiary payment percentage to the 

adjusted payment rate for a service 

calculated under section II.H. of this 

final rule with comment period, with 

and without the rural adjustment, to 

calculate the adjusted beneficiary 

copayment for a given service. 

Wage-adjusted copayment amount for 

the APC = Adjusted Medicare 

Payment * B. 

Wage-adjusted copayment amount for 

the APC (SCH or EACH) = 

(Adjusted Medicare Payment * 

1.071) * B. 

Step 4. For a hospital that failed to 

meet its Hospital OQR Program 

requirements, multiply the copayment 

calculated in Step 3 by the reporting 

ratio of 0.980. 

The unadjusted copayments for 

services payable under the OPPS that 

will be effective January 1, 2018, are 

shown in Addenda A and B to this final 

rule with comment period (which are 

available via the Internet on the CMS 

Web site). We note that the national 

unadjusted payment rates and 

copayment rates shown in Addenda A 

and B to this final rule with comment 

period reflect the CY 2018 OPD fee 

schedule increase factor discussed in 

section II.B. of this final rule with 

comment period. 

In addition, as noted earlier, section 

1833(t)(8)(C)(i) of the Act limits the 

amount of beneficiary copayment that 

may be collected for a procedure 

performed in a year to the amount of the 

inpatient hospital deductible for that 

year. 

III. OPPS Ambulatory Payment 

Classification (APC) Group Policies 

A. OPPS Treatment of New CPT and 

Level II HCPCS Codes 

CPT and Level II HCPCS codes are 

used to report procedures, services, 

items, and supplies under the hospital 

OPPS. Specifically, CMS recognizes the 

following codes on OPPS claims: 

• Category I CPT codes, which 

describe surgical procedures and 

medical services; 

• Category III CPT codes, which 

describe new and emerging 

technologies, services, and procedures; 

and 

• Level II HCPCS codes, which are 

used primarily to identify products, 

supplies, temporary procedures, and 

services not described by CPT codes. 

CPT codes are established by the 

American Medical Association (AMA) 

and the Level II HCPCS codes are 

established by the CMS HCPCS 

Workgroup. These codes are updated 

and changed throughout the year. CPT 

and HCPCS code changes that affect the 

OPPS are published both through the 

annual rulemaking cycle and through 

the OPPS quarterly update Change 

Requests (CRs). CMS releases new Level 

II HCPCS codes to the public or 

recognizes the release of new CPT codes 

by the AMA and makes these codes 

effective (that is, the codes can be 

reported on Medicare claims) outside of 

the formal rulemaking process via OPPS 

quarterly update CRs. Based on our 

review, we assign the new CPT and 

Level II HCPCS codes to interim status 

indicators (SIs) and APCs. These interim 

assignments are finalized in the OPPS/ 

ASC final rules. This quarterly process 

offers hospitals access to codes that may 

more accurately describe items or 

services furnished and provides 

payment or more accurate payment for 

these items or services in a timelier 

manner than if we waited for the annual 

rulemaking process. We solicit public 

comments on these new codes and 

finalize our proposals related to these 

codes through our annual rulemaking 

process. 

We note that, under the OPPS, the 

APC assignment determines the 

payment rate for an item, procedure, or 

service. Those items, procedures, or 

services not paid separately under the 

hospital OPPS are assigned to 

appropriate status indicators. Certain 

payment status indicators provide 

separate payment, while other payment 

status indicators do not. Section XI. of 

this final rule with comment period 

discusses the various status indicators 

used under the OPPS. 

As we did in the CY 2018 OPPS/ASC 

proposed rule, in Table 11 below, we 

summarize our current process for 

updating codes through our OPPS 

quarterly update CRs, seeking public 

comments, and finalizing the treatment 

of these new codes under the OPPS. 

TABLE 11—COMMENT TIMEFRAME FOR NEW OR REVISED HCPCS CODES

OPPS quarterly update CR Type of code Effective date Comments sought When finalized 

April 1, 2017 ...................... Level II HCPCS Codes ..... April 1, 2017 ...................... CY 2018 OPPS/ASC proposed rule.CY 2018 OPPS/ASC final 

rule with comment period. 


sradovich on DSK3GMQ082PROD with RULES2
59272 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 11—COMMENT TIMEFRAME FOR NEW OR REVISED HCPCS CODES—Continued 

OPPS quarterly update CR Type of code Effective date Comments sought When finalized 

July 1, 2017 ....................... Level II HCPCS Codes ..... July 1, 2017 ...................... CY 2018 OPPS/ASC proposed rule.CY 2018 OPPS/ASC final 

rule with comment period. 

Category I (certain vaccine 

codes) and III CPT 

codes.

July 1, 2017 ...................... CY 2018 OPPS/ASC proposed rule.CY 2018 OPPS/ASC final 

rule with comment period. 

October 1, 2017 ................ Level II HCPCS Codes ..... October 1, 2017 ................ CY 2018 OPPS/ASC final 

rule with comment period.

CY 2019 OPPS/ASC final 

rule with comment period. 

January 1, 2018 ................ Level II HCPCS Codes ..... January 1, 2018 ................ CY 2018 OPPS/ASC final 

rule with comment period.

CY 2019 OPPS/ASC final 

rule with comment period. 

Category I and III CPT 

Codes.

January 1, 2018 ................ CY 2018 OPPS/ASC proposed rule.CY 2018 OPPS/ASC final 

rule with comment period. 

1. Treatment of New HCPCS Codes That 

Were Effective April 1, 2017 for Which 

We Solicited Public Comments in the 

CY 2018 OPPS/ASC Proposed Rule 

Through the April 2017 OPPS 

quarterly update CR (Transmittal 3728, 

Change Request 10005, dated March 3, 

2017), we made effective five new Level 

II HCPCS codes for separate payment 

under the OPPS. In the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33601), we 

solicited public comments on the 

proposed APC and status indicator 

assignments for these Level II HCPCS 

codes, which were displayed in Table 

13 of the proposed rule and are now 

listed in Table 12 of this final rule with 

comment period. Specifically, we 

solicited public comments on HCPCS 

codes C9484, C9485, C9486, C9487, and 

C9488. We note that HCPCS code C9487 

was deleted on June 30, 2017, and 

replaced with HCPCS code Q9989, 

effective July 1, 2017. We indicated that 

the proposed payment rates for these 

codes were included in Addendum B to 

the proposed rule (which is available 

via the Internet on the CMS Web site). 

TABLE 12—NEW LEVEL II HCPCS CODES EFFECTIVE APRIL 1, 2017 

CY 2017 

HCPCS code 

CY 2018 

HCPCS code CY 2018 long descriptor Final CY 2018 SI 

Final 

CY 2018 APC 

C9484 ............. J1428 Injection, eteplirsen, 10 mg ............................................................................ G 9484 

C9485 ............. J9285 Injection, olaratumab, 10 mg .......................................................................... G 9485 

C9486 ............. J1627 Injection, granisetron, extended-release, 0.1 mg ........................................... G 9486 

C9487 * ........... J3358 Ustekinumab, for intravenous injection, 1 mg ................................................ G 9487 

C9488 ............. C9488 Injection, conivaptan hydrochloride, 1 mg ...................................................... G 9488 

* HCPCS code C9487, which was effective April 1, 2017, was deleted June 30, 2017 and replaced with HCPCS code Q9989 (Ustekinumab, for 

intravenous injection, 1 mg) effective July 1, 2017. 

We did not receive any public 

comments on the proposed APC and 

status indicator assignments for the new 

Level II HCPCS codes implemented in 

April 2017. Therefore, we are finalizing 

the proposed APC and status indicator 

assignments for these codes, as 

indicated in Table 12 above. We note 

that several of the HCPCS C-codes have 

been replaced with HCPCS J-codes 

effective January 1, 2018. Their 

replacement codes are listed in Table 12 

above. The final payment rates for these 

codes can be found in Addendum B to 

this final rule with comment period 

(which is available via the Internet on 

the CMS Web site). In addition, the 

status indicator meanings can be found 

in Addendum A to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site). 

2. Treatment of New HCPCS Codes That 

Were Effective July 1, 2017 for Which 

We Solicited Public Comments in the 

CY 2018 OPPS/ASC Proposed Rule 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33602), 

through the July 2017 OPPS quarterly 

update CR (Transmittal 3783, Change 

Request 10122, dated May 26, 2017), we 

made 10 new Category III CPT codes 

and 13 Level II HCPCS codes effective 

July 1, 2017, and assigned them to 

appropriate interim OPPS status 

indicators and APCs. In the CY 2018 

OPPS/ASC proposed rule, we solicited 

public comments on the proposed APC 

and status indicator assignments for CY 

2018 for the CPT and Level II HCPCS 

codes implemented on July 1, 2017, all 

of which were displayed in Table 14 of 

the proposed rule, and are now listed in 

Table 13 of this final rule with comment 

period. We note that three of the new 

HCPCS codes effective July 1, 2017 

replaced four existing HCPCS codes. 

Specifically, HCPCS code Q9986 

replaced HCPCS code J1725 (Injection, 

hydroxyprogesterone caproate, 1 mg), 

HCPCS codes Q9987 and Q9988 

replaced HCPCS code P9072 (Platelets, 

pheresis, pathogen reduced or rapid 

bacterial tested, each unit), and HCPCS 

code Q9989 replaced HCPCS code 

C9487 (Ustekinumab, for intravenous 

injection, 1 mg). With the establishment 

of HCPCS codes Q9986, Q9987, and 

Q9988, we made their predecessor 

HCPCS codes J1725 and P9072 inactive 

for reporting and revised the status 

indicators for both codes to ‘‘E1’’ (Not 

Payable by Medicare) effective July 1, 

2017. In addition, because HCPCS code 

Q9989 describes the same drug as 

HCPCS code C9487, in the CY 2018 

OPPS/ASC proposed rule, we proposed 

to continue the drug’s pass-through 

payment status and to assign HCPCS 

code Q9989 to the same APC and status 

indicator as its predecessor HCPCS code 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59273 

C9487, as shown in Table 14 of the 

proposed rule. The proposed payment 

rates and status indicators for these 

codes, where applicable, were included 

in Addendum B to the proposed rule 

(which is available via the Internet on 

the CMS Web site). 

We did not receive any public 

comments on the proposed APC and 

status indicator assignments for the new 

Category III CPT codes and Level II 

HCPCS codes implemented in July 

2017. Therefore, we are finalizing the 

proposed APC and status indicator 

assignments for these codes, as 

indicated in Table 13 below. We note 

that several of the HCPCS C and Qcodes have been replaced with HCPCS 

J-codes effective January 1, 2018. Their 

replacement codes are listed in Table 13 

below. The final payment rates for these 

codes can be found in Addendum B to 

this final rule with comment period 

(which is available via the Internet on 

the CMS Web site). In addition, the 

status indicator meanings can be found 

in Addendum A to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site). 

TABLE 13—NEW CATEGORY III CPT AND LEVEL II HCPCS CODES EFFECTIVE JULY 1, 2017 

CY 2017 

HCPCS code 

CY 2018 

HCPCS code CY 2018 long descriptor Final CY 2018 SI 

Final 

CY 2018 APC 

C9489 ............. J2326 ............. Injection, nusinersen, 0.1 mg ......................................................................... G 9489 

C9490 ............. J0565 ............. Injection, bezlotoxumab, 10 mg ...................................................................... G 9490 

C9745 ............. C9745 ............ Nasal endoscopy, surgical; balloon dilation of eustachian tube .................... J1 5165 

C9746 ............. C9746 ............ Transperineal implantation of permanent adjustable balloon continence device, with cystourethroscopy, when performed and/or fluoroscopy, when 

performed.

J1 5377 

C9747 ............. C9747 ............ Ablation of prostate, transrectal, high intensity focused ultrasound (HIFU), 

including imaging guidance.

J1 5376 

K0553 ............. K0553 ............ Supply allowance for therapeutic continuous glucose monitor (CGM), includes all supplies and accessories, 1 month supply = 1 Unit Of Service.Y N/A 

K0554 ............. K0554 ............ Receiver (monitor), dedicated, for use with therapeutic glucose continuous 

monitor system.

Y N/A 

Q9984 ............. J7296 ............. Levonorgestrel-releasing intrauterine contraceptive system (Kyleena), 19.5 

mg.

E1 N/A 

Q9985 ............. J1729 ............. Injection, hydroxyprogesterone caproate, not otherwise specified, 10 mg .... N N/A 

Q9986 ............. J1726 ............. Injection, hydroxyprogesterone caproate (Makena), 10 mg ........................... K 9074 

Q9987 ............. P9100 ............ Pathogen(s) test for platelets ......................................................................... S 1493 

Q9988 ............. P9073 ............ Platelets, pheresis, pathogen reduced, each unit .......................................... R 9536 

Q9989 ............. J3358 ............. Ustekinumab, for intravenous injection, 1 mg ................................................ G 9487 

0469T ............. 0469T ............. Retinal polarization scan, ocular screening with on-site automated results, 

bilateral.

E1 N/A 

0470T ............. 0470T ............. Optical coherence tomography (OCT) for microstructural and morphological 

imaging of skin, image acquisition, interpretation, and report; first lesion.

M N/A 

0471T ............. 0471T ............. Optical coherence tomography (OCT) for microstructural and morphological 

imaging of skin, image acquisition, interpretation, and report; each additional lesion (List separately in addition to code for primary procedure).

N N/A 

0472T ............. 0472T ............. Device evaluation, interrogation, and initial programming of intra- ocular 

retinal electrode array (eg, retinal prosthesis), in person, with iterative 

adjustment of the implantable device to test functionality, select optimal 

permanent programmed values with analysis, including visual training, 

with review and report by a qualified health care professional.

Q1 5743 

0473T ............. 0473T ............. Device evaluation and interrogation of intra-ocular retinal electrode array 

(eg, retinal prosthesis), in person, including reprogramming and visual 

training, when performed, with review and report by a qualified health 

care professional.

Q1 5742 

0474T ............. 0474T ............. Insertion of anterior segment aqueous drainage device, with creation of 

intraocular reservoir, internal approach, into the supraciliary space.

J1 5492 

0475T ............. 0475T ............. Recording of fetal magnetic cardiac signal using at least 3 channels; patient recording and storage, data scanning with signal extraction, technical analysis and result, as well as supervision, review, and interpretation of report by a physician or other qualified health care professional.M N/A 

0476T ............. 0476T ............. Recording of fetal magnetic cardiac signal using at least 3 channels; patient recording, data scanning, with raw electronic signal transfer of data 

and storage.

Q1 5734 

0477T ............. 0477T ............. Recording of fetal magnetic cardiac signal using at least 3 channels; signal 

extraction, technical analysis, and result.

Q1 5734 

0478T ............. 0478T ............. Recording of fetal magnetic cardiac signal using at least 3 channels; review, interpretation, report by physician or other qualified health care 

professional.

M N/A 


sradovich on DSK3GMQ082PROD with RULES2
59274 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

3. Process for New Level II HCPCS 

Codes That Became Effective October 1, 

2017 and New Level II HCPCS Codes 

That Will Be Effective January 1, 2018 

for Which We Are Soliciting Public 

Comments in This CY 2018 OPPS/ASC 

Final Rule With Comment Period 

As has been our practice in the past, 

we incorporate those new Level II 

HCPCS codes that are effective October 

1 and January 1 in the final rule with 

comment period, thereby updating the 

OPPS for the following calendar year, as 

displayed in Table 11 of this final rule 

with comment period. These codes are 

released to the public through the 

October and January OPPS quarterly 

update CRs and via the CMS HCPCS 

Web site (for Level II HCPCS codes). For 

CY 2018, these codes are flagged with 

comment indicator ‘‘NI’’ in Addendum 

B to this OPPS/ASC final rule with 

comment period to indicate that we are 

assigning them an interim payment 

status which is subject to public 

comment. Specifically, the status 

indicators and the APC assignments for 

codes flagged with comment indicator 

‘‘NI’’ are open to public comment in this 

final rule with comment period, and we 

will respond to these public comments 

in the OPPS/ASC final rule with 

comment period for the next year’s 

OPPS/ASC update. In the CY 2018 

OPPS/ASC proposed rule (82 FR 33603), 

we proposed to continue this process for 

CY 2018. Specifically, for CY 2018, we 

proposed to include in Addendum B to 

the CY 2018 OPPS/ASC final rule with 

comment period the following new 

HCPCS codes: 

• New Level II HCPCS codes effective 

October 1, 2017, that would be 

incorporated in the October 2017 OPPS 

quarterly update CR; and 

• New Level II HCPCS codes effective 

January 1, 2018, that would be 

incorporated in the January 2018 OPPS 

quarterly update CR. 

As stated above, the October 1, 2017 

and January 1, 2018 codes are flagged 

with comment indicator ‘‘NI’’ in 

Addendum B to this CY 2018 OPPS/ 

ASC final rule with comment period to 

indicate that we have assigned these 

codes an interim OPPS payment status 

for CY 2018. We are inviting public 

comments on the interim status 

indicator and APC assignments for these 

codes, if applicable, that will be 

finalized in the CY 2019 OPPS/ASC 

final rule with comment period. 

4. Treatment of New and Revised 

Category I and III CPT Codes That Will 

Be Effective January 1, 2018 for Which 

We Solicited Public Comments in the 

CY 2018 OPPS/ASC Proposed Rule 

In the CY 2015 OPPS/ASC final rule 

with comment period (79 FR 66841 

through 66844), we finalized a revised 

process of assigning APC and status 

indicators for new and revised Category 

I and III CPT codes that would be 

effective January 1. Specifically, for the 

new/revised CPT codes that we receive 

in a timely manner from the AMA’s CPT 

Editorial Panel, we finalized our 

proposal to include the codes that 

would be effective January 1 in the 

OPPS/ASC proposed rules, along with 

proposed APC and status indicator 

assignments for them, and to finalize the 

APC and status indicator assignments in 

the OPPS/ASC final rules beginning 

with the CY 2016 OPPS update. For 

those new/revised CPT codes that were 

received too late for inclusion in the 

OPPS/ASC proposed rule, we finalized 

our proposal to establish and use 

HCPCS G-codes that mirror the 

predecessor CPT codes and retain the 

current APC and status indicator 

assignments for a year until we can 

propose APC and status indicator 

assignments in the following year’s 

rulemaking cycle. We note that even if 

we find that we need to create HCPCS 

G-codes in place of certain CPT codes 

for the MPFS proposed rule, we do not 

anticipate that these HCPCS G-codes 

will always be necessary for OPPS 

purposes. We will make every effort to 

include proposed APC and status 

indicator assignments for all new and 

revised CPT codes that the AMA makes 

publicly available in time for us to 

include them in the proposed rule, and 

to avoid the resort to HCPCS G-codes 

and the resulting delay in utilization of 

the most current CPT codes. Also, we 

finalized our proposal to make interim 

APC and status indicator assignments 

for CPT codes that are not available in 

time for the proposed rule and that 

describe wholly new services (such as 

new technologies or new surgical 

procedures), solicit public comments, 

and finalize the specific APC and status 

indicator assignments for those codes in 

the following year’s final rule. 

For the CY 2018 OPPS update, we 

received the CY 2018 CPT codes from 

AMA in time for inclusion in the CY 

2018 OPPS/ASC proposed rule. The 

new, revised, and deleted CY 2018 

Category I and III CPT codes were 

included in Addendum B to the CY 

2018 OPPS/ASC proposed rule (which 

is available via the Internet on the CMS 

Web site). We noted in the proposed 

rule that the new and revised codes are 

assigned to new comment indicator 

‘‘NP’’ to indicate that the code is new 

for the next calendar year or the code is 

an existing code with substantial 

revision to its code descriptor in the 

next calendar year as compared to the 

current calendar year with a proposed 

APC assignment, and that comments 

will be accepted on the proposed APC 

assignment and status indicator. 

Further, in the CY 2018 OPPS/ASC 

proposed rule, we reminded readers that 

the CPT code descriptors that appear in 

Addendum B are short descriptors and 

do not fully describe the complete 

procedure, service, or item described by 

the CPT code. Therefore, we included 

the 5-digit placeholder codes and their 

long descriptors for the new and revised 

CY 2018 CPT codes in Addendum O to 

the proposed rule (which is available 

via the Internet on the CMS Web site) 

so that the public could adequately 

comment on our proposed APCs and 

status indicator assignments. We 

indicated that the 5-digit placeholder 

codes were included in Addendum O, 

specifically under the column labeled 

‘‘CY 2018 OPPS/ASC Proposed Rule 5- 

Digit AMA Placeholder Code,’’ to the 

proposed rule. We stated that the final 

CPT code numbers will be included in 

the CY 2018 OPPS/ASC final rule with 

comment period. We noted that not 

every code listed in Addendum O is 

subject to comment. For the new and 

revised Category I and III CPT codes, we 

requested comments on only those 

codes that are assigned to comment 

indicator ‘‘NP’’. We indicated that 

public comments would not be accepted 

for new Category I CPT laboratory codes 

that were not assigned to the ‘‘NP’’ 

comment indicator in Addendum O to 

the proposed rule. We stated that 

comments to these codes must be 

submitted at the Clinical Laboratory Fee 

Schedule (CLFS) Public Meeting, which 

was scheduled on July 31–August 1, 

2017. 

In summary, we solicited public 

comments on the proposed APC and 

status indicator assignments for the new 

and revised Category I and III CPT codes 

that will be effective January 1, 2018. 

The CPT codes were listed in 

Addendum B to the proposed rule with 

short descriptors only. We listed them 

again in Addendum O to the proposed 

rule with long descriptors. We also 

proposed to finalize the status indicator 

and APC assignments for these codes 

(with their final CPT code numbers) in 

the CY 2018 OPPS/ASC final rule with 

comment period. 

Commenters addressed several of the 

new CPT codes that were assigned to 

comment indicator ‘‘NP’’ in Addendum 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59275 

B to the CY 2018 OPPS/ASC proposed 

rule. We have responded to those public 

comments in sections II.A.2.b. 

(Comprehensive APCs), III.D. (OPPS 

APC-Specific Policies), V. (OPPS 

Payment Changes for Drugs, Biologicals, 

and Radiopharmaceuticals), and XII. 

(Updates to the ASC Payment System) 

of this CY 2018 OPPS/ASC final rule 

with comment period. 

The final status indicators, APC 

assignments, and payment rates for the 

new CPT codes that are effective 

January 1, 2018 can be found in 

Addendum B to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site). In 

addition, the status indicator meanings 

can be found in Addendum A to this 

final rule with comment period (which 

is available via the Internet on the CMS 

Web site). 

B. OPPS Changes—Variations Within 

APCs 

1. Background 

Section 1833(t)(2)(A) of the Act 

requires the Secretary to develop a 

classification system for covered 

hospital outpatient department services. 

Section 1833(t)(2)(B) of the Act provides 

that the Secretary may establish groups 

of covered OPD services within this 

classification system, so that services 

classified within each group are 

comparable clinically and with respect 

to the use of resources. In accordance 

with these provisions, we developed a 

grouping classification system, referred 

to as Ambulatory Payment 

Classifications (APCs), as set forth in 

§ 419.31 of the regulations. We use 

Level I and Level II HCPCS codes to 

identify and group the services within 

each APC. The APCs are organized such 

that each group is homogeneous both 

clinically and in terms of resource use. 

Using this classification system, we 

have established distinct groups of 

similar services. We also have 

developed separate APC groups for 

certain medical devices, drugs, 

biologicals, therapeutic 

radiopharmaceuticals, and 

brachytherapy devices that are not 

packaged into the payment for the 

procedure. 

We have packaged into the payment 

for each procedure or service within an 

APC group the costs associated with 

those items and services that are 

typically ancillary and supportive to a 

primary diagnostic or therapeutic 

modality and, in those cases, are an 

integral part of the primary service they 

support. Therefore, we do not make 

separate payment for these packaged 

items or services. In general, packaged 

items and services include, but are not 

limited to, the items and services listed 

in § 419.2(b) of the regulations. A 

further discussion of packaged services 

is included in section II.A.3. of this final 

rule with comment period. 

Under the OPPS, we generally pay for 

covered hospital outpatient services on 

a rate-per-service basis, where the 

service may be reported with one or 

more HCPCS codes. Payment varies 

according to the APC group to which 

the independent service or combination 

of services is assigned. In the CY 2018 

OPPS/ASC proposed rule (82 FR 33604), 

for CY 2018, we proposed that each APC 

relative payment weight represents the 

hospital cost of the services included in 

that APC, relative to the hospital cost of 

the services included in APC 5012 

(Clinic Visits and Related Services). The 

APC relative payment weights are 

scaled to APC 5012 because it is the 

hospital clinic visit APC and clinic 

visits are among the most frequently 

furnished services in the hospital 

outpatient setting. 

2. Application of the 2 Times Rule 

Section 1833(t)(9)(A) of the Act 

requires the Secretary to review, not less 

often than annually, and revise the APC 

groups, the relative payment weights, 

and the wage and other adjustments 

described in paragraph (2) to take into 

account changes in medical practice, 

changes in technology, the addition of 

new services, new cost data, and other 

relevant information and factors. 

Section 1833(t)(9)(A) of the Act also 

requires the Secretary to consult with an 

expert outside advisory panel composed 

of an appropriate selection of 

representatives of providers to review 

(and advise the Secretary concerning) 

the clinical integrity of the APC groups 

and the relative payment weights. We 

note that the HOP Panel 

recommendations for specific services 

for the CY 2018 OPPS and our responses 

to them are discussed in the relevant 

specific sections throughout this final 

rule with comment period. 

In addition, section 1833(t)(2) of the 

Act provides that, subject to certain 

exceptions, the items and services 

within an APC group cannot be 

considered comparable with respect to 

the use of resources if the highest cost 

for an item or service in the group is 

more than 2 times greater than the 

lowest cost for an item or service within 

the same group (referred to as the ‘‘2 

times rule’’). The statute authorizes the 

Secretary to make exceptions to the 2 

times rule in unusual cases, such as 

low-volume items and services (but the 

Secretary may not make such an 

exception in the case of a drug or 

biological that has been designated as an 

orphan drug under section 526 of the 

Federal Food, Drug, and Cosmetic Act). 

Therefore, in accordance with section 

1833(t)(2) of the Act and § 419.31 of the 

regulations, we annually review the 

items and services within an APC group 

to determine if there are any APC 

violations of the 2 times rule and 

whether there are any appropriate 

revisions to APC assignments that may 

be necessary or exceptions to be made. 

In determining the APCs with a 2 times 

rule violation, we consider only those 

HCPCS codes that are significant based 

on the number of claims. We note that, 

for purposes of identifying significant 

procedure codes for examination under 

the 2 times rule, we consider procedure 

codes that have more than 1,000 single 

major claims or procedure codes that 

have both greater than 99 single major 

claims and contribute at least 2 percent 

of the single major claims used to 

establish the APC cost to be significant 

(75 FR 71832). This longstanding 

definition of when a procedure code is 

significant for purposes of the 2 times 

rule was selected because we believe 

that a subset of 1,000 claims (or less 

than 1,000 claims) is negligible within 

the set of approximately 100 million 

single procedure or single session 

claims we use for establishing costs. 

Similarly, a procedure code for which 

there are fewer than 99 single claims 

and which comprises less than 2 

percent of the single major claims 

within an APC will have a negligible 

impact on the APC cost. In the CY 2018 

OPPS/ASC proposed rule (81 FR 33604 

through 33605), we proposed to make 

exceptions to this limit on the variation 

of costs within each APC group in 

unusual cases, such as low-volume 

items and services. 

For the CY 2018 OPPS update, we 

identified the APCs with violations of 

the 2 times rule, and we proposed 

changes to the procedure codes assigned 

to these APCs in Addendum B to the CY 

2018 OPPS/ASC proposed rule. We 

noted that Addendum B did not appear 

in the printed version of the Federal 

Register as part of the CY 2018 OPPS/ 

ASC proposed rule. Rather, it was 

published and made available via the 

Internet on the CMS Web site at: http:// 

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

PPS/index.html. In these cases, to 

eliminate a violation of the 2 times rule 

or to improve clinical and resource 

homogeneity, in the CY 2018 OPPS/ASC 

proposed rule (81 FR 33604 through 

33605), we proposed to reassign these 

procedure codes to new APCs that 

contain services that are similar with 

regard to both their clinical and 


sradovich on DSK3GMQ082PROD with RULES2
59276 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

resource characteristics. In many cases, 

the proposed procedure code 

reassignments and associated APC 

reconfigurations for CY 2018 included 

in the proposed rule are related to 

changes in costs of services that were 

observed in the CY 2016 claims data 

newly available for CY 2018 ratesetting. 

We also proposed changes to the status 

indicators for some procedure codes 

that were not specifically and separately 

discussed in the proposed rule. In these 

cases, we proposed to change the status 

indicators for these procedure codes 

because we believe that another status 

indicator would more accurately 

describe their payment status from an 

OPPS perspective based on the policies 

that we proposed for CY 2018. 

Addendum B to the CY 2018 OPPS/ASC 

proposed rule identified with the 

comment indicator ‘‘CH’’ those 

procedure codes for which we proposed 

a change to the APC assignment or 

status indicator, or both, that were 

initially assigned in the July 1, 2017 

OPPS Addendum B update (available 

via the Internet on the CMS Web site at: 

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

Medicare-Fee-for-Service-Payment/ 

HospitalOutpatientPPS/Addendum-Aand-Addendum-B-Updates.html). 

Addendum B to this final rule with 

comment period (available via the 

Internet on the CMS Web site) identifies 

with the ‘‘CH’’ comment indicator the 

final CY 2018 changes compared to the 

HCPCS codes’ status as reflected in the 

October 2017 Addendum B update. 

3. APC Exceptions to the 2 Times Rule 

Taking into account the APC changes 

that we proposed for CY 2018, we 

reviewed all of the APCs to determine 

which APCs would not meet the 

requirements of the 2 times rule. We 

used the following criteria to evaluate 

whether to propose exceptions to the 2 

times rule for affected APCs: 

• Resource homogeneity; 

• Clinical homogeneity; 

• Hospital outpatient setting 

utilization; 

• Frequency of service (volume); and 

• Opportunity for upcoding and code 

fragments. 

Based on the CY 2016 claims data 

available for the CY 2018 proposed rule, 

we found 12 APCs with violations of the 

2 times rule. We applied the criteria as 

described above to identify the APCs for 

which we proposed to make exceptions 

under the 2 times rule for CY 2018, and 

found that all of the 12 APCs we 

identified met the criteria for an 

exception to the 2 times rule based on 

the CY 2016 claims data available for 

the proposed rule. We did not include 

in that determination those APCs where 

a 2 times rule violation was not a 

relevant concept, such as APC 5401 

(Dialysis), which only has two HCPCS 

codes assigned to it that have similar 

geometric mean costs and do not create 

a 2 times rule violation. Therefore, we 

have only identified those APCs, 

including those with criteria-based 

costs, such as device-dependent CPT/ 

HCPCS codes, with 2 times rule 

violations. 

We note that, for cases in which a 

recommendation by the HOP Panel 

appears to result in or allow a violation 

of the 2 times rule, we may accept the 

HOP Panel’s recommendation because 

those recommendations are based on 

explicit consideration (that is, a review 

of the latest OPPS claims data and group 

discussion of the issue) of resource use, 

clinical homogeneity, site of service, 

and the quality of the claims data used 

to determine the APC payment rates. 

Table 16 of the proposed rule listed 

the 12 APCs for which we proposed to 

make exceptions under the 2 times rule 

for CY 2018 based on the criteria cited 

above and claims data submitted 

between January 1, 2016, and December 

31, 2016, that were processed on or 

before December 31, 2016. We indicated 

that, for the final rule with comment 

period, we intended to use claims data 

for dates of service between January 1, 

2016, and December 31, 2016, that were 

processed on or before June 30, 2017, 

and updated CCRs, if available. 

Based on the updated final rule CY 

2016 claims data used for this CY 2018 

final rule with comment period, we 

were able to remedy 6 APC violations 

out of the 12 APCs that appeared in 

Table 16 of the CY 2018 OPPS/ASC 

proposed rule. Specifically, we found 

that the following 6 APCs no longer met 

the criteria for exception to the 2 times 

rule in this final rule with comment 

period: 

• APC 5161 (Level 1 ENT 

Procedures); 

• APC 5311 (Level 1 Lower GI 

Procedures); 

• APC 5461 (Level 1 Neurostimulator 

and Related Procedures); 

• APC 5573 (Level 3 Imaging with 

Contrast); 

• APC 5611 (Level 1 Therapeutic 

Radiation Treatment Preparation); and 

• APC 5735 (Level 5 Minor 

Procedures). 

Secondly, based on our analysis of the 

final rule claims data, we found a total 

of 11 APCs with violations of the 2 

times rule. Of these 11 total APCs, 6 

were identified in the proposed rule and 

5 are newly identified APCs. 

Specifically, we found the following 6 

APCs from the proposed rule continued 

to have violations of the 2 times rule for 

this final rule with comment period: 

• APC 5112 (Level 2 Musculoskeletal 

Procedures); 

• APC 5521 (Level 1 Imaging without 

Contrast); 

• APC 5691 (Level 1 Drug 

Administration); 

• APC 5731 (Level 1 Minor 

Procedures); 

• APC 5771 (Cardiac Rehabilitation); 

and 

• APC 5823 (Level 3 Health and 

Behavior Services). 

In addition, we found that the 

following 5 additional APCs violated 

the 2 times rule using the final rule with 

comment period claims data: 

• APC 5522 (Level 2 Imaging without 

Contrast); 

• APC 5524 (Level 4 Imaging without 

Contrast); 

• APC 5571 (Level 1 Imaging with 

Contrast); 

• APC 5721 (Level 1 Diagnostic Tests 

and Related Services); and 

• APC 5732 (Level 2 Minor 

Procedures). 

Comment: Some commenters 

requested that CMS not adopt the 

exception to C–APCs, including C–APC 

5112 (Level 2 Musculoskeletal 

Procedures), because they believed it 

would result in lowering the payments 

for the procedures assigned to C–APCs. 

According to the commenters, because 

C–APCs involve complex combinations 

of items and services where appropriate 

valuation is critical, CMS should not 

adopt exceptions that have the result of 

lowering the overall payment rate for 

associated procedures. Instead, as one 

commenter suggested, CMS should 

establish additional APC levels to avoid 

any exceptions to the 2 times rule. 

Response: We do not agree that we 

should establish a new APC for every 

group that violates the 2 times rule. We 

believe that excepting certain APCs 

from the 2 times rule is necessary, 

especially for procedures assigned to the 

same APC based on clinical 

homogeneity. As we have seen 

throughout the years since the 

implementation of the OPPS on August 

1, 2000, APCs excepted in one year are 

usually resolved the following year 

based on our analysis of the latest 

claims data used for ratesetting. For 

example, we listed C–APC 5165 (Level 

5 ENT Procedures) in Table 19 of the CY 

2016 OPPS/ASC final rule with 

comment period (80 FR 70374) as one 

of the APCs that violated the 2 times 

rule for CY 2016. However, this same 

APC no longer appeared in Table 9 of 

the CY 2017 OPPS/ASC final rule with 

comment period (81 FR 79614) as 

excepted from the 2 times rule. We 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59277 

believe that the anomalies seen in one 

year but not the next year for a given 

APC are the result of more accurate 

coding and charge master identification 

by HOPDs. 

After considering the public 

comments we received on APC 

assignments and our analysis of the CY 

2016 costs from hospital claims and cost 

report data available for this CY 2018 

final rule with comment period, we are 

finalizing our proposals with some 

modifications. Specifically, we are 

finalizing our proposal to except 6 of the 

12 proposed APCs from the 2 times rule 

for CY 2018 (APCs 5112, 5521, 5691, 

5731, 5771, and 5823), and also 

excepting 5 additional APCs (APCs 

5522, 5524, 5571, 5721, and 5732). As 

noted above, we were able to remedy 

the other 6 of the proposed rule 2 time 

violations in this final rule with 

comment period. 

Table 14 below lists the 11 APCs that 

we are excepting from the 2 times rule 

for CY 2018 based on the criteria 

described earlier and a review of 

updated claims data for dates of service 

between January 1, 2016 and December 

31, 2016, that were processed on or 

before June 30, 2017, and updated CCRs, 

if available. We note that, for cases in 

which a recommendation by the HOP 

Panel appears to result in or allow a 

violation of the 2 times rule, we 

generally accept the HOP Panel’s 

recommendation because those 

recommendations are based on explicit 

consideration of resource use, clinical 

homogeneity, site of service, and the 

quality of the claims data used to 

determine the APC payment rates. The 

geometric mean costs for hospital 

outpatient services for these and all 

other APCs that were used in the 

development of this final rule with 

comment period can be found on the 

CMS Web site at: http://www.cms.gov. 

TABLE 14—APC EXCEPTIONS TO THE

2 TIMES RULE FOR CY 2018 

APC CY 2018 APC title 

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

5521 ....... Level 1 Imaging without Contrast. 

5522 ....... Level 2 Imaging without Contrast. 

5524 ....... Level 4 Imaging without Contrast. 

5571 ....... Level 1 Imaging with Contrast. 

5691 ....... Level 1 Drug Administration. 

5721 ....... Level 1 Diagnostic Tests and Related. Services 

5731 ....... Level 1 Minor Procedures. 

5732 ....... Level 2 Minor Procedures. 

5771 ....... Cardiac Rehabilitation. 

5823 ....... Level 3 Health and Behavior 

Services. 

C. New Technology APCs 

1. Background 

In the November 30, 2001 final rule 

(66 FR 59903), we finalized changes to 

the time period in which a service can 

be eligible for payment under a New 

Technology APC. Beginning in CY 2002, 

we retain services within New 

Technology APC groups until we gather 

sufficient claims data to enable us to 

assign the service to an appropriate 

clinical APC. This policy allows us to 

move a service from a New Technology 

APC in less than 2 years if sufficient 

data are available. It also allows us to 

retain a service in a New Technology 

APC for more than 2 years if sufficient 

data upon which to base a decision for 

reassignment have not been collected. 

For CY 2017, there are 51 New 

Technology APC levels, ranging from 

the lowest cost band assigned to APC 

1491 (New Technology—Level 1A ($0– 

$10)) through the highest cost band 

assigned to APC 1906 (New 

Technology—Level 51 ($140,001- 

$160,000)). In the CY 2004 OPPS final 

rule with comment period (68 FR 

63416), we restructured the New 

Technology APCs to make the cost 

intervals more consistent across 

payment levels and refined the cost 

bands for these APCs to retain two 

parallel sets of New Technology APCs, 

one set with a status indicator of ‘‘S’’ 

(Significant Procedures, Not Discounted 

when Multiple. Paid under OPPS; 

separate APC payment) and the other set 

with a status indicator of ‘‘T’’ 

(Significant Procedure, Multiple 

Reduction Applies. Paid under OPPS; 

separate APC payment). These current 

New Technology APC configurations 

allow us to price new technology 

services more appropriately and 

consistently. 

We note that the cost bands for the 

New Technology APCs, specifically, 

APCs 1491 through 1599 and 1901 

through 1906, vary with increments 

ranging from $10 to $19,999. These cost 

bands identify the APCs to which new 

technology procedures and services 

with estimated service costs that fall 

within those cost bands are assigned 

under the OPPS. Payment for each APC 

is made at the mid-point of the APC’s 

assigned cost band. For example, 

payment for New Technology APC 1507 

(New Technology—Level 7 ($501– 

$600)) is made at $550.50. 

Every year, we receive several 

requests for higher payment amounts 

under the New Technology APCs for 

specific procedures paid under the 

OPPS because they require the use of 

expensive equipment. As we did in the 

CY 2018 OPPS/ASC proposed rule, we 

are taking this opportunity to reiterate 

our response, in general, to the issue of 

hospitals’ capital expenditures as they 

relate to the OPPS and Medicare, as 

specified in the CY 2016 OPPS/ASC 

final rule with comment period (80 FR 

70374). 

Under the OPPS, one of our goals is 

to make payments that are appropriate 

for the services that are necessary for the 

treatment of Medicare beneficiaries. The 

OPPS, like other Medicare payment 

systems, is budget neutral and increases 

are limited to the annual hospital 

inpatient market basket increase. We 

believe that our payment rates generally 

reflect the costs that are associated with 

providing care to Medicare 

beneficiaries. Furthermore, we believe 

that our payment rates are adequate to 

ensure access to services (80 FR 70374). 

For many emerging technologies, 

there is a transitional period during 

which utilization may be low, often 

because providers are first learning 

about the techniques and their clinical 

utility. Quite often, parties request that 

Medicare make higher payment 

amounts under the New Technology 

APCs for new procedures in that 

transitional phase. These requests, and 

their accompanying estimates for 

expected total patient utilization, often 

reflect very low rates of patient use of 

expensive equipment, resulting in high 

per use costs for which requesters 

believe Medicare should make full 

payment. Medicare does not, and we 

believe should not, assume 

responsibility for more than its share of 

the costs of procedures based on 

projected utilization for Medicare 

beneficiaries and does not set its 

payment rates based on initial 

projections of low utilization for 

services that require expensive capital 

equipment. For the OPPS, we rely on 

hospitals to make informed business 

decisions regarding the acquisition of 

high-cost capital equipment, taking into 

consideration their knowledge about 

their entire patient base (Medicare 

beneficiaries included) and an 

understanding of Medicare’s and other 

payers’ payment policies. (We refer 

readers to the CY 2013 OPPS/ASC final 

rule with comment period (77 FR 

68314) for further discussion regarding 

this payment policy.) 

We note that, in a budget neutral 

environment, payments may not fully 

cover hospitals’ costs in a particular 

circumstance, including those for the 

purchase and maintenance of capital 

equipment. We rely on hospitals to 

make their decisions regarding the 

acquisition of high-cost equipment with 

the understanding that the Medicare 

program must be careful to establish its 


sradovich on DSK3GMQ082PROD with RULES2
59278 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

initial payment rates, including those 

made through New Technology APCs, 

for new services that lack hospital 

claims data based on realistic utilization 

projections for all such services 

delivered in cost-efficient hospital 

outpatient settings. As the OPPS 

acquires claims data regarding hospital 

costs associated with new procedures, 

we regularly examine the claims data 

and any available new information 

regarding the clinical aspects of new 

procedures to confirm that our OPPS 

payments remain appropriate for 

procedures as they transition into 

mainstream medical practice (77 FR 

68314). 

2. Revised and Additional New 

Technology APC Groups 

As stated earlier, for CY 2017, there 

are currently 51 levels of New 

Technology APCs. To improve our 

ability to have payments for services 

over $100,000 more closely match the 

cost of the service, in the CY 2018 

OPPS/ASC proposed rule (82 FR 33606), 

for CY 2018, we proposed to narrow the 

increments for New Technology APCs 

1901–1906 from $19,999 cost bands to 

$14,999 cost bands. We also proposed to 

add New Technology APCs 1907 and 

1908 (New Technology Level 52 

($145,001–$160,000), which would 

allow for an appropriate payment of 

retinal prosthesis implantation 

procedures, which is discussed later in 

this section. Table 17 of the proposed 

rule included the complete list of the 

proposed modified and additional New 

Technology APC groups for CY 2018. 

We did not receive any public 

comments on our proposal. Therefore, 

we are finalizing the proposal, without 

modification. Table 15 below includes 

the complete list of the final modified 

and additional New Technology APC 

groups for CY 2018. 

TABLE 15—CY 2018 ADDITIONAL NEW TECHNOLOGY APC GROUPS

CY 2018 APC CY 2018 APC title CY 2018 SI Updated or new APC 

1901 ................ New Technology—Level 49 ($100,001–$115,000) ......................................................... S Updated. 

1902 ................ New Technology—Level 49 ($100,001–$115,000) ......................................................... T Updated. 

1903 ................ New Technology—Level 50 ($115,001–$130,000) ......................................................... S Updated. 

1904 ................ New Technology—Level 50 ($115,001–$130,000) ......................................................... T Updated. 

1905 ................ New Technology—Level 51 ($130,001–$145,000) ......................................................... S Updated. 

1906 ................ New Technology—Level 51 ($130,001–$145,000) ......................................................... T Updated. 

1907 ................ New Technology—Level 52 ($145,001–$160,000) ......................................................... S New. 

1908 ................ New Technology—Level 52 ($145,001–$160,000) ......................................................... T New. 

The final payment rates for New 

Technology APCs 1901 through 1908 

are included in Addendum A to this 

final rule with comment period (which 

is available via the Internet on the CMS 

Web site). 

3. Procedures Assigned to New 

Technology APC Groups for CY 2018 

As we explained in the CY 2002 OPPS 

final rule with comment period (66 FR 

59902), we generally retain a procedure 

in the New Technology APC to which 

it is initially assigned until we have 

obtained sufficient claims data to justify 

reassignment of the procedure to a 

clinically appropriate APC. 

In addition, in cases where we find 

that our initial New Technology APC 

assignment was based on inaccurate or 

inadequate information (although it was 

the best information available at the 

time), where we obtain new information 

that was not available at the time of our 

initial New Technology APC 

assignment, or where the New 

Technology APCs are restructured, we 

may, based on more recent resource 

utilization information (including 

claims data) or the availability of refined 

New Technology APC cost bands, 

reassign the procedure or service to a 

different New Technology APC that 

more appropriately reflects its cost (66 

FR 59903). 

Consistent with our current policy, for 

CY 2018, in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33606), we 

proposed to retain services within New 

Technology APC groups until we obtain 

sufficient claims data to justify 

reassignment of the service to a 

clinically appropriate APC. The 

flexibility associated with this policy 

allows us to reassign a service from a 

New Technology APC in less than 2 

years if sufficient claims data are 

available. It also allows us to retain a 

service in a New Technology APC for 

more than 2 years if sufficient claims 

data upon which to base a decision for 

reassignment have not been obtained 

(66 FR 59902). 

a. Magnetic Resonance-Guided Focused 

Ultrasound Surgery (MRgFUS) (APCs 

1537, 5114, and 5414) 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33607), 

currently, there are four CPT/HCPCS 

codes that describe magnetic resonance 

image guided high intensity focused 

ultrasound (MRgFUS) procedures, three 

of which we proposed to continue to 

assign to standard APCs and one of 

which we proposed to continue to 

assign to a New Technology APC for CY 

2018. These codes include CPT codes 

0071T, 0072T, and 0398T, and HCPCS 

code C9734. CPT codes 0071T and 

0072T are used for the treatment of 

uterine fibroids, CPT code 0398T is 

used for the treatment of essential 

tremor, and HCPCS code C9734 is used 

for pain palliation for metastatic bone 

cancer. 

As shown in Table 18 of the proposed 

rule, and as listed in Addendum B of 

the CY 2018 OPPS/ASC proposed rule, 

we proposed to continue to assign CPT 

codes 0071T and 0072T to APC 5414 

(Level 4 Gynecologic Procedures), with 

a proposed payment rate of 

approximately $2,189 for CY 2018. We 

also proposed to continue to assign the 

APC to status indicator ‘‘J1’’ (Hospital 

Part B services paid through a 

comprehensive APC) to indicate that all 

covered Part B services on the claim are 

packaged with the payment for the 

primary ‘‘J1’’ service for the claim, 

except for services assigned to OPPS 

status indicator ‘‘F’’, ‘‘G’’, ‘‘H’’, ‘‘L’’, and 

‘‘U’’; ambulance services; diagnostic and 

screening mammography; all preventive 

services; and certain Part B inpatient 

services. In addition, we proposed to 

continue to assign HCPCS code C9734 

(Focused ultrasound ablation/ 

therapeutic intervention, other than 

uterine leiomyomata, with magnetic 

resonance (mr) guidance) to APC 5114 

(Level 4 Musculoskeletal Procedures), 

with a proposed payment rate of 

approximately $5,385 for CY 2018. We 

also proposed to continue to assign 

HCPCS code C9734 to status indicator 

‘‘J1’’. 

Further, we proposed to continue to 

assign CPT code 0398T to APC 1537 

(New Technology—Level 37 ($9,501– 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59279 

$10,000)), with a proposed payment rate 

of $9,750.50 for CY 2018. At the time 

the proposed rule was developed, there 

was only one claim for CPT code 0398T 

with a geometric mean cost of $27,516. 

We referred readers to Addendum B to 

the proposed rule for the proposed 

payment rates for all codes reportable 

under the OPPS. Addendum B is 

available via the Internet on the CMS 

Web site. 

Comment: Several commenters stated 

that the proposed payment rate for CPT 

code 0398T is too low and 

recommended that CPT code 0398T be 

assigned to either New Technology APC 

1578 (New Technology—Level 41 

($25,001–$30,000)) or APC 5464 (Level 

4 Neurostimulator and Related 

Procedures), which have payment rates 

closer to the reported cost of the 

procedure of $27,500 based on the one 

claim available at the time of the 

development of the proposed rule. 

Commenters also noted that the 

resources required for the procedure 

described by CPT code 0398T are 

substantially more than the resources 

required for the procedure described by 

CPT code C9734, which had been used 

by CMS to attempt to model the cost of 

the procedure described by CPT code 

0398T. 

Response: We appreciate the concerns 

of the commenters and, for the reasons 

set forth below, agree that the proposed 

payment rate for CPT code 0398T may 

be too low and the procedure should be 

reassigned to a different APC. The 

proposed payment rate for CPT code 

0398T was based on the payment rate 

for HCPCS code C9734 because the 

MRgFUS equipment used in the 

performance of the procedure described 

by CPT code 0398T is very similar to the 

MRgFUS equipment used in the 

performance of the procedure described 

by HCPCS code C9734. Both machines 

are made by the same manufacturer (81 

FR 79642). However, based on 

information from the manufacturer, 

resources involved for the procedure 

described by CPT code 0398T appear to 

be higher than those involved for the 

procedure described by HCPCS code 

C9734. In addition, we still have 

concerns that the costs reported from 

the one claim for the procedure 

described by CPT code 0398T may not 

accurately reflect the geometric mean 

costs of the procedure. However, the 

geometric mean cost of $29,254 for the 

one claim means the cost of CPT code 

0398T is substantially higher than the 

proposed payment rate of $9,750.50. We 

note that, for CY 2017, the manufacturer 

indicated that an appropriate payment 

for the procedure described by CPT 

code 0398T would be approximately 

$18,000 and that either a New 

Technology APC paying that amount or 

assignment to clinical APC 5463 (Level 

3 Neurostimulator and Related 

Procedures) would be appropriate. 

Based on the presence of only one claim 

along with the reported costs associated 

with the procedure described by CPT 

code 0398T presented to us last year by 

the manufacturer, we believe that it is 

appropriate to assign the procedure 

described by CPT code 0398T to APC 

1576 (New Technology—Level 39 

($15,001-$20,000)), with a payment rate 

of $17,500.50 for CY 2018. The 

continued New Technology APC 

assignment will allow time to collect 

more claims data before assigning CPT 

code 0398T to a clinical APC. 

Comment: One commenter supported 

the proposal to assign CPT code C9734 

to APC 5114. 

Response: We appreciate the 

commenter’s support. 

In summary, after consideration of the 

public comments we received, we are 

modifying our proposal for the APC 

assignment of CPT code 0398T. Instead 

of continuing to assign this code to New 

Technology APC 1537 (New 

Technology—Level 37 ($9,501– 

$10,000)), with a payment rate of 

$9,750.50, for CY 2018, we are 

reassigning CPT code 0398T to New 

Technology APC 1576 (New 

Technology—Level 39 ($15,001– 

$20,000)), with a payment rate of 

$17,500.50. In addition, we are 

finalizing our proposal, without 

modification, to reassign HCPCS code 

C9734 to APC 5114. We did not receive 

any public comments related to our 

proposal for CPT codes 0071T and 

0072T. Therefore, we are finalizing our 

proposal to continue to assign these CPT 

codes to APC 5414 without 

modification. Table 16 below lists the 

final CY 2018 status indicator and APC 

assignments for the magnetic resonance 

image guided high intensity focused 

ultrasound (MRgFUS) procedures. We 

refer readers to Addendum B of this 

final rule with comment period for the 

final payment rates for all codes 

reportable under the OPPS. Addendum 

B is available via the Internet on the 

CMS Web site. 

TABLE 16—CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR THE MAGNETIC RESONANCE IMAGE GUIDED

HIGH INTENSITY FOCUSED ULTRASOUND (MRgFUS) PROCEDURES

CPT/HCPCS 

code Long descriptor CY 2017 OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

CY 2018 OPPS 

payment rate 

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

uterine leiomyomata, including 

mr guidance; total leiomyomata 

volume less than 200 cc of tissue.

J1 5414 $2,084.59 J1 5414 Refer to OPPS 

Addendum B. 

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

uterine leiomyomata, including 

mr guidance; total leiomyomata 

volume greater or equal to 200 

cc of tissue.

J1 5414 2,084.59 J1 5414 Refer to OPPS 

Addendum B. 

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

ultrasound (mrgfus), 

stereotactic ablation lesion, 

intracranial for movement disorder including stereotactic 

navigation and frame placement when performed.

S 1537 9,750.50 S 1576 Refer to OPPS 

Addendum B. 


sradovich on DSK3GMQ082PROD with RULES2
59280 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 16—CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR THE MAGNETIC RESONANCE IMAGE GUIDED

HIGH INTENSITY FOCUSED ULTRASOUND (MRgFUS) PROCEDURES—Continued 

CPT/HCPCS 

code Long descriptor CY 2017 OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

CY 2018 OPPS 

payment rate 

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

therapeutic intervention, other 

than uterine leiomyomata, with 

magnetic resonance (mr) guidance.

J1 5114 5,219.36 J1 5114 Refer to OPPS 

Addendum B. 

c. Retinal Prosthesis Implant Procedure 

CPT code 0100T (Placement of a 

subconjunctival retinal prosthesis 

receiver and pulse generator, and 

implantation of intra-ocular retinal 

electrode array, with vitrectomy) 

describes the implantation of a retinal 

prosthesis, specifically, a procedure 

involving the use of the Argus® II 

Retinal Prosthesis System. This first 

retinal prosthesis was approved by the 

FDA in 2013 for adult patients 

diagnosed with advanced retinitis 

pigmentosa. Pass-through payment 

status was granted for the Argus® II 

device under HCPCS code C1841 

(Retinal prosthesis, includes all internal 

and external components) beginning 

October 1, 2013, and this status expired 

on December 31, 2015. We note that 

after pass-through payment status 

expires for a medical device, the 

payment for the device is packaged into 

the payment for the associated surgical 

procedure. Consequently, for CY 2016, 

the device described by HCPCS code 

C1841 was assigned to OPPS status 

indicator ‘‘N’’ to indicate that payment 

for the device is packaged and included 

in the payment rate for the surgical 

procedure described by CPT code 

0100T. For CY 2016, CPT code 0100T 

was assigned to New Technology APC 

1599 with a payment rate of $95,000, 

which was the highest paying New 

Technology APC for that year. This 

payment includes both the surgical 

procedure (CPT code 0100T) and the 

use of the Argus® II device (HCPCS code 

C1841). However, stakeholders 

(including the device manufacturer and 

hospitals) believed that the CY 2016 

payment rate for the procedure 

involving the Argus® II System was 

insufficient to cover the hospital cost of 

performing the procedure, which 

includes the cost of the retinal 

prosthesis with a retail price of 

approximately $145,000. 

For CY 2017, analysis of the CY 2015 

OPPS claims data used for the CY 2017 

final rule with comment period showed 

9 single claims (out of 13 total claims) 

for CPT code 0100T, with a geometric 

mean cost of approximately $142,003 

based on claims submitted between 

January 1, 2015, through December 31, 

2015, and processed through June 30, 

2016. Based on the CY 2015 OPPS 

claims data available for the final rule 

with comment period and our 

understanding of the Argus® II 

procedure, we reassigned CPT code 

0100T from New Technology APC 1599 

to New Technology APC 1906, with a 

final payment rate of $150,000.50 for CY 

2017. We noted that this payment rate 

included the cost of both the surgical 

procedure (CPT code 0100T) and the 

retinal prosthesis device (HCPCS code 

C1841). 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33607 

through 33608), for the CY 2018 update, 

analysis of the CY 2016 OPPS claims 

data used for the CY 2018 proposed rule 

showed 3 single claims (out of 3 total 

claims) for CPT code 0100T, with a 

geometric mean cost of approximately 

$116,239 based on the claims submitted 

between January 1, 2016 through 

December 31, 2016, and processed 

through December 31, 2016. We stated 

in the proposed rule that, for the CY 

2018 OPPS/ASC final rule with 

comment period, the final payment rate 

would be based on claims submitted 

between January 1, 2016 and December 

31, 2016, and processed through June 

30, 2017. 

In the proposed rule, based on the CY 

2016 OPPS claims data available, which 

showed a geometric mean cost of 

approximately $116,239, we proposed 

to reassign the Argus® II procedure to a 

New Technology APC with a payment 

band that covers the geometric mean 

cost of the procedure. Therefore, we 

proposed to reassign CPT code 0100T to 

APC 1904 (New Technology—Level 50 

($115,001–$130,000)), with a proposed 

payment of $122,500.50 for CY 2018. 

We invited public comments on this 

proposal. 

Comment: One commenter, the 

manufacturer, opposed the proposal to 

reassign CPT code 0100T to APC 1904, 

with a proposed payment of 

$122,500.50 for CY 2018. Instead, the 

commenter requested that CMS reassign 

CPT code 0100T to a New Technology 

APC that would establish a payment 

rate near the CY 2017 payment rate of 

$150,000.50. The commenter stated that 

the estimated cost of the service 

generated from 3 claims reported in CY 

2016 is much lower than the actual cost 

of the procedure. The commenter 

believed the lower cost of the procedure 

described by CPT code 0100T is a result 

of CMS’ decision to set the payment rate 

of the procedure at $95,000 for CY 2016 

based on 2 claims, for which the 

submitting hospital stated the charges 

reported were mistakenly low. The 

commenter asserted that the lower 

payment rate forced the manufacturer of 

the Argus® II to provide a substantial 

discount for the device, which is 

reflected in the lower reported cost for 

the Argus® II procedure in CY 2016. 

This commenter and a second 

commenter were concerned with the 

high level of variation in payment for a 

low volume service like the Argus® II 

procedure from year to year. The 

commenters requested payment of 

approximately $150,000 for CPT code 

0100T in CY 2018 to break the cycle of 

extremely volatile year-to-year shifts of 

the payment for the procedure described 

by this CPT code and noted its 

expectation that claims for CY 2017 

(which would be used for the CY 2019 

rulemaking) would reflect a 

significantly higher average cost than 

those for CY 2016. 

Response: We understand the 

concerns of the commenters. The 

reported cost of the Argus® II procedure 

based on the updated CY 2016 hospital 

outpatient claims data, which include 

additional claims received after 

issuance of the CY 2018 proposed rule 

and finalized as of June 30, 2017, is 

approximately $94,455, which is more 

than $55,000 less than the payment rate 

for the procedure in CY 2017. We note 

that the costs of the Argus® II procedure 

are extraordinarily high compared to 

many other procedures paid under the 

OPPS. In addition, the number of claims 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59281 

submitted has, to date, been very low 

and has not exceeded 10 claims. We 

believe it is important to mitigate 

significant payment differences, 

especially shifts of several tens of 

thousands of dollars, while also basing 

payment rates on available costs 

information and claims data. In CY 

2016, the payment rate for the Argus®

II procedure was $95,000.50. The 

payment rate increased to $150,000.50 

in CY 2017. For CY 2018, we proposed 

a payment rate of $122,500.50 based on 

the most recent claims data available at 

the time of the development of the 

proposed rule. However, if we were to 

assign the payment rate based on 

updated final rule claims data, the 

payment rate would decrease, to 

$95,000.50 for CY 2018, a decrease of 

$55,000 relative to CY 2017. We are 

concerned that these large changes in 

payment could potentially create an 

access to care issue for the Argus® II 

procedure. While we believe that the 

proposed payment rate of $122,500.50 is 

a significant decrease, we believe that it 

would be appropriate to finalize the 

proposed rate to mitigate a much 

sharper decline in payment from one 

year to the next (as well as from the 

proposed rule to the final rule). 

In accordance with section 

1833(t)(2)(B) of the Act, we must 

establish that services classified within 

each APC are comparable clinically and 

with respect to the use of resources. 

Accordingly, we are using our equitable 

adjustment authority under section 

1833(t)(2)(E) of the Act, which states 

that the Secretary shall establish, in a 

budget neutral manner, other 

adjustments as determined to be 

necessary to ensure equitable payments, 

to maintain the proposed rate for this 

procedure, despite the lower geometric 

mean costs available in the claims data 

used for this final rule with comment 

period. As stated earlier, we believe that 

this situation is unique, given the high 

cost and very limited number of claims 

for the procedure. Therefore, for CY 

2018, we are reassigning the Argus® II 

procedure to APC 1904 (New 

Technology—Level 50 ($115,001– 

$130,000)). This APC assignment will 

establish a payment rate for the Argus®

II procedure of $122,500.50, which is 

the arithmetic mean of the payment 

rates for the service for CY 2016 and CY 

2017. As we do each year, we acquire 

claims data regarding hospital costs 

associated with new procedures. We 

regularly examine the claims data and 

any available new information regarding 

the clinical aspects of new procedures 

to confirm that our OPPS payments 

remain appropriate for procedures like 

the Argus® II procedure as they 

transition into mainstream medical 

practice (77 FR 68314). 

After consideration of the public 

comments we received, we are 

finalizing our proposal to reassign CPT 

code 0100T to APC 1904 through use of 

our equitable adjustment authority. We 

are reassigning CPT code 0100T from 

APC 1906 (New Technology—Level 51 

($140,001–$160,000)), which has a final 

payment rate of $150,000.50 for CY 

2017, to APC 1904 (New Technology— 

Level 50 $115,001–$130,000)), which 

has a final payment rate of $122,500.50 

for CY 2018. We note this payment 

includes both the surgical procedure 

(CPT code 0100T) and the use of the 

Argus® II device (HCPCS code C1841). 

d. Pathogen Test for Platelets 

As stated in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33608), the CMS 

HCPCS Workgroup established HCPCS 

code Q9987 (Pathogen(s) test for 

platelets), effective July 1, 2017. HCPCS 

code Q9987 will be used to report any 

test used to identify bacterial or other 

pathogen contamination in blood 

platelets. Currently, there is one test 

approved by the FDA that is described 

by HCPCS code Q9987. The test is a 

rapid bacterial test, and the 

manufacturer estimates the cost of the 

test to be between $26 and $35. HCPCS 

code Q9987 was established after 

concerns from blood and blood product 

stakeholders that the previous CPT code 

used to describe pathogen tests for 

platelets, CPT code P9072 (Platelets, 

pheresis, pathogen reduced or rapid 

bacterial tested, each unit), 

inappropriately described rapid 

bacterial testing by combining the test 

with the pathogen reduction of platelets. 

CPT code P9072 is inactive effective on 

July 1, 2017. 

In the CY 2018 OPPS/ASC proposed 

rule, we sought more information on the 

actual costs of pathogen tests for 

platelets before assigning HCPCS code 

Q9987 to a clinical APC. Effective July 

1, 2017, HCPCS code Q9987 is assigned 

to New Technology APC 1493 (New 

Technology—Level 1C ($21–$30)), with 

a payment rate of $25.50. We proposed 

to continue to assign HCPCS code 

Q9987 to New Technology APC 1493, 

with a proposed payment rate of $25.50, 

until such time as claims data are 

available to support the assignment to a 

clinical APC. We invited public 

comments on this proposal. 

Comment: Two commenters 

supported the proposal to continue to 

provide separate payment for HCPCS 

code Q9987. 

Response: We appreciate the 

commenters’ support. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to continue 

separate payment for HCPCS code 

Q9987 for CY 2018, with a modification 

that HCPCS code Q9987 will be 

replaced by HCPCS code P9100 

(Pathogen(s) test for platelets). Table 17 

below contains more information on the 

coding change. 

TABLE 17—REPLACEMENT CODE FOR HCPCS CODE Q9987 AS OF JANUARY 1, 2018 

CY 2017 HCPCS code CY 2018 

HCPCS code CY 2018 long descriptor Final CY 2018 SI 

Final CY 

2018 APC 

Q9987 ................................................. P9100 ............ Pathogen(s) test for platelets ..................................... S 1493 

e. Fractional Flow Reserve Derived 

From Computed Tomography (FFRCT) 

For CY 2018, the AMA CPT Editorial 

Panel established four new CPT codes 

for fractional flow reserve derived from 

computed tomography (FFRCT). Table 

18 below lists the new CPT codes along 

with their complete descriptors. These 

codes were listed in Addendum B and 

Addendum O to the CY 2018 OPPS/ASC 

proposed rule (which is available via 

the Internet on the CMS Web site). 

Addendum B included the proposed 

status indicator assignments for the new 

codes and their assignment to comment 

indicator ‘‘NP’’ (New code for the next 

calendar year or existing code with 

substantial revision to its code 

descriptor in the next calendar year as 

compared to current calendar year, 

proposed APC assignment; comments 

will be accepted on the proposed APC 

assignment for the new code). 

Addendum O included the proposed/ 

placeholder CY 2018 CPT codes and the 

long descriptors. 

We note that the CPT code descriptors 

that appeared in Addendum B were 

short descriptors and did not fully 

describe the complete procedure, 


sradovich on DSK3GMQ082PROD with RULES2
59282 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

1Available at: https://www.accessdata.fda.gov/ 

cdrh_docs/reviews/DEN130045.pdf, page 1. 

2Available at: http://www.heartflow.com/. 

service, or item identified for the CPT 

codes. Therefore, we included the 5- 

digit placeholder codes and their long 

descriptors in Addendum O to the 

proposed rule, specifically under the 

column labeled ‘‘CY 2018 OPPS/ASC 

Proposed Rule 5-Digit AMA Placeholder 

Code,’’ so that the public could 

adequately comment on our proposed 

APC and status indicator assignments. 

We also indicated that the final CPT 

code numbers would be included in this 

CY 2018 OPPS/ASC final rule with 

comment period. The final CPT code 

numbers, along with their 

corresponding 5-digit placeholder 

codes, can be found in Table 19 below. 

As displayed in Table 18 and in 

Addendum B of the CY 2018 OPPS/ASC 

proposed rule, we proposed to assign 

CPT codes 0501T and 0504T to status 

indicator ‘‘M’’ (Not paid under OPPS; 

Items and Services Not Billable to the 

MAC) to indicate that these services are 

not paid under the OPPS, and to assign 

CPT codes 0502T and 0503T to status 

indicator ‘‘N’’ (packaged) to indicate 

that the payment for these services is 

packaged into the primary service or 

procedure that is reported with the 

codes. 

TABLE 18—PROPOSED CY 2018 STATUS INDICATOR (SI) ASSIGNMENT FOR THE NEW FFRCT CPT CODES EFFECTIVE

JANUARY 1, 2018 

CPT code 

CY 2018 

OPPS/ASC 

proposed rule 

placeholder 

code 

Long descriptor 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS APC 

Proposed 

CY 2018 

OPPS 

payment 

0501T ............. 02X4T ............ Non-invasive estimated coronary fractional flow reserve (FFR) 

derived from coronary computed tomography angiography data 

using computation fluid dynamics physiologic simulation software analysis of functional data to assess the severity of coronary artery disease; data preparation and transmission, analysis of fluid dynamics and simulated maximal coronary hyperemia, generation of estimated FFR model, with anatomical 

data review in comparison with estimated FFR model to reconcile discordant data, interpretation and report.

M N/A N/A 

0502T ............. 02X5T ............ Non-invasive estimated coronary fractional flow reserve (FFR) 

derived from coronary computed tomography angiography data 

using computation fluid dynamics physiologic simulation software analysis of functional data to assess the severity of coronary artery disease; data preparation and transmission.

N N/A N/A 

0503T ............. 02X6T ............ Non-invasive estimated coronary fractional flow reserve (FFR) 

derived from coronary computed tomography angiography data 

using computation fluid dynamics physiologic simulation software analysis of functional data to assess the severity of coronary artery disease; analysis of fluid dynamics and simulated 

maximal coronary hyperemia, and generation of estimated 

FFR model.

N N/A N/A 

0504T ............. 02X7T ............ Non-invasive estimated coronary fractional flow reserve (FFR) 

derived from coronary computed tomography angiography data 

using computation fluid dynamics physiologic simulation software analysis of functional data to assess the severity of coronary artery disease; anatomical data review in comparison with 

estimated FFR model to reconcile discordant data, interpretation and report.

M N/A N/A 

According to the FDA, FFRCT uses 

post-processing software to create ‘‘a 

mathematically derived quantity, 

computed from simulated pressure, 

velocity and blood flow information 

obtained from a 3D computer model 

generated from static coronary CT 

images.’’ 1 FFRCT is performed outside 

the outpatient hospital setting by 

HeartFlow, which uses proprietary 

software to conduct the analysis. 

Hospital outpatient providers use 

industry-leading protocols and 

technologies at every step to ensure 

protection of patient data and that the 

CT images are securely transferred to 

HeartFlow.2 After FFRCT is performed, a 

report is generated that provides 

fractional flow reserve values 

throughout the coronary blood vessels, 

which allows providers to determine 

treatment strategies based on the 

findings of the report while considering 

the patient’s medical history, symptoms, 

and results of other diagnostic tests. 

The developer of FFRCT first 

submitted an application for the 

procedure to be given a temporary 

procedure code and assigned to a New 

Technology APC in March 2016. CMS 

denied the developer’s application 

because we considered the FFRCT

procedure to be an image guidance, 

processing, supervision, or 

interpretation service whose payment 

should be packaged into the payment 

for the related computed tomography 

service, in accordance with our 

regulations at 42 CFR 419.2(b)(13). The 

developer then filed a New Technology 

APC reconsideration request in March 

2017 asking that CMS reverse its denial 

of the developer’s application to have 

the FFRCT assigned to a New 

Technology APC. We reviewed the 

reconsideration request and denied the 

request for the same reason as we did in 

March 2016. 

In a New Technology APC application 

for HeartFlow for CY 2018, the 

developer of the FFRCT service proposed 

that the service be reported with CPT 

code 0503T (Non-invasive estimated 

coronary fractional flow reserve (FFR) 

derived from coronary computed 

tomography angiography data using 

computation fluid dynamics physiologic 

simulation software analysis of 

functional data to assess the severity of 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59283 

coronary artery disease; analysis of fluid 

dynamics and simulated maximal 

coronary hyperemia, and generation of 

estimated FFR model) and requested 

that the service be assigned to APC 1517 

(New Technology—Level 17 ($1501– 

$1600)), with a payment rate of 

$1,550.50. Because both the initial New 

Technology APC application and the 

reconsideration request were denied, we 

did not describe the associated New 

Technology APC application for 

HeartFlow in the CY 2018 OPPS/ASC 

proposed rule. 

Comment: Several commenters, 

including the developer of HeartFlow 

and some clinicians who have 

experience with it, supported having a 

FFRCT service paid as a separate service 

and not packaged into the payment for 

the coronary computed tomography 

angiography. The commenters stated 

that FFRCT is performed separately from 

a coronary computed tomography 

angiography by an independent testing 

company that is not affiliated with any 

outpatient hospital provider and is 

performed at locations owned by the 

testing company. These commenters 

noted that the service may be performed 

several days or weeks after the original 

coronary computed tomography 

angiography is performed. Also, 

commenters noted that several 

physician societies involved in cardiac 

care recognize FFRCT as a separate 

service from a coronary computed 

tomography angiography and requested 

that new CPT codes 0501T, 0502T, 

0503T, and 0504T be established for 

FFRCT services, effective January 1, 

2018. The commenters stated that the 

physician societies and the AMA 

determined that a coronary computed 

tomography angiography and a FFRCT

service are not connected services. 

Commenters asserted that a FFRCT

service provides information that cannot 

be obtained from standard analysis of a 

coronary computed tomography 

angiography image. Several commenters 

stated that FFRCT services can improve 

the quality of screening for coronary 

artery disease (CAD) while reducing 

costs. That is, the commenters stated 

that, unlike a coronary computed 

tomography angiography service, which 

merely produces images, the FFRCT

service is able to directly produce FFRCT

values by creating a 3–D model of the 

patient’s coronary arteries using the 

previously acquired image. Moreover, 

the commenters contended that, because 

the FFRCT service does not produce 

images, it is improper to package the 

costs of FFRCT into the payment for the 

associated coronary computed 

tomography angiography service. 

Commenters stated that, many times, 

a coronary computed tomography 

angiography indicates that a beneficiary 

may potentially have CAD and that 

without FFRCT, providers will often 

request an invasive coronary angiogram 

to verify the presence of CAD. In many 

cases, the invasive coronary angiogram 

finds no occurrence of CAD. FFRCT

services can provide analytic services 

not otherwise available to determine 

fractional flow rates in coronary arteries 

using the original coronary computed 

tomography angiography image and 

show whether a beneficiary has CAD 

without performing a coronary 

procedure. 

The developer also stated that 

hospitals incur a cost charged by 

HeartFlow of $1,500 to perform the 

FFRCT analysis, and certain other 

modest costs (for example, overhead for 

interpretation and entering results into 

medical record). Therefore, the 

commenters stated that bundling the 

payment for FFRCT with the payment for 

the coronary computed tomography 

angiography imaging service would 

prevent hospitals from using FFRCT

because the payment rate for the 

bundled coronary computed 

tomography angiography service would 

be less than $300. One commenter (the 

developer) requested that the service be 

assigned to APC 1517 (New 

Technology—Level 17 ($1501–$1600)), 

with a payment rate of $1,550.50. 

Some commenters, including the 

developer, stated that CMS did not 

properly interpret the regulation at 42 

CFR 419.2(b)(13) in its previous 

decisions to deny the FFRCT application 

and reconsideration request to receive 

separate payment in a New Technology 

APC. Specifically, the FFRCT developer 

and other commenters stated that the 

FFRCT service was not an image 

guidance service because CMS stated in 

prior preamble language that an image 

guidance service must produce images. 

The commenters stated that a FFRCT

service does not produce images, but 

instead produces FFR values. They 

stated that the FFRCT service is also not 

an image processing service because 

such processing services help to 

compile diagnostic data to create an 

image, and noted that, although the 

FFRCT service analyzes image data, it is 

not used to construct an anatomic 

image. In addition, the commenters 

asserted that the FFRCT service is not an 

imaging supervision or interpretation 

service. The commenters believed that 

imaging supervision and interpretation 

services should be performed on the 

same day and at the provider location as 

the independent imaging service; 

whereas the FFRCT service can be 

performed days or weeks after the 

original coronary computed tomography 

angiography service is performed and is 

performed in a specialized location 

outside of hospital. In addition, the 

commenters stated that imaging 

supervision and interpretation services 

are for radiological services that are 

mostly billed with the CPT radiological 

code set (CPT codes 70000–79999) and 

the FFRCT service is not a radiological 

service and does not involve 

supervision or interpretation. 

Response: We appreciate the 

comments we have received about the 

FFRCT service. We have reviewed our 

image packaging regulations under 42 

CFR 419.2(b)(13). This regulation states, 

in relevant part, that in determining the 

packaged costs for hospital outpatient 

prospective payment rates, the 

prospective payment system establishes 

a national payment rate, standardized 

for geographic wage differences, that 

includes operating and capital-related 

costs that are integral, ancillary, 

supportive, dependent, or adjunctive to 

performing a procedure or furnishing a 

service on an outpatient basis. In 

general, these packaged costs may 

include, but are not limited to, among 

other items and services, image 

guidance, processing, supervision, and 

interpretation services, the payment for 

which are packaged or conditionally 

packaged into the payment for the 

related procedures or services. 

After reviewing the public comments, 

we agree with the commenters that the 

FFRCT service is not image guidance or 

supervision because FFRCT does not 

produce images, does not appear to be 

a supportive guidance service that aids 

in the performance of an independent 

procedure, and, unlike typical 

supervision services, is not generally 

reported when the initial image is 

acquired. However, we are concerned 

that it may be image processing and/or 

interpretation. We discuss these 

concerns below. 

With respect to image processing, in 

the CY 2008 OPPS/ASC interim and 

final rule with comment period, we 

stated that an ‘‘image processing service 

processes and integrates diagnostic test 

data that were captured during another 

independent procedure, usually one 

that is separately payable under the 

OPPS. The image processing service is 

not necessarily provided on the same 

date of service as the independent 

procedure. In fact, several of the image 

processing services that we proposed to 

package for CY 2008 do not need to be 

provided face-to-face with the patient in 

the same encounter as the independent 

service’’ (72 FR 66625). In addition, we 

stated that we believed it was important 


sradovich on DSK3GMQ082PROD with RULES2
59284 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

to package payment for supportive 

dependent services that accompany 

independent services but that may not 

need to be provided face-to-face with 

the patient in the same encounter 

because the supportive services utilize 

data that were collected during the 

preceding independent services and 

packaging their payment encourages the 

most efficient use of hospital resources. 

We noted that we were particularly 

concerned with any OPPS payment 

policies that could encourage certain 

inefficient and more costly service 

patterns. In addition, we stated that 

packaging encourages hospitals to 

establish protocols that ensure that 

services are furnished only when they 

are medically necessary and to carefully 

scrutinize the services ordered by 

practitioners to minimize unnecessary 

use of hospital resources (72 FR 66625). 

FFRCT services necessarily require the 

use of the prior coronary computed 

tomography angiography image; the fact 

that the FFRCT service is done on a 

different date, at a different site, and by 

nonhospital staff does not, in and of 

itself, mean that the service is separate 

and distinct, from the CCTA. This is 

especially true because it is using a 

prior image acquired by the hospital for 

the patient and is used for the same 

purpose to diagnose CAD. 

With respect to imaging 

interpretation, as stated in the CY 2008 

OPPS/ASC final rule with comment 

period (72 FR 66630), we define 

‘‘imaging supervision and interpretation 

codes’’ as HCPCS codes for services that 

are defined as ‘‘radiological supervision 

and interpretation’’ in the radiology 

series, codes 70000 through 79999 of the 

book of AMA CPT codes, with the 

addition of some services in other code 

ranges of CPT, Category III CPT tracking 

codes, or Level II HCPCS codes that are 

clinically similar or directly crosswalk 

to codes defined as radiological 

supervision and interpretation services 

in the CPT radiology range. The current 

CPT FFRCT codes are Category III codes, 

and we believe they may be clinically 

similar to codes in the 70000 through 

79999 range of the AMA book of CPT 

codes. 

Nonetheless, we were persuaded by 

the commenters that the FFRCT service 

is a separate and distinct service from 

the original coronary computed 

tomography angiography service and 

should receive separate payment. 

Specifically, the commenters provided 

additional details since the denial of the 

new technology reconsideration request 

that FFRCT is not covered by the image 

packaging regulations under 42 CFR 

419.2(b)(13). Most of the additional 

detail focuses on whether FFRCT is an 

image processing service. In particular, 

the FFRCT service generates data on FFR 

values that can only be obtained by 

performing the FFRCT service. 

Accordingly, we now believe that the 

FFRCT service should not be considered 

to be an image processing service 

because the diagnostic output of the 

FFRCT service yields functional values 

(that is, FFR values), which reflect the 

drop in pressure across a narrowing in 

a coronary artery as opposed to 

anatomic images. The CY 2008 OPPS/ 

ASC final rule with comment period (72 

FR 66625) states that image processing 

covers ‘‘supportive dependent services 

to process and integrate diagnostic test 

data in the development of images, 

indicating that an image processing 

service must help develop or otherwise 

visually enhance an image and the 

FFRCT service does neither. Further, we 

agree that the quantitative diagnostic 

information about the function of the 

coronary arteries produced by the FFRCT

service is not possible to derive from 

examining anatomic images of the 

arteries. Additionally, we agree with the 

commenters that the FFRCT service does 

not support the diagnostic output of 

CCTA. Notably, CPT code 0503T does 

not mention processing, interpretation, 

or supervision. Further, the FDA 

clearance refers to the FFRCT service as 

‘‘post-processing image analysis 

software . . . using graphics and text 

[FFRCT] to aid the clinician in the 

assessment of coronary artery disease.’’ 

Therefore, we conclude, based on the 

information available to us at this time, 

that the costs of the FFRCT service, as 

described by CPT code 0503T, should 

not be a packaged service under the 

regulation at 42 CFR 419.2(b)(13). 

Accordingly, we are assigning CPT code 

0503T to a New Technology APC for CY 

2018. We remind hospitals that, 

according to the Medicare statute, this 

service should only be furnished when 

reasonable and medically necessary for 

the purposes of diagnosis of and 

treatment a Medicare beneficiary. 

In summary, after consideration of the 

public comments we received, we are 

finalizing our proposal for CPT codes 

0501T, 0502T, and 0504T without 

modification. However, for CPT code 

0503T, we are finalizing our proposal 

with modification. Specifically, we are 

reassigning CPT code 0503T from 

packaged status (status indicator ‘‘N’’) to 

New Technology APC 1516 (New 

Technology—Level 16 ($1401–$1500)), 

with a payment rate of $1,450.50 for CY 

2018. We note our belief that CPT code 

0503T covers payment for the majority 

of hospital resources involved in the 

HeartFlow service, and that CPT 0502T, 

which reflects data preparation and 

transmission, will be packaged under 

the OPPS. 

Table 19 lists the final status indicator 

assignments for CPT codes 0501T, 

0502T, 0503T, and 0504T. We refer 

readers to Addendum B to this final rule 

with comment period for the payment 

rates for all codes reported under the 

OPPS. In addition, we refer readers to 

Addendum A to this final rule with 

comment period for the status indicator 

meanings for all codes reported under 

the OPPS. Both Addendum A and B are 

available via the Internet on the CMS 

Web site. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59285 

TABLE 19—FINAL CY 2018 STATUS INDICATOR (SI) ASSIGNMENT FOR THE NEW FFRCT CPT CODES EFFECTIVE

JANUARY 1, 2018 

CPT code 

CY 2018 

OPPS/ASC 

proposed rule 

placeholder 

code 

Long descriptor CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

CY 2018 OPPS 

payment 

0501T ............. 02X4T ............ Non-invasive estimated coronary fractional flow reserve 

(FFR) derived from coronary computed tomography 

angiography data using computation fluid dynamics 

physiologic simulation software analysis of functional 

data to assess the severity of coronary artery disease; data preparation and transmission, analysis of 

fluid dynamics and simulated maximal coronary hyperemia, generation of estimated FFR model, with anatomical data review in comparison with estimated 

FFR model to reconcile discordant data, interpretation 

and report.

M N/A N/A. 

0502T ............. 02X5T ............ Non-invasive estimated coronary fractional flow reserve 

(FFR) derived from coronary computed tomography 

angiography data using computation fluid dynamics 

physiologic simulation software analysis of functional 

data to assess the severity of coronary artery disease; data preparation and transmission.

N N/A N/A. 

0503T ............. 02X6T ............ Non-invasive estimated coronary fractional flow reserve 

(FFR) derived from coronary computed tomography 

angiography data using computation fluid dynamics 

physiologic simulation software analysis of functional 

data to assess the severity of coronary artery disease; analysis of fluid dynamics and simulated maximal coronary hyperemia, and generation of estimated 

FFR model.

S 1516 Refer to OPPS 

Addendum B. 

0504T ............. 02X7T ............ Non-invasive estimated coronary fractional flow reserve 

(FFR) derived from coronary computed tomography 

angiography data using computation fluid dynamics 

physiologic simulation software analysis of functional 

data to assess the severity of coronary artery disease; anatomical data review in comparison with estimated FFR model to reconcile discordant data, interpretation and report.

M N/A N/A. 

D. OPPS APC-Specific Policies 

1. Blood-Derived Hematopoietic Cell 

Harvesting 

HCPCS code 38205 describes bloodderived hematopoietic progenitor cell 

harvesting for transplantation, per 

collection; allogeneic. This code 

represents a donor acquisition cost for 

an allogeneic hematopoietic stem cell 

transplant (HSCT). In the CY 2010 

OPPS/ASC final rule with comment 

period (74 FR 60575), we assigned 

HCPCS code 38205 to status indicator 

‘‘B’’, which indicates that this code is 

not recognized by the OPPS when 

submitted on an outpatient hospital Part 

B bill (type 12x and 13x). 

In CY 2017, we finalized a C–APC for 

HSCT (81 FR 79586 through 79587). 

Payment for donor acquisition services 

for HSCT is included in the C–APC 

payment for the allogeneic stem cell 

transplant when the transplant occurs in 

the hospital outpatient setting. All 

donor acquisition costs, including the 

costs for HCPCS code 38205, should be 

reported on the same date of service as 

the transplant procedure (HCPCS code 

38240 (Hematopoietic progenitor (HPC); 

allogeneic transplantation per donor)) in 

order to be appropriately packaged for 

payment purposes. Hospitals are 

instructed to identify services required 

to acquire stem cells from a donor for 

allogeneic HSCT separately in Field 42 

on Form CMS–1450 (or UB–04), with 

revenue code 0815 when an allogeneic 

stem cell transplant occurs. (We refer 

readers to the Medicare Claims 

Processing Manual (Pub. 100–04), 

Chapter 4, Section 231.11, and Chapter 

3, Section 90.3.1.) 

There are other donor acquisition 

costs, namely those costs for the 

procedure described by HCPCS code 

38230 (Bone marrow harvesting for 

transplantation; allogeneic), that are 

assigned to status indicator ‘‘S’’. For 

consistency and to ensure that the donor 

acquisition costs are captured 

accurately, in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33608), for CY 

2018, we proposed to change the status 

indicator assignment for the procedure 

described by HCPCS code 38205 from 

‘‘B’’ to ‘‘S’’, which indicates that the 

procedure is paid under the OPPS and 

receives separate payment. 

The CY 2016 claims data used for the 

proposed rule, which included claims 

submitted between January 1, 2016, and 

December 31, 2016, and processed on or 

before December 31, 2016, showed a 

geometric mean cost of approximately 

$580 for HCPCS code 38205 based on 2 

single claims (out of 8 total claims). The 

procedure described by HCPCS code 

38205 has resource and clinical 

similarities to procedures assigned to 

APC 5242 (Level 2 Blood Product 

Exchange and Related Services). 

Therefore, we proposed to assign 

HCPCS code 38205 to APC 5242. We 

invited public comments on these 

proposals. 

Comment: Several commenters 

opposed the proposal to change the 

status indicator assignment for the 

procedure described by HCPCS code 

38205 from ‘‘B’’ to ‘‘S’’. The commenters 

stated that this procedure represents a 

donor acquisition cost for allogeneic 

hematopoietic stem cell transplants for 


sradovich on DSK3GMQ082PROD with RULES2
59286 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

which Medicare does not make separate 

payment because hospitals may bill and 

receive payment only for services 

provided to the Medicare beneficiary 

who is the recipient of the stem cell 

transplant and whose illness is being 

treated with the stem cell transplant. 

The commenters believed that a change 

from status indicator ‘‘B’’ to ‘‘S’’ may 

indicate to providers that they can bill 

donors for these services and lead to 

potential for erroneous separate 

payments if this code is billed with 

status indicator ‘‘S’’. In addition, the 

HOP Panel recommended that CMS 

retain status indicator ‘‘B’’ for HCPCS 

code 38205. The commenters also 

encouraged CMS to look at the entire 

series of bone marrow and stem cell 

transplant-related CPT codes to ensure 

consistency in terms of coding, billing 

guidance, appropriate APC assignment, 

and payment. 

Response: We appreciate the 

commenters’ responses. We believed 

that changing the status indicator 

assignment from ‘‘B’’ to ‘‘S’’ for HCPCS 

code 38205 would be consistent with 

other donor acquisition costs and ensure 

that the donor acquisition costs for 

allogeneic HSCT are captured 

accurately. However, we agree with the 

commenters that this change could 

result in erroneous billing or 

misinterpretations by providers. 

After consideration of the public 

comments we received, we are not 

finalizing our proposal to change the 

status indicator assignment for the 

procedure described by HCPCS code 

38205 from ‘‘B’’ to ‘‘S’’ and to assign 

HCPCS code 38205 to APC 5242. 

2. Brachytherapy Insertion Procedures 

(C–APCs 5341 and 5092) 

a. C–APC 5341 (Abdominal/Peritoneal/ 

Biliary and Related Procedures) 

For CY 2018, as displayed in Table 20 

below and in Addendum B to the CY 

2018 OPPS/ASC proposed rule, we 

proposed to continue to assign CPT 

code 55920 to C–APC 5341 (Abdominal/ 

Peritoneal/Biliary and Related 

Procedures), with a proposed payment 

rate of $2,788.26. 

TABLE 20—PROPOSED CY 2018 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT RATE FOR CPT CODE

55920 

CPT code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS payment rate 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS APC 

Proposed 

CY 2018 

OPPS payment rate 

55920 ............. Placement of needles or catheters 

into pelvic organs and/or genitalia 

(except prostate) for subsequent interstitial radioelement application.

J1 5341 $2,861.53 J1 5341 $2,788.26 

Comment: Commenters disagreed 

with the proposed APC assignment for 

CPT code 55920 and recommended that 

this code be reassigned to an APC that 

includes gynecologic procedures, 

specifically C–APC 5415 (Level 5 

Gynecologic Procedures). The 

commenters noted that radiation 

therapy is an important adjuvant 

treatment for gynecological 

malignancies and the vignette for the 

procedure described by CPT 55920 

describes a gynecological implant with 

a Syed-type intracavitary applicator 

insertion to the vagina, cervix, or female 

urethra. The commenters stated that the 

procedure described by CPT code 55920 

was similar, from a clinical and resource 

perspective, to procedures assigned to 

C–APC 5415. 

Response: Our analysis of the final 

rule updated claims data revealed a 

geometric mean cost of approximately 

$4,791 for CPT code 55920 based on 134 

single claims (out of 135 total claims), 

which is comparable to the geometric 

mean cost of approximately $4,109 for 

C–APC 5415. The geometric mean cost 

for C–APC 5341 is approximately 

$2,909. After reviewing the procedures 

assigned to C–APC 5415, we agree with 

the commenters that CPT code 55920 

would be more appropriately reassigned 

to C–APC 5415 based on its clinical 

homogeneity and resource costs. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2018 proposal with 

modification. Specifically, we are 

reassigning CPT code 55920 from C– 

APC 5341 to C–APC 5415 for CY 2018. 

We refer readers to Addendum B to this 

final rule with comment period for the 

final CY 2018 payment rates for all 

codes reported under the OPPS. In 

addition, we refer readers to Addendum 

A to this final rule with comment period 

for the status indicator meanings for all 

codes reported under the OPPS for CY 

2018. Both Addendum A and 

Addendum B are available via the 

Internet on the CMS Web site. 

b. C–APC 5092 (Level 2 Breast/ 

Lymphatic Surgery and Related 

Procedures) 

For CY 2018, as displayed in Table 21 

below and in Addendum B to the CY 

2018 OPPS/ASC proposed rule, we 

proposed to continue to assign CPT 

code 19298 to C–APC 5092 (Level 2 

Breast/Lymphatic Surgery and Related 

Procedures), with a proposed payment 

rate of $4,616.48. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59287 

TABLE 21—PROPOSED CY 2018 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT RATE FOR CPT CODE

19298 

CPT code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS payment rate 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS APC 

Proposed 

CY 2018 

OPPS payment rate 

19298 ............. Placement of radiotherapy 

afterloading brachytherapy catheters (multiple tube and button type) 

into breast for interstitial; 

radioelement application following 

(at the time of or subsequent to) 

partial mastectomy, includes image 

guidance).

J1 5092 $4,417.60 J1 5092 $4,616.48 

Comment: Commenters disagreed 

with the proposed continued APC 

assignment for CPT code 19298 to C– 

APC 5092. These commenters stated 

that the CY 2018 proposed payment is 

inadequate and does not cover the costs 

associated with the surgical placement 

of the breast brachytherapy catheter or 

the brachytherapy treatment delivery 

and related planning and preparation 

codes included on the claim. The 

commenters also stated that, previously, 

both breast brachytherapy catheter 

placement codes 19296 (Breast 

interstitial radiation treatment, delayed 

(expandable) and 19298 have been 

assigned to the same APC as they are 

similar clinically and with regard to 

resource cost. The commenters 

requested that CPT code 19298 be 

assigned to the same C–APC as CPT 

code 19296 proposed for CY 2018; that 

is, C–APC 5093 (Level 3 Breast/ 

Lymphatic Surgery and Related 

Procedures). 

Response: Our analysis of the final 

rule updated claims data revealed a 

geometric mean cost of approximately 

$5,944 for CPT code 19298 based on 68 

single claims (out of 69 total claims). 

Based on our updated analysis, we 

believe that CPT code 19298 is 

appropriately assigned to C–APC 5092, 

which has a geometric mean cost of 

approximately $4,809, rather than to C– 

APC 5093, which has a geometric mean 

cost of approximately $7,383 as 

suggested by the commenters. In 

addition, our updated analysis showed 

that the geometric mean cost of 

approximately $5,944 for CPT code 

19298 is within the range of the 

significant procedures assigned to C– 

APC 5092, which is between $4,276 (for 

CPT code 19380) and $6,134 (for CPT 

code 19340). 

After consideration of the public 

comments we received and based on 

updated claims data, we are finalizing 

our proposal to continue to assign CPT 

code 19298 to C–APC 5092 for CY 2018. 

3. Care Management Coding Changes 

Effective January 1, 2018 (APCs 5821 

and 5822) 

As noted in the CY 2018 MPFS 

proposed rule (82 FR 34079), we 

continue to be interested in the ongoing 

work of the medical community to 

refine the set of codes used to describe 

care management services, including 

chronic care management. In the CY 

2018 OPPS/ASC proposed rule (82 FR 

33603 and 33604), we proposed to adopt 

CPT replacement codes for CY 2018 for 

several of the care management services 

finalized last year and sought public 

comment on ways we might further 

reduce the burden on reporting 

providers, including through stronger 

alignment between CMS requirements 

and CPT guidance for existing and 

potential new codes. Table 15 of the CY 

2018 OPP/ASC proposed rule detailed 

the proposed care management coding 

changes. We referred readers to 

Addendum B to the proposed rule 

(which is available via the Internet on 

the CMS Web site) for the proposed CY 

2018 payment rates for the replacement 

codes. 

Comment: Commenters supported 

CMS’ proposed replacement codes for 

CY 2018 for several of the care 

management services finalized for CY 

2017. One commenter recommended 

that the new chronic care management 

codes be removed from the financial 

settlement of accountable care 

organizations (ACOs). This commenter 

also recommended that CMS develop 

documentation and billing workflow to 

reduce administrative burden on 

providers billing transitional care 

management and chronic care 

management codes. 

Response: We appreciate the 

commenters’ support. We also 

appreciate the suggestion for reducing 

provider burden with respect to billing 

and documentation requirements for 

chronic care management and will 

consider these suggestions in future 

rulemaking. However, we note that 

ACOs are outside the scope of this final 

rule with comment period. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to adopt CPT 

replacement codes for CY 2018 for 

several of the care management services 

finalized last year. Table 22 below 

details the final care management 

coding changes. We refer readers to 

Addendum B to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site) for 

the final CY 2018 payment rates for the 

replacement codes. 

TABLE 22—CARE MANAGEMENT CODING CHANGES EFFECTIVE JANUARY 1, 2018 

CY 2017 

HCPCS code 

CY 2017 HCPCS code 

short descriptor 

CY 2017 

OPPS SI 

CY 2017 

OPPS ASC 

CY 2018 

replacement 

CPT code 

CY 2018 

replacement HCPCS 

code short descriptor * 

CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

G0502 ............. Init psych care Manag, 

70min.

S 5822 99492 1st Psyc collab care 

mgmt.

S 5822 

G0503 ............. Subseq psych care man, 

60mi.

S 5822 99493 Sbsg psyc collab care 

mgmt.

S 5822 


sradovich on DSK3GMQ082PROD with RULES2
59288 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 22—CARE MANAGEMENT CODING CHANGES EFFECTIVE JANUARY 1, 2018—Continued 

CY 2017 

HCPCS code 

CY 2017 HCPCS code 

short descriptor 

CY 2017 

OPPS SI 

CY 2017 

OPPS ASC 

CY 2018 

replacement 

CPT code 

CY 2018 

replacement HCPCS 

code short descriptor * 

CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

G0504 ............. Init/sub psych Care add 

30 m.

N N/A 99494 1st/sbsq psyc collab care N N/A 

G0505 ............. Cog/func assessment 

outpt.

S 5822 99483 Assmt & care pln pt cog 

imp.

S 5822 

G0507 ............. Care manage serv minimum 20.S 5821 99484 Care mgmt. svc bhvl hlth 

cond.

S 5821 

* The long descriptors for the final CPT codes can be found in Addendum O (New Category I and Category III CPT Codes Effective January 1, 

2018) to this final rule with comment period, which is available via the Internet on the CMS Web site. 

4. Cardiac Telemetry (APC 5721) 

For CY 2018, as noted in Table 23 

below and in Addendum B to the CY 

2018 OPPS/ASC proposed rule, we 

proposed to reassign CPT code 93229 

from APC 5733 (Level 3 Minor 

Procedures) to APC 5734 (Level 4 Minor 

Procedures), with a proposed payment 

rate of $94.27. 

TABLE 23—PROPOSED CY 2018 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT RATE FOR CPT CODE

93229 

CPT Code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS APC 

Proposed 

CY 2018 

OPPS payment 

rate 

93229 ............. External mobile cardiovascular telemetry with electrocardiographic recording, concurrent computerized 

real time data analysis and greater 

than 24 hours of accessible ecg 

data storage (retrievable with query) 

with ecg triggered and patient selected events transmitted to a remote attended surveillance center 

for up to 30 days; technical support 

for connection and patient instructions for use, attended surveillance, 

analysis and transmission of daily 

and emergent data reports as prescribed by a physician or other 

qualified health care professional.

S 5733 $54.55 S 5734 $94.27 

We proposed to revise the APC 

assignment for CPT code 93229 based 

on claims data used for the CY 2018 

OPPS/ASC proposed rule. We note that 

the proposed rule data were based on 

claims data submitted between January 

1, 2016, and December 31, 2016, that 

were processed on or before December 

31, 2016. Our analysis of the claims data 

revealed a geometric mean cost of 

approximately $156 for CPT code 93229 

based on 1,518 single claims (out of 

3,370 total claims). Our analysis further 

revealed a geometric mean cost of 

approximately $98 for APC 5734. Based 

on the geometric mean cost, we believed 

that it was necessary to revise the APC 

assignment for CPT code 93229 from 

APC 5733 to APC 5734 to pay 

appropriately for the service. 

Comment: Some commenters 

disagreed with the proposed 

reassignment of CPT code 93229 to APC 

5734, and instead requested a 

reassignment to APC 5722 (Level 2 

Diagnostic Tests and Related Services), 

which had a proposed payment rate of 

$242.21 and which is the same APC 

assignment for CPT code 93229 as in CY 

2016. The commenters believed that the 

cost data used to set the payment rate 

for the CY 2017 OPPS update was based 

on miscoding of the service because 

mobile outpatient telemetry is a lowvolume service in the HOPD setting that 

is performed by a small number of 

hospitals. The commenters indicated 

that since the publication of a 2016 

coding guidance in the AHA Coding 

Clinic for HCPCS on the proper coding 

of remote cardiac monitoring services, 

they have noticed that the top billers of 

this service from prior years are no 

longer inappropriately reporting the 

service. In addition, the commenters 

believed that APC 5734 is an 

inappropriate assignment both from the 

clinical and resource cost perspectives. 

The commenters further indicated that 

the service is not a minor procedure, as 

described by the group description for 

APC 5734, and added that CPT code 

93229 is the only code in APC 5734 

with a status indicator assignment of 

‘‘S’’ (Procedure or Service, Not 

Discounted When Multiple), while all 

the other codes in the APC are assigned 

to status indicator ‘‘Q1’’ (conditionally 

packaged). 

Response: Although CPT code 93229 

was assigned to status indicator ‘‘S’’ in 

APC 5734, it was not the only status 

indicator assigned to the codes in this 

APC. As indicated in OPPS Addendum 

B that was released with the CY 2018 

OPPS/ASC proposed rule, three separate 

status indicators were assigned to the 

codes in APC 5734. Specifically, CPT 

code 93229 was assigned to status 

indicator ‘‘S’’, CPT codes 30903 and 

30905 were assigned to status indicator 

‘‘T’’ (Procedure or Service, Discounted 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59289 

When Multiple), and the remaining 

codes were assigned to status indicator 

‘‘Q1’’. We note that a specific status 

indicator assignment does not preclude 

a code’s assignment to a specific APC. 

In addition, as we have stated since 

the implementation of the OPPS in 

August 2000, section 1833(t)(9) of the 

Act requires that we annually review all 

the items and services within an APC 

group and revise the APC structures 

accordingly. Included in this review is 

the identification of any 2 times rule 

violations as provided under section 

1833(t)(2) of the Act and, to the extent 

possible, rectification of these 

violations. We review the most recently 

available OPPS claims data every year 

and determine whether changes to the 

current APC assignment are necessary. 

Although CPT code 93229 was assigned 

to APC 5722 in CY 2016, we revised the 

APC assignment to APC 5733 for CY 

2017 based on the latest claims data 

available at that time. The discussion 

related to this APC revision can be 

found in the CY 2017 OPPS/ASC final 

rule with comment period (81 FR 79616 

through 79617). 

For this CY 2018 OPPS/ASC final rule 

with comment period, we again 

reviewed the claims data associated 

with CPT code 93229. We note that, for 

this final rule with comment period, we 

used claims data with dates of service 

between January 1, 2016, and December 

31, 2016 that were processed on or 

before June 30, 2017. Our analysis 

revealed a geometric mean cost of 

approximately $160 for CPT code 93229 

based on 1,750 single claims (out of 

3,869 total claims). Based on our review 

of the four levels of Diagnostic Tests and 

Related Services APCs, we believe that 

CPT code 93229 appropriately fits in 

APC 5721 (Level 1 Diagnostic Tests and 

Related Services), which has a 

geometric mean cost of approximately 

$136, rather than in APC 5722, which 

has a geometric mean cost of 

approximately $249. In addition, our 

review shows that the geometric mean 

cost of approximately $160 for CPT code 

93229 is within the range of the 

significant procedures in APC 5721, 

which is between $60 (for CPT code 

93702) and $181 (for CPT code 94727). 

Consequently, we believe that a 

reassignment of CPT code 93229 to APC 

5721 is more appropriate. 

In summary, after consideration of the 

public comments we received, we are 

finalizing our CY 2018 proposal with 

modification. Specifically, we are 

revising the assignment for CPT code 

93229 to APC 5721 for CY 2018 rather 

than the proposed APC 5734. Consistent 

with our policy of reviewing APC 

assignments annually, we will 

reevaluate the cost of CPT code 93229 

and its APC assignment for the CY 2019 

rulemaking. Table 24 below lists the 

final status indicator and APC 

assignment for CPT code 93229 for CY 

2018. We refer readers to Addendum B 

of this final rule with comment period 

for the payment rates for all codes 

reported under the OPPS. In addition, 

we refer readers to Addendum A to this 

final rule with comment period for the 

status indicator meanings for all codes 

reported under the OPPS. Both 

Addenda A and B are available via the 

Internet on the CMS Web site. 

TABLE 24—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR CPT CODE 93229 

CPT code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

CY 2018 OPPS 

payment rate 

93229 ............. External mobile cardiovascular telemetry with electrocardiographic recording, concurrent 

computerized real time data 

analysis and greater than 24 

hours of accessible ecg data 

storage (retrievable with query) 

with ecg triggered and patient 

selected events transmitted to a 

remote attended surveillance 

center for up to 30 days; technical support for connection and 

patient instructions for use, attended surveillance, analysis 

and transmission of daily and 

emergent data reports as prescribed by a physician or other 

qualified health care professional.

S 5733 $54.55 S 5721 Refer to OPPS 

Addendum B. 

5. Collagen Cross-Linking of Cornea 

(C–APC 5503) 

For CY 2018, as noted in Addendum 

B to the CY 2018 OPPS/ASC proposed 

rule, we proposed to continue to assign 

CPT code 0402T (Collagen cross-linking 

of cornea (including removal of the 

corneal epithelium and intraoperative 

pachymetry when performed)) to APC 

5502 (Level 2 Extraocular, Repair, and 

Plastic Eye Procedures) for CY 2018. 

Comment: One commenter requested 

that CMS reassign CPT code 0402T from 

APC 5502 to APC 5504 (Level 4 

Extraocular, Repair, and Plastic Eye 

Procedures). The commenter 

recommended reassignment to APC 

5504 because it believed that 

assignment to that APC would more 

accurately reflect the level of resource 

utilization (particularly labor time and 

capital equipment) involved in the 

corneal collagen cross-linking 

procedure. In addition, the commenter 

provided resource information on the 

supplies, equipment, and labor required 

to perform the procedure described by 

CPT code 0402T. According to the 

commenter, the capital equipment 

required for the procedure costs 

approximately $90,000, and disposable 

supplies and at least one technician or 

registered nurse are also required. In 

addition, the commenter stated that the 

average procedure time can last from 

1.25 to 2 hours. The commenter 

acknowledged that there are no 

Medicare claims data for CPT code 


sradovich on DSK3GMQ082PROD with RULES2
59290 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

0402T because it was established on 

January 1, 2016. 

Response: We reviewed the updated 

CY 2016 claims data used for this final 

rule with comment period. Based on our 

review, and with consideration of the 

resource information provided by the 

commenter, in the absence of data and 

based on the resources and operating 

expenses to perform the procedure as 

described by the commenter, we 

disagree with the commenter’s 

recommendation that CPT code 0402T 

should be reassigned to APC 5504, 

which has a geometric mean cost of 

approximately $3,000 in CY 2018. In the 

absence of claims data, we may use 

other data, such as invoices, to assign a 

new procedure to a clinical APC. In this 

case, the commenter did not provide 

invoices, but did supply some cost 

information in its comment. We note 

that the payment rate is not designed to 

pay for capital equipment costs on a per 

claim basis. However, taking into 

account the disposable costs as well as 

information from the commenter about 

the time to perform the procedure and 

the hospital staff involved, we are 

persuaded to modify our proposal. 

Given the resource cost and clinical 

congruence of CPT code 0402T with 

other procedures assigned to APC 5503 

(approximate geometric mean cost of 

$1,800), such as CPT code 65436 

(Removal of corneal epithelium; with 

application of chelating agent, eg., 

EDTA), we believe that the reassignment 

to APC 5503 is more appropriate for CY 

2018. Therefore, we are modifying our 

proposal, and reassigning CPT code 

0402T to APC 5503 (Level 3 Extraocular, 

Repair, and Plastic Eye Procedures) for 

CY 2018. We will consider reassignment 

of CPT code 0402T to APC 5504 in the 

CY 2019 rulemaking. 

6. Cryoablation Procedure for Lung 

Tumors (C–APC 5361) 

For CY 2018, the AMA CPT Editorial 

Panel deleted CPT code 0340T and 

replaced the code with CPT code 32994, 

effective January 1, 2018. We note that 

CPT code 0340T was effective January 1, 

2014, and deleted on December 31, 

2017. Table 25 below lists the complete 

descriptors for the deleted and 

replacement code. We note that the 

deleted and replacement code were both 

listed in Addendum B and Addendum 

O to the CY 2018 OPPS/ASC proposed 

rule (which are available via the Internet 

on the CMS Web site). Addendum B 

listed the proposed status indicator 

assignment for the replacement code 

and assigned it to comment indicator 

‘‘NP’’ (New code for the next calendar 

year or existing code with substantial 

revision to its code descriptor in the 

next calendar year as compared to 

current calendar year, proposed APC 

assignment; comments will be accepted 

on the proposed APC assignment for the 

new code), while Addendum O listed 

the proposed/placeholder CY 2018 CPT 

codes and the long descriptors. 

TABLE 25—CODING CHANGES FOR CPT CODE 32994 

CPT Code 

CY 2018 

OPPS/ASC 

proposed rule 

placeholder 

code 

Long descriptor 

0340T ............. ........................ Ablation, pulmonary tumor(s), including pleura or chest wall when involved by tumor extension, percutaneous, 

cryoablation, unilateral, includes imaging guidance. 

32994 .............. 32X99 ............ Ablation therapy for reduction or eradication of 1 or more pulmonary tumor(s) including pleura or chest wall 

when involved by tumor extension, percutaneous, including imaging guidance when performed, unilateral; 

cryoablation. 

As noted in Table 26 below and in 

Addendum B to the CY 2018 OPPS/ASC 

proposed rule, we proposed to delete 

CPT code 0340T (status indicator ‘‘D’’) 

and assign its replacement code, CPT 

code 32994 (placeholder code 32X99), 

to C–APC 5361 (Level 1 Laparoscopy 

and Related Services), with a proposed 

payment rate of $4,340.65. As noted in 

Table 26, for CY 2017, CPT code 0340T 

was assigned to C–APC 5361, which is 

the same APC assignment for CPT code 

32994. 

TABLE 26—PROPOSED CY 2018 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT RATE FOR CPT CODE

32994 

CPT code 

CY 2018 

OPPS/ASC 

proposed rule 

placeholder 

code 

Short descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS APC 

Proposed 

CY 2018 

OPPS 

payment 

rate 

0340T ............. ........................ Ablate pulm tumors 

+ extnsn.

J1 5361 $4,199.13 D N/A N/A 

32994 ............. 32X99 ............ Ablate pulm tumor 

perq crybl.

N/A N/A N/A J1 5361 $4,340.65 

Comment: Commenters presented 

opposing recommendations on the 

proposed APC assignment for CPT code 

32994. Some commenters supported the 

proposed APC assignment to C–APC 

5361. One commenter stated that the 

APC assignment maintains clinical 

homogeneity for services within the 

APC and addresses resource cost 

fluctuation and volatility, and suggested 

that CMS finalize the proposal. 

However, other commenters disagreed 

with the proposed APC assignment and 

recommended that CPT code 32994 be 

assigned to C–APC 5362 (Level 2 

Laparoscopy and Related Services), 

which had a proposed payment rate of 

$7,213.53. One commenter understood 

why CMS proposed to assign CPT code 

32994 to C–APC 5361, which is the 

same APC to which its predecessor code 

was assigned. However, the commenter 

believed that the cost of the procedure 

will only increase as hospitals gain 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59291 

experience with it. Consequently, the 

commenter suggested that CMS assign 

the CPT code to C–APC 5362. Another 

commenter recommended that CMS 

assign CPT code 32994 to C–APC 5362 

and further noted the importance of new 

codes to be priced correctly before they 

are subject to APC placement based on 

their actual cost data. 

Response: Because CPT code 0340T is 

a predecessor code to CPT code 32994, 

we have historical claims data on which 

to base the payment rate for CPT code 

32994. Review of our claims data for 

this final rule with comment period 

shows a geometric mean cost of 

approximately $5,471 for CPT code 

0340T based on 27 single claims (out of 

27 total claims), which is more 

comparable to the geometric mean cost 

of approximately $4,486 for C–APC 

5361 than to the geometric mean cost of 

approximately $7,591 for C–APC 5362. 

We do not agree that we should assign 

CPT code 32994 to C–APC 5362 because 

the geometric mean cost for this APC is 

significantly greater than that of CPT 

code 32994 (cross-walked from CPT 

code 0340T) as indicated in our claims 

data available for this final rule with 

comment period. In addition, if the cost 

of the procedure increases, this will be 

identified through our annual review of 

the claims data. Consistent with our 

policy of reviewing APC assignments 

annually, we will reevaluate the 

geometric mean cost of CPT code 32994 

and its APC assignment in next year’s 

rulemaking for the CY 2019 OPPS 

update. 

In summary, after consideration of the 

public comments we received and our 

analysis of the updated claims data for 

this final rule with comment period, we 

are finalizing our CY 2018 proposal 

without modification, and assigning 

CPT code 32994 to C–APC 5361. The 

final CY 2018 geometric mean cost for 

C–APC 5361 is approximately $4,486. 

Table 27 below lists the final status 

indicator and APC assignment for CPT 

code 32994 for CY 2018. We refer 

readers to Addendum B to this final rule 

with comment period for the payment 

rates for all codes reported under the 

OPPS. In addition, we refer readers to 

Addendum A to this final rule with 

comment period for the status indicator 

meanings for all codes reported under 

the OPPS. Both Addenda A and B are 

available via the Internet on the CMS 

Web site. 

TABLE 27—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR CPT CODE 32994 

CPT code 

CY 2018 

OPPS/ASC 

proposed rule 

placeholder 

code 

Short descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

CY 2018 OPPS 

payment rate 

0340T ............. N/A ................. Ablate pulm tumors + extnsn.J1 5361 $4,199.13 D N/A N/A. 

32994 ............. 32X99 ............ Ablate pulm 

tumor perq 

crybl.

N/A N/A N/A J1 5361 Refer to OPPS 

Addendum B. 

7. Diagnostic Bone Marrow Aspiration 

and Biopsy (C–APC 5072) 

For CY 2018, the AMA CPT Editorial 

Panel revised the bone marrow and 

aspiration CPT codes. Specifically, the 

descriptors for CPT codes 38220 and 

38221 were revised and new CPT codes 

20939 (placeholder code 2093X) and 

38222 (placeholder code 382X3) were 

established, effective January 1, 2018. In 

addition, add-on HCPCS code G0364, 

which was effective January 1, 2005, 

will be deleted on December 31, 2017 

and replaced with CPT codes 38220, 

38221, and 38222, effective January 1, 

2018. The deleted and replacement 

codes were listed in Addendum B and 

Addendum O to the CY 2018 OPPS/ASC 

proposed rule. Addendum B listed the 

proposed status indicator assignment for 

revised CPT codes 38220 and 38221 and 

new CPT code 38222, which was 

assigned to comment indicator ‘‘NP’’ 

(New code for the next calendar year or 

existing code with substantial revision 

to its code descriptor in the next 

calendar year as compared to current 

calendar year, proposed APC 

assignment; comments will be accepted 

on the proposed APC assignment for the 

new code), while Addendum O listed 

the proposed/placeholder CY 2018 CPT 

codes and the long descriptors. 

Table 28 below lists the complete 

descriptors for the bone marrow 

aspiration and biopsy codes. 

TABLE 28—CODING CHANGES FOR THE BONE MARROW ASPIRATION AND BIOPSY CODES

HCPCS code 

CY 2018 

OPPS/ASC 

proposed rule 

placeholder 

code 

Long descriptor 

20939 .............. 2093X ............ Bone marrow aspiration for bone grafting, spine surgery only, through separate skin or fascial incision (List 

separately in addition to code for primary procedure). 

38220 .............. N/A ................. Diagnostic bone marrow; aspiration. 

38221 .............. N/A ................. Diagnostic bone marrow; biopsy(ies). 

38222 .............. 382X3 ............ Diagnostic bone marrow; biopsy(ies) and aspiration(s). 

G0364 ............. N/A ................. Bone marrow aspiration performed with bone marrow biopsy through the same incision on the same date of 

service. 

As noted in Table 29 below and in 

Addendum B of the CY 2018 OPPS/ASC 

proposed rule, we proposed to delete 

HCPCS code G0364 (status indicator 

‘‘D’’) and assign revised CPT codes 

38220 and 38221, as well as new CPT 

code 38222 (placeholder code 382X3) to 

C–APC 5072 (Level 2 Excision/Biopsy/ 

Incision and Drainage), with a proposed 

payment rate of $1,268.53. We note that, 

under the OPPS, we packaged the 

payment for HCPCS code G0364 (status 


sradovich on DSK3GMQ082PROD with RULES2
59292 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

indicator ‘‘N’’) into the primary service 

or procedure that is reported with the 

code because we considered the service 

to be an add-on furnished as part of a 

comprehensive service. In addition, we 

proposed to assign CPT code 20939 

(placeholder 2093X) to status indicator 

‘‘N’’ (Packaged status) because it is an 

add-on code. Under Medicare 

regulations at 42 CFR 419.2(b)(18), addon codes are packaged under the OPPS. 

Further, we proposed to continue to 

assign revised CPT codes 38220 and 

38221 to C–APC 5072 for CY 2018. 

TABLE 29—PROPOSED CY 2018 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT RATES FOR THE BONE

MARROW ASPIRATION AND BIOPSY CODES

HCPCS Code 

CY 2018 

OPPS/ASC 

proposed rule 

placeholder 

code 

Short descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS 

APC 

CY 2017 

OPPS 

payment 

rate 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS 

APC 

Proposed 

CY 2018 

OPPS 

payment 

rate 

20939 ............... 2093X .............. Bone marrow aspir bone grfg ........................... N/A N/A N/A N N/A N/A 

38220 ............... N/A .................. Dx bone marrow aspirations ............................. J1 5072 $1,236.62 J1 5072 $1,268.53 

38221 ............... N/A .................. Dx bone marrow biopsies ................................. J1 5072 $1,236.62 J1 5072 $1,268.53 

38222 ............... 382X3 .............. Dx bone marrow bx & aspir .............................. N/A N/A N/A J1 5072 $1,268.53 

G0364 .............. N/A .................. Bone marrow aspirate &biopsy ......................... N N/A N/A D N/A N/A 

Comment: One commenter disagreed 

with the proposed APC assignment of 

new CPT code 38222 to C–APC 5072 

and recommended that the code be 

assigned to C–APC 5073 (Level 3 

Excision/Biopsy/Incision and Drainage), 

which had a proposed payment rate of 

$2,222.47. This commenter further 

noted the importance of new codes 

being priced correctly before they are 

subject to APC assignment based on 

their actual cost data. 

Response: As displayed in Table 29, 

we proposed to make no change to the 

APC assignments for CPT codes 38220 

and 38221. Specifically, we proposed to 

continue to assign both codes to C–APC 

5072 for CY 2018 based on claims data 

used for the CY 2018 OPPS/ASC 

proposed rule. We note that the 

proposed rule data was based on claims 

data submitted between January 1, 2016, 

and December 31, 2016, that were 

processed on or before December 31, 

2016. For CPT code 38220, our 

examination of the claims data revealed 

a geometric mean cost of approximately 

$1,645 based on 5,361 single claims (out 

of 5,431 total claims). For CPT code 

38221, our claims data showed a 

geometric mean cost of approximately 

$1,615 based on 53,789 single claims 

(out of 54,335 total claims). We believe 

that the geometric mean costs of 

approximately $1,645 for CPT code 

38220 and $1,615 for CPT code 38221 

are comparable to the geometric mean 

cost of approximately $1,319 for C–APC 

5072. Consequently, we proposed to 

maintain both codes in C–APC 5072 for 

CY 2018. We note that we had no claims 

data for HCPCS code G0364 because this 

is an add-on code whose payment is 

packaged into the primary service that 

is reported with the code. 

For this final rule with comment 

period, we again analyzed updated 

claims data associated with the four 

codes. We note that, for this final rule 

with comment period, we used claims 

data with dates of service between 

January 1, 2016, and December 31, 2016, 

that were processed on or before June 

30, 2017. Our review of the final rule 

claims data revealed a similar pattern 

for both codes. For CPT code 38220, we 

found a geometric mean cost of 

approximately $1,787 based on 5,908 

single claims (out of 5,993 total claims), 

and for CPT code 38221, our claims data 

revealed a geometric mean cost of 

approximately $1,799 based on 59,892 

single claims (out of 60,467 total 

claims). Because the geometric mean 

costs of approximately $1,787 for CPT 

code 38220 and $1,799 for CPT code 

38221 are similar to the geometric mean 

cost of approximately $1,347 for C–APC 

5072, we continue to believe that 

C–APC 5072 is the most appropriate 

APC assignment for both codes for CY 

2018. 

In addition, based on input from our 

medical advisors, we believe that C– 

APC 5072 is the most appropriate APC 

assignment for new CPT code 38222, 

consistent with the APC assignment for 

similar diagnostic bone marrow 

aspiration and biopsy procedures. As 

noted in Table 29, CPT codes 38220 and 

38221 are assigned to C–APC 5072, and 

we believe that the service described by 

new CPT code 38222 is similar to the 

existing bone marrow aspiration and 

biopsy codes. Consistent with the 

statutory requirement under section 

1833(t)(9)(A) of the Act, we will 

reevaluate the APC groupings during the 

next rulemaking cycle. 

After consideration of the public 

comment we received, we are finalizing 

our CY 2018 proposals, without 

modification, for the bone marrow 

aspiration and biopsy codes, 

specifically, CPT codes 20939, 38220, 

38221, and 38222. Table 30 below lists 

the final APC and status indicator 

assignments for CPT codes 20939, 

38220, 38221, and 38222 for CY 2018. 

We refer readers to Addendum B to this 

final rule with comment period for the 

payment rates for all codes reported 

under the OPPS. In addition, we refer 

readers to Addendum A to this final 

rule with comment period for the status 

indicator meanings for all codes 

reported under the OPPS. Both 

Addendum A and Addendum B are 

available via the Internet on the CMS 

Web site. 

TABLE 30—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR THE BONE MARROW ASPIRATION AND

BIOPSY CODES

HCPCS code 

CY 2018 

OPPS/ASC 

proposed rule 

placeholder 

code 

Short descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS 

APC 

CY 2017 

OPPS 

payment 

rate 

CY 2018 

OPPS SI 

CY 2018 

OPPS 

APC 

CY 2018 

OPPS 

payment 

rate 

20939 ............... 2093X .............. Bone marrow aspir bone 

grfg.

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

38220 ............... N/A .................. Dx bone marrow aspirations J1 5072 $1,236.62 J1 5072 Refer to OPPS Addendum 

B. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59293 

TABLE 30—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR THE BONE MARROW ASPIRATION AND

BIOPSY CODES—Continued 

HCPCS code 

CY 2018 

OPPS/ASC 

proposed rule 

placeholder 

code 

Short descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS 

APC 

CY 2017 

OPPS 

payment 

rate 

CY 2018 

OPPS SI 

CY 2018 

OPPS 

APC 

CY 2018 

OPPS 

payment 

rate 

38221 ............... N/A .................. Dx bone marrow biopsies .... J1 5072 $1,236.62 J1 5072 Refer to OPPS Addendum 

B. 

38222 ............... 382X3 .............. Dx bone marrow bx & aspir N/A N/A N/A J1 5072 Refer to OPPS Addendum 

B. 

G0364 .............. ......................... Bone marrow aspirate 

&biopsy.

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

8. Discussion of Comment Solicitation 

in the Proposed Rule on Intraocular 

Procedure APCs 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33609 

through 33610), as part of our CY 2018 

comprehensive review of the structure 

of the APCs and procedure code 

assignments, we evaluated the 

intraocular procedure APCs with a 

particular focus on C–APC 5491 (Level 

1 Intraocular Procedures) that contains 

cataract surgery procedures. We strive to 

maintain APCs that contain procedures 

that are relatively homogenous in 

resource costs and clinical 

characteristics. While it is impracticable 

and contrary to the principles of a 

prospective payment system to assign 

each procedure to its own APC, thus 

resulting in a cost-based, fee schedule 

payment system, we seek to ensure our 

clinical groupings appropriately group 

like items and services while 

maintaining the integrity of a 

prospective payment system under 

which bundled, encounter-based 

payments are essential. 

For CY 2018, we considered 

proposing a new intraocular procedure 

APC that would further distinguish the 

resource costs and clinical 

characteristics between cataract surgery 

and complex cataract surgery. As listed 

in Addendum B of the CY 2018 OPPS/ 

ASC proposed rule, we proposed to 

continue to assign CPT code 66984 

(Cataract surgery with IOL 1 stage 

procedure) and CPT code 66982 

(Cataract surgery complex) to C–APC 

5491. However, because the 2017 AMA 

CPT Code manual describes a complex 

cataract surgery case as ‘‘requiring 

devices or techniques not generally used 

in routine cataract surgery (e.g., iris 

expansion device, suture support for 

intraocular lens, or primary posterior 

capsulorrhexis),’’ we stated that we 

believe it may be more appropriate to 

assign CPT code 66982 to a C–APC that 

is separate from the C–APC assignment 

for CPT code 66984. However, because 

this potential APC grouping would 

assign CPT code 66982 to a higher 

paying C–APC than CPT code 66984, we 

indicated that we would monitor claims 

data for changes in the distribution of 

coding complex cataract surgery and 

routine cataract surgery if we were to 

adopt this change. In the proposed rule, 

we sought public comments from 

stakeholders, including 

ophthalmologists, organizations 

representing ophthalmologists, 

beneficiaries, hospitals, and all other 

interested parties on whether we should 

create a new C–APC that includes 

complex cataract surgeries identified by 

CPT code 66982 (along with other 

intraocular procedures that are similar 

in resources) in a newly created C–APC 

that is separate from those identified by 

CPT code 66984. That is, we are 

considering whether to establish a new 

Level 2 Intraocular Procedures C–APC 

in between existing C–APCs 5491 and 

5492. 

Comment: Commenters, including 

several ophthalmologists and 

organizations representing 

ophthalmologists, did not support 

separation of complex cataract surgery 

identified by CPT code 66982 and 

simple cataract surgery identified by 

CPT code 66984 into separate APCs. 

Commenters recommended that CMS 

maintain the current assignment of CPT 

code 66982 and 66984 in the same APC 

(APC 5491) because the procedures are 

similar clinically and the modest 

variation in cost between the two 

procedures does not warrant 

reassignment of CPT code 66982 into a 

higher payment APC. However, 

commenters supported CMS’ intent to 

monitor the data for these procedures 

and make future changes, if needed. In 

addition, one commenter indicated that 

variations in payment between simple 

and complex cataract surgery should be 

reflected in the physician payment 

rather than the facility fee. 

Response: We thank the commenters 

for providing detailed responses to the 

comment solicitation on whether to 

separate simple and complex cataract 

surgery into separate APCs. Based on 

the points raised in response to the 

comment solicitation with respect to the 

facility resource costs and clinical 

similarity between simple and complex 

cataract surgery, it does not appear 

necessary to separate these procedures 

into separate APCs. 

After consideration of the public 

comments we received, we are 

continuing the assignment of simple 

and complex cataract surgery 

procedures (described by CPT codes 

66984 and 66982, respectively) to the 

same APC for CY 2018. We appreciate 

the commenters’ support of CMS’ 

continuing efforts to monitor both the 

cost and utilization of simple and 

complex cataract surgery to determine if 

an APC reassignment or other change 

may be needed in the future. 

9. Endovascular APCs (C–APCs 5191 

through 5194) 

For CY 2018, we proposed to continue 

the existing four levels of Endovascular 

C–APCs (C–APCs 5191 through 5194) as 

displayed in Table 31 below and in 

Addendum B to the CY 2018 OPPS/ASC 

proposed rule. 

TABLE 31—PROPOSED CY 2018 GEOMETRIC MEAN COST AND PAYMENT FOR ENDOVASCULAR C–APCS

C–APC 

CY 2018 

geometric 

mean cost 

Proposed 

CY 2018 

OPPS 

payment 

5191—Level 1 Endovascular Procedures ............................................................................................................... $2,958.89 $2,844 


sradovich on DSK3GMQ082PROD with RULES2
59294 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 31—PROPOSED CY 2018 GEOMETRIC MEAN COST AND PAYMENT FOR ENDOVASCULAR C–APCS—Continued 

C–APC 

CY 2018 

geometric 

mean cost 

Proposed 

CY 2018 

OPPS 

payment 

5192—Level 2 Endovascular Procedures ............................................................................................................... 5,199.87 4,999 

5193—Level 3 Endovascular Procedures ............................................................................................................... 10,627.86 10,218 

5194—Level 4 Endovascular Procedures ............................................................................................................... 16,197.55 15,572 

Comment: Commenters disagreed 

with the proposal to continue the four 

levels of the endovascular C–APCs and 

requested that CMS create more levels 

within the endovascular C–APCs to 

improve resource homogeneity within 

these C–APCs. Specifically, the 

commenters requested that CMS create 

a six-level endovascular C–APC family 

by reassigning endovascular procedures 

with costs greater than approximately 

$7,000 up one level, from the current C– 

APC 5192 (Level 2 Endovascular 

Procedures) to a new Level 3 

Endovascular Procedures C–APC 

(519X), and reassigning procedures with 

costs less than approximately $9,000 

down one level, from the current C–APC 

5193 (Level 3 Endovascular Procedures) 

to the new requested Level 3 

Endovascular Procedures C–APC. 

Commenters also requested that 

procedures with costs greater than 

approximately $12,000 in the current C– 

APC 5193 be moved up one level to a 

new Level 5 Endovascular Procedures 

C–APC (519Y), and those procedures 

with costs greater than approximately 

$13,000 to be moved down one level 

from current C–APC 5194 (Level 4 

Endovascular Procedures) to the new 

requested Level 5 C–APC (519Y). The 

commenters’ requested the C–APC 

structure and estimated payment 

amount for each C–APC as listed in 

Table 32 below. 

TABLE 32—CY 2018 STRUCTURE FOR ENDOVASCULAR C–APCS REQUESTED BY COMMENTERS

C–APC 

Estimated 

CY 2018 

OPPS 

payment 

5191—Level 1 Endovascular Procedures ........................................................................................................................................... $2,845 

5192—Level 2 Endovascular Procedures ........................................................................................................................................... 4,875 

519X—New Level 3 Endovascular Procedures .................................................................................................................................. 8,042 

5193—Current Level 3 Endovascular Procedures/New Level 4 Endovascular Procedures .............................................................. 10,084 

519Y—New Level 5 Endovascular Procedures .................................................................................................................................. 12,149 

5194—Current Level 4 Endovascular Procedures/New Level 6 Endovascular Procedures .............................................................. 15,713 

At the annual meeting for the HOP 

Panel held on August 21, 2017, the HOP 

Panel recommended that, for CY 2018, 

CMS examine the number of APCs for 

endovascular procedures. The HOP 

Panel also recommended that the 

appropriate Panel subcommittee review 

the APCs for endovascular procedures 

to determine whether more granularity 

(that is, more APCs) is warranted. 

Other commenters opposed a 

reorganization of the endovascular C– 

APCs for CY 2018 and expressed 

concerns regarding changing the 

number of C–APCs in this family 

without a chance for the public to 

comment. These commenters 

encouraged CMS to consider the impact 

that adding APCs for the endovascular 

procedures may have on other 

procedures in existing APCs and 

recommended that, if CMS plans to 

make a change to the endovascular 

APCs, it include a proposal in the CY 

2019 OPPS/ASC proposed rule to allow 

the opportunity for the public to 

comment. 

Response: We thank the commenters 

for their input. At this time, we 

continue to believe that the current C– 

APC levels for the endovascular C–APC 

family provide an appropriate 

distinction between the resource costs at 

each level and provide clinical 

homogeneity. We will continue to 

review this C–APC structure, including 

consultation with the appropriate HOP 

Panel subcommittee, to determine if 

additional granularity is necessary for 

this C–APC family. 

10. Esophagogastroduodenoscopy (EGD) 

(C–APC 5362) 

For CY 2018, as displayed in Table 33 

below and in Addendum B to the CY 

2018 OPPS/ASC proposed rule, we 

proposed to continue to assign CPT 

code 43210 to APC 5331 (Complex GI 

Procedures), with a proposed payment 

rate of $4,119.27. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59295 

TABLE 33—PROPOSED CY 2018 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT RATE FOR CPT CODE

43210 

CPT code Long descriptor 

CY 2017 

OPPS 

SI 

CY 2017 

OPPS 

APC 

CY 2017 

OPPS 

payment 

rate 

Proposed 

CY 2018 

OPPS 

SI 

Proposed 

CY 2018 

OPPS 

APC 

Proposed 

CY 2018 

OPPS 

payment 

rate 

43210 ............. Esophagogastroduo-denoscopy, flexible, transoral; with esophagogastric 

fundoplasty, partial or complete, includes duodenoscopy when performed.

J1 5331 $3,940.61 J1 5331 $4,119.27 

Comment: One commenter disagreed 

with the proposed APC assignment for 

CPT code 43210 and stated that that the 

proposed payment is inadequate to 

cover the cost of the procedure. The 

commenter stated that the device 

associated with the procedure costs 

approximately $4,100. The commenter 

elaborated that because of the 

inadequate payment for the procedure, 

providers are reluctant to perform the 

procedure, and instead are opting to 

perform the higher paying procedures 

for the treatment of gastroesophageal 

reflux disease (GERD). The commenter 

also stated that, based on the geometric 

mean cost of $7,013 for CPT code 43210, 

the code is inappropriately assigned to 

APC 5331, which has a geometric mean 

cost of approximately $4,284. To correct 

the inadequate payment for the 

procedure, the commenter suggested 

that CMS either reassign CPT code 

43210 to C–APC 5362 (Level 2 

Laparoscopy and Related Services), 

which had a proposed payment rate of 

$7,214, or establish a new Level 2 

Complex GI Procedures APC that 

contains only the surgical procedures 

described by the following CPT codes: 

• 43210 

(Esophagogastroduodenoscopy, flexible, 

transoral; with esophagogastric 

fundoplasty, partial or complete, 

includes duodenoscopy when 

performed); 

• 43257 

(Esophagogastroduodenoscopy, flexible, 

transoral; with delivery of thermal 

energy to the muscle of lower 

esophageal sphincter and/or gastric 

cardia, for treatment of gastroesophageal 

reflux disease); 

• 43280 (Laparoscopy, surgical, 

esophagogastric fundoplasty (e.g., 

nissen, toupet procedures)); 

• 43281 (Laparoscopy, surgical, repair 

of paraesophageal hernia, includes 

fundoplasty, when performed; without 

implantation of mesh); 

• 43284 (Laparoscopy, surgical, 

esophageal sphincter augmentation 

procedure, placement of sphincter 

augmentation device (i.e., magnetic 

band), including cruroplasty when 

performed); 

• 43770 (Laparoscopy, surgical, 

gastric restrictive procedure; placement 

of adjustable gastric restrictive device 

(e.g., gastric band and subcutaneous 

port components)); and 

• 46762 (Sphincteroplasty, anal, for 

incontinence, adult; implantation 

artificial sphincter). 

Response: For the second suggestion, 

we believe the grouping of procedures 

in the suggested APC may be 

inappropriate based on lack of clinical 

homogeneity. Specifically, CPT code 

46762 describes a sphincteroplasty 

procedure, which is unlike that of the 

other GERD-related procedures in the 

suggested APC. However, for the first 

suggestion, based on our analysis of the 

final rule claims data, we believe that it 

would be appropriate to reassign CPT 

code 43210 to C–APC 5362. We note 

that, for this final rule with comment 

period, we used claims data with dates 

of service between January 1, 2016, and 

December 31, 2016, that were processed 

on or before June 30, 2017. Our analysis 

of the final rule claims data revealed a 

geometric mean cost of approximately 

$6,759 for CPT code 43210 based on 91 

single claims (out of 92 total claims), 

which is comparable to the geometric 

mean cost of approximately $7,591 for 

C–APC 5362. Compared to the 

geometric mean cost of approximately 

$4,291 for C–APC 5331, we agree with 

the commenter that C–APC 5362 is the 

more appropriate C–APC assignment for 

CPT code 43210 based on its clinical 

homogeneity and resource costs. 

In summary, after consideration of the 

public comment we received, we are 

finalizing our CY 2018 proposal with 

modification. Specifically, we are 

reassigning CPT code 43210 from 

C–APC 5331 to C–APC 5362 for CY 

2018. As we do every year under the 

OPPS, we will reevaluate the cost of the 

procedure and its APC assignment for 

next year’s OPPS rulemaking. Table 34 

below lists the final status indicator and 

APC assignments for CPT code 43210. 

We refer readers to Addendum B of this 

final rule with comment period for the 

payment rates for all codes reported 

under the OPPS. In addition, we refer 

readers to Addendum A of this final 

rule with comment period for the status 

indicator meanings for all codes 

reported under the OPPS. Both 

Addendum A and Addendum B are 

available via the Internet on the CMS 

Web site. 

TABLE 34—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR CPT CODE 43210 

CPT code Long descriptor 

CY 2017 

OPPS 

SI 

CY 2017 

OPPS 

APC 

CY 2017 

OPPS 

payment 

rate 

CY 2018 

OPPS 

SI 

CY 2018 

OPPS 

APC 

CY 2018 OPPS 

payment rate 

43210 ............. Esophagogastroduo-denoscopy, 

flexible, transoral; with 

esophagogastric fundoplasty, 

partial or complete, includes duodenoscopy when performed.

J1 5331 $3,940.61 J1 5362 Refer to OPPS 

Addendum B. 


sradovich on DSK3GMQ082PROD with RULES2
59296 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

11. Hemorrhoid Treatment by Thermal 

Energy (APC 5312) 

For CY 2018, as displayed in Table 35 

below and in Addendum B to the CY 

2018 OPPS/ASC proposed rule, we 

proposed to continue to assign CPT 

code 46930 to APC 5311 (Level 1 Lower 

GI Procedures), with a proposed 

payment rate of $690.37. 

TABLE 35—PROPOSED CY 2018 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT RATE FOR CPT CODE

46930 

HCPCS code Long descriptor 

CY 2017 

OPPS 

SI 

CY 2017 

OPPS 

APC 

CY 2017 

OPPS 

payment 

rate 

Proposed 

CY 2018 

OPPS 

SI 

Proposed 

CY 2018 

OPPS 

APC 

Proposed 

CY 2018 

OPPS 

payment 

rate 

46930 ............. Destruction of internal hemorrhoid(s) 

by thermal energy (e.g., infrared coagulation, cautery, radiofrequency).

T 5311 $667.67 T 5311 $690.37 

Comment: One commenter requested 

a reassignment of CPT code 46930 to 

APC 5312 (Level 2 Lower GI 

Procedures), which had a CY 2018 

proposed payment rate of $907.04. The 

commenter indicated that review of the 

geometric mean cost of approximately 

$879 for CPT code 46930 from the CY 

2018 proposed rule claims data is more 

in line with the geometric mean cost for 

APC 5312. Specifically, the commenter 

noted that the geometric mean cost for 

APC 5312 is approximately $943, which 

is comparable to the geometric cost of 

$879 for CPT code 46930, rather than 

the geometric mean cost of 

approximately $718 for APC 5311. 

Response: For this final rule with 

comment period, we reviewed the 

claims data associated with CPT codes 

46930. We used claims data for this 

final rule with comment period with 

dates of service between January 1, 

2016, and December 31, 2016 that were 

processed on or before June 30, 2017. 

Our analysis of the final rule claims data 

revealed that a change in the APC 

assignment to APC 5312 for CPT code 

46930 is appropriate. Specifically, we 

found a geometric mean cost of 

approximately $858 for CPT code 46930 

based on 363 single claims (out of 970 

total claims), which is similar to the 

geometric mean cost of approximately 

$936 for APC 5312 rather than the 

geometric mean cost of approximately 

$710 for APC 5311. In addition, our 

analysis of the range of geometric mean 

costs for the significant procedures 

within APCs 5311 and 5312 shows that 

the geometric mean cost for CPT code 

46930 is comparable to the costs of 

procedures assigned to APC 5312. 

Specifically, the geometric mean costs 

of the significant procedures assigned to 

APC 5311 range between approximately 

$382 (for CPT code 46221) and $750 (for 

CPT code 45378), while the range for 

procedures assigned to APC 5312 is 

between approximately $824 (for CPT 

code 45341) and $1,579 (for CPT 45390). 

Consequently, we agree that a 

reassignment of CPT code 46930 to APC 

5312 is more appropriate. 

Therefore, after consideration of the 

public comment we received, we are 

finalizing our CY 2018 proposal with 

modification to the APC assignment for 

CPT code 46930. Specifically, we are 

reassigning CPT code 46930 from C– 

APC 5311 to C–APC 5312 for CY 2018. 

Table 36 below lists the final status 

indicator and APC assignments for CPT 

code 49630. We refer readers to 

Addendum B to this final rule with 

comment period for the payment rates 

for all codes reported under the OPPS. 

In addition, we refer readers to 

Addendum A to this final rule with 

comment period for the status indicator 

meanings for all codes reported under 

the OPPS. Both Addendum A and 

Addendum B are available via the 

Internet on the CMS Web site. 

TABLE 36—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR CPT CODE 46930 

CPT code Long descriptor 

CY 2017 

OPPS 

SI 

CY 2017 

OPPS 

APC 

CY 2017 

OPPS 

payment 

rate 

CY 2018 

OPPS 

SI 

CY 2018 

OPPS 

APC 

CY 2018 

OPPS payment 

rate 

46930 ............. Destruction of internal hemorrhoid(s) by thermal energy (e.g., 

infrared coagulation, cautery, 

radiofrequency).

T 5311 $667.67 T 5312 Refer to OPPS 

Addendum B. 

12. Ileoscopy Through Stoma With Stent 

Placement (C–APC 5303) 

For CY 2018, as displayed in Table 37 

below and in Addendum B to the CY 

2018 OPPS/ASC proposed rule, we 

proposed to continue to assign CPT 

code 44384 to C–APC 5303 (Level 3 

Upper GI Procedures). 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59297 

TABLE 37—PROPOSED CY 2018 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT RATE FOR CPT CODE

44384 

CPT code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS APC 

Proposed 

CY 2018 

OPPS 

payment 

rate 

44384 ............. Ileoscopy, through stoma; with placement of endoscopic stent (includes 

pre- and post-dilation and guide 

wire passage, when performed).

J1 5303 $2,510.70 J1 5303 $2,630.93 

Comment: Several commenters 

opposed the proposed continued 

assignment of CPT code 44384 to 

C–APC 5303. The commenters stated 

that the procedure includes the use of 

a stent that costs approximately $1,500, 

and that the resources required to 

perform the procedure are similar to 

those other small and large bowel 

procedures that require stent placement 

in C–APC 5331 (Complex GI 

Procedures), which had a CY 2018 

proposed payment rate of $4,119.27. 

The commenters further added that 

because C–APC 5303 is not a devicedependent designated APC, the 

continued assignment of CPT code 

44384 to C–APC 5303 results in an ASC 

payment that is below the cost of 

performing the procedure. 

Consequently, the commenters urged 

CMS to revise the APC assignment for 

CPT code 44384 back to its CY 2016 

APC assignment, specifically, C–APC 

5331. 

Response: We proposed to continue 

the APC assignment for CPT code 44384 

based on claims data used for the CY 

2018 OPPS/ASC proposed rule. We note 

that the proposed rule data was based 

on claims data submitted between 

January 1, 2016, and December 31, 2016, 

that were processed on or before 

December 31, 2016. For CPT code 

44384, our analysis of the claims data 

revealed a geometric mean cost of 

approximately $2,404 for the CPT code 

based on 25 single claims (out of 26 

total claims), which is similar to the 

geometric mean cost of approximately 

$2,736 for C–APC 5303 rather than the 

geometric mean cost of approximately 

$4,284 for C–APC 5331. Consequently, 

we proposed to continue the APC 

assignment for CPT code 44384 to C– 

APC 5303 for CY 2018. 

For this final rule with comment 

period, we again examined updated 

claims data associated with CPT code 

44384. We note that for this final rule 

with comment period we used claims 

data with dates of service between 

January 1, 2016, and December 31, 2016, 

that were processed on or before June 

30, 2017. Our examination of the final 

rule claims data revealed a similar 

pattern for CPT code 44384. 

Specifically, we found a geometric mean 

cost of approximately $2,492 for CPT 

code 44384 based on 32 single claims 

(out of 33 total claims), which is similar 

to the geometric mean cost of 

approximately $2,742 for C–APC 5303 

rather than the geometric mean cost of 

approximately $4,291 for C–APC 5331. 

Assigning CPT code 43384 to C–APC 

5331 would result in an overpayment 

for the procedure. C–APC 5303 contains 

several GI-related procedures, which are 

similar to those procedures described by 

CPT code 44384, based on clinical 

homogeneity and resource costs. 

In response to the comment related to 

device-dependent APCs, we note that 

device-dependent APCs are no longer 

recognized under the OPPS as of CY 

2015 and that, effective January 1, 2017, 

device-intensive status is assigned at the 

HCPCS code level, not at the APC level. 

We note that when we implemented the 

C–APC policy in CY 2015, we 

eliminated the device-dependent APC 

policy and replaced it with the deviceintensive policy, effective January 1, 

2015. For more information on this 

change, we refer readers to the CY 2015 

OPPS/ASC final rule with comment 

period (79 FR 66793 through 66795), the 

CY 2016 OPPS/ASC final rule with 

comment period (80 FR 70421 through 

70422), and the CY 2017 OPPS/ASC 

final rule with comment period (81 FR 

79657 through 79659). In addition, we 

refer readers to section IV.B. of this final 

rule with comment period for the 

discussion related to the deviceintensive policy under the OPPS. For a 

discussion of ASC procedures 

designated as device-intensive, we refer 

readers to section XII.C.1.c. of this final 

rule with comment period. 

Finally, we remind readers that, as we 

have stated since the implementation of 

the OPPS in August 2000, section 

1833(t)(9) of the Act requires that we 

annually review all the items and 

services within an APC group and revise 

the APC structures accordingly. 

Included in this review is the 

identification of any 2 times rule 

violations as provided under section 

1833(t)(2) of the Act and, to the extent 

possible, rectification of these 

violations. We review our claims data 

every year and determine whether we 

need to make changes to the current 

APC assignment for the following year. 

Although CPT code 44384 was assigned 

to C–APC 5331 in CY 2016, we revised 

the assignment to C–APC 5303 for CY 

2017 based on the latest claims data. 

In summary, after consideration of the 

public comments we received, we are 

finalizing our CY 2018 proposal without 

modification to continue the assignment 

of CPT code 44384 to C–APC 5303. 

Table 38 below lists the final status 

indicator and APC assignments for CY 

2018. We refer readers to Addendum B 

to this final rule with comment period 

for the payment rates for all codes 

reported under the OPPS. In addition, 

we refer readers to Addendum A to this 

final rule with comment period for the 

status indicator meanings for all codes 

reported under the OPPS. Both 

Addendum A and Addendum B are 

available via the Internet on the CMS 

Web site. 


sradovich on DSK3GMQ082PROD with RULES2
59298 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 38—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR CPT CODE 44384 

CPT code Long descriptors CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

CY 2018 OPPS 

payment rate 

44384 ............. Ileoscopy, through stoma; with 

placement of endoscopic stent 

(includes pre- and post-dilation 

and guide wire passage, when 

performed).

J1 5303 $2,510.70 J1 5303 Refer to OPPS 

Addendum B. 

13. Laparoscopic Nephrectomy (C–APC 

5362) 

For CY 2018, as displayed in Table 39 

below and in Addendum B to the CY 

2018 OPPS/ASC proposed rule, we 

proposed to reassign CPT code 50543 

from C–APC 5377 (Level 7 Urology and 

Related Services), which had a proposed 

payment rate of $15,220.83 to C–APC 

5362 (Level 2 Laparoscopy and Related 

Services), which had a proposed 

payment rate of $7,213.53. 

TABLE 39—PROPOSED CY 2018 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT RATE FOR CPT CODE

50543 

CPT code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS APC 

Proposed 

CY 2018 

OPPS 

payment 

50543 ............. Laparoscopy, surgical; partial nephrectomy.J1 5377 $14,363.61 J1 5362 $7,213.53 

Comment: One commenter applauded 

CMS’ proposal to remove CPT code 

50543 from C–APC 5377. The 

commenter indicated that the code was 

inappropriately placed in C–APC 5377 

because the procedure involves no 

implantable device, which is in contrast 

to the device-related procedures in C– 

APC 5377. The commenter believed that 

the addition of this CPT code to C–APC 

5377 for CY 2017 was an error that 

disrupted the clinical homogeneity of 

the APC. The commenter suggested that 

CMS finalize the proposal to reassign 

CPT code 50543 from C–APC 5377 to 

APC 5362. 

Response: We appreciate the 

commenter’s support. For this final rule 

with comment period, we again 

reviewed the updated claims data 

associated with CPT code 50543 and 

continue to believe that C–APC 5362 is 

the more appropriate assignment for the 

CPT code based on its clinical 

coherence and resource similarity to the 

other procedures in the APC. Although 

our analysis showed a geometric mean 

cost of approximately $7,591 for C–APC 

5362, which is lower than the geometric 

mean cost of approximately $10,247 for 

CPT code 50543 based on 1,008 single 

claims (out of 1,016 total claims), we 

found that the geometric mean cost for 

the CPT code falls within the range of 

costs for significant procedures assigned 

to C–APC 5362. Specifically, the cost 

range for procedures assigned to C–APC 

5362 is between approximately $5,997 

(for CPT code 50593) and $10,247 (for 

CPT code 50543). Based on the final 

rule claims data, we believe that CPT 

code 50543 is more appropriately 

assigned to C–APC 5362 based on its 

clinical coherence and resource 

similarity to the other procedures 

assigned to C–APC 5362. 

Therefore, after consideration of the 

public comment we received, we are 

finalizing our proposal, without 

modification, to reassign CPT code 

50543 to C–APC 5362 for CY 2018. As 

we do every year, we will review our 

claims data for the procedure for the CY 

2019 OPPS rulemaking. Table 40 below 

lists the final CY 2018 status indicator 

and APC assignments for CPT code 

50543. We refer readers to Addendum B 

to this final rule with comment period 

for the payment rates for all codes 

reported under the OPPS. In addition, 

we refer readers to Addendum A to this 

final rule with comment period for the 

status indicator meanings for all codes 

reported under the OPPS. Both 

Addendum A and Addendum B are 

available via the Internet on the CMS 

Web site. 

TABLE 40—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR CPT CODE 50543 

CPT code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

CY 2018 

OPPS 

payment rate 

50543 ............. Laparoscopy, surgical; partial nephrectomy.J1 5377 $14,363.61 J1 5362 Refer to OPPS 

Addendum B. 

14. Multianalyte Assays With 

Algorithmic Analyses (MAAA) 

For CY 2018, as displayed in Table 41 

below and as listed in Addendum B to 

the CY 2018 OPPS/ASC proposed rule, 

we proposed to continue to assign CPT 

codes 81490, 81503, 81535, 81536, 

81538, and 81539, to status indicator 

‘‘Q4’’ to indicate that the codes are 

conditionally packaged. Specifically, as 

defined in Addendum D1 to the CY 

2018 OPPS/ASC proposed rule, an 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59299 

assignment to status indicator ‘‘Q4’’ 

indicates that payment for the 

laboratory test is either packaged if 

billed on the same claim as a HCPCS 

code assigned to status indicator ‘‘J1’’, 

‘‘J2’’, ‘‘S’’, ‘‘T’’, ‘‘V’’, ‘‘Q1’’, ‘‘Q2’’, or 

‘‘Q3’’, or in other circumstances, is paid 

through the CLFS. 

TABLE 41—PROPOSED CY 2018 STATUS INDICATOR (SI) FOR CPT CODES 81490, 81503, 81535, 81536, 81538, AND

81539 

CPT code Long descriptor CY 2017 

OPPS SI 

Proposed 

CY 2018 

OPPS SI 

81490 ............. Autoimmune (rheumatoid arthritis), analysis of 12 biomarkers using immunoassays, utilizing 

serum, prognostic algorithm reported as a disease activity score.

Q4 Q4 

81503 ............. Oncology (ovarian), biochemical assays of five proteins (ca-125, apolipoprotein a1, beta-2 microglobulin, transferrin, and pre-albumin), utilizing serum, algorithm reported as a risk score.Q4 Q4 

81535 ............. Oncology (gynecologic), live tumor cell culture and chemotherapeutic response by dapi stain and 

morphology, predictive algorithm reported as a drug response score; first single drug or drug 

combination.

Q4 Q4 

81536 ............. Oncology (gynecologic), live tumor cell culture and chemotherapeutic response by dapi stain and 

morphology, predictive algorithm reported as a drug response score; each additional single 

drug or drug combination (list separately in addition to code for primary procedure).

Q4 Q4 

81538 ............. Oncology (lung), mass spectrometric 8-protein signature, including amyloid a, utilizing serum, 

prognostic and predictive algorithm reported as good versus poor overall survival.

Q4 Q4 

81539 ............. Oncology (high-grade prostate cancer), biochemical assay of four proteins (total psa, free psa, intact psa, and human kallikrein-2 [hk2]), utilizing plasma or serum, prognostic algorithm reported 

as a probability score.

Q4 Q4 

Comment: Some commenters 

requested a revision to the status 

indicator assignment for the six MAAA 

codes (CPT codes 81490, 81503, 81535, 

81536, 81538, and 81539) from ‘‘Q4’’ to 

‘‘A’’ (Not paid under the OPPS but may 

be paid under a different Medicare 

payment system), consistent with the 

status indicator assignment for the DNA 

and RNA-based MAAA tests. The 

commenters stated that these tests are 

generally not performed in the HOPD 

setting. Also, the commenters indicated 

that all of the Category I CPT MAAA 

codes are already assigned to status 

indicator ‘‘A’’ except for CPT codes 

81490, 81503, 81535, 81536, 81538, and 

81539, which are protein-based MAAA 

codes. The commenters asserted that, 

based on the June 23, 2016 CLFS final 

rule entitled ‘‘Medicare Program; 

Medicare Clinical Diagnostic Laboratory 

Tests Payment System,’’ CMS defined 

an ADLT under section 1834A(d)(5)(A) 

of the Act to include DNA, RNA, and 

protein-based tests, and, as such, the six 

protein-based MAAA codes should be 

reassigned to status indicator ‘‘A’’. 

Response: As we stated in the CY 

2017 OPPS/ASC final rule with 

comment period (81 FR 79594), we will 

assign status indicator ‘‘A’’ (Separate 

payment under the CLFS) to ADLTs 

once a laboratory test is designated as an 

ADLT under the CLFS. Before a test can 

be designated as an ADLT, applicants 

must submit an application for 

successful designation as an ADLT by 

CMS. These 6 codes (CPT codes 81490, 

81503, 81535, 81536, 81538, and 81539) 

have not been designated as ADLTs by 

CMS at this time, and therefore we do 

not believe they should be reassigned to 

status indicator ‘‘A’’. However, once a 

code has been designated under the 

CLFS as an ADLT that meets the criteria 

of section 1834A(d)(5)(A) of the Act, we 

will update the OPPS payment file 

(Addendum B) on a quarterly basis to 

reflect the appropriate status indicator 

assignment. 

Therefore, after consideration of the 

public comments, we are finalizing our 

proposal, without modification, for CPT 

codes 81490, 81503, 81535, 81536, 

81538, and 81539. As stated earlier, we 

will update the OPPS payment file 

(Addendum B) to appropriately reflect 

the status indicator assignment once a 

CPT code has been designated under the 

CLFS as an ADLT that meets the criteria 

of section 1834A(d)(5)(A) of the Act. 

Table 42 below lists the final status 

indicator for the CPT codes. We refer 

readers to Addendum B to this final rule 

with comment period for the payment 

rates for all codes reported under the 

OPPS. In addition, we refer readers to 

Addendum A to this final rule with 

comment period for the status indicator 

meanings for all codes reported under 

the OPPS. Both Addendum A and 

Addendum B are available via the 

Internet on the CMS Web site. 

TABLE 42—FINAL CY 2018 STATUS INDICATOR (SI) FOR CPT CODES 81490, 81503, 81535, 81536, 81538, AND 81539 

CPT code Long descriptor CY 2017 

OPPS SI 

CY 2018 

OPPS SI 

81490 ............. Autoimmune (rheumatoid arthritis), analysis of 12 biomarkers using immunoassays, utilizing 

serum, prognostic algorithm reported as a disease activity score.

Q4 Q4 

81503 ............. Oncology (ovarian), biochemical assays of five proteins (ca-125, apolipoprotein a1, beta-2 microglobulin, transferrin, and pre-albumin), utilizing serum, algorithm reported as a risk score.Q4 Q4 

81535 ............. Oncology (gynecologic), live tumor cell culture and chemotherapeutic response by dapi stain and 

morphology, predictive algorithm reported as a drug response score; first single drug or drug 

combination.

Q4 Q4 

81536 ............. Oncology (gynecologic), live tumor cell culture and chemotherapeutic response by dapi stain and 

morphology, predictive algorithm reported as a drug response score; each additional single 

drug or drug combination (list separately in addition to code for primary procedure).

Q4 Q4 

81538 ............. Oncology (lung), mass spectrometric 8-protein signature, including amyloid a, utilizing serum, 

prognostic and predictive algorithm reported as good versus poor overall survival.

Q4 Q4 


sradovich on DSK3GMQ082PROD with RULES2
59300 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 42—FINAL CY 2018 STATUS INDICATOR (SI) FOR CPT CODES 81490, 81503, 81535, 81536, 81538, AND

81539—Continued 

CPT code Long descriptor CY 2017 

OPPS SI 

CY 2018 

OPPS SI 

81539 ............. Oncology (high-grade prostate cancer), biochemical assay of four proteins (total psa, free psa, intact psa, and human kallikrein-2 [hk2]), utilizing plasma or serum, prognostic algorithm reported 

as a probability score.

Q4 Q4 

15. Musculoskeletal APCs (APC 5111 

Through 5116) 

For CY 2018, we proposed to continue 

the existing C–APCs for the six levels of 

musculoskeletal procedures (C–APCs 

5111 through 5116), as displayed in 

Table 43 below and in Addendum B to 

the CY 2018 OPPS/ASC proposed rule. 

TABLE 43—PROPOSED CY 2018 GEOMETRIC MEAN COST AND PAYMENT FOR MUSCULOSKELETAL C–APCS

C–APC 

CY 2018 

geometric 

mean cost 

Proposed 

CY 2018 

OPPS 

payment 

5111—Level 1 Musculoskeletal Procedures ........................................................................................................... $222.10 $214 

5112—Level 2 Musculoskeletal Procedures ........................................................................................................... 1,311.47 1,261 

5113—Level 3 Musculoskeletal Procedures ........................................................................................................... 2,600.94 2,501 

5114—Level 4 Musculoskeletal Procedures ........................................................................................................... 5,602.87 5,385 

5115—Level 5 Musculoskeletal Procedures ........................................................................................................... 10,310.27 9,913 

5116—Level 6 Musculoskeletal Procedures ........................................................................................................... 15,783.57 15,175 

Comment: Commenters disagreed 

with the proposal for six levels of the 

musculoskeletal C–APCs and requested 

that CMS create two additional levels 

within the musculoskeletal C–APCs. 

The commenters stated concerns about 

the range of costs of procedures 

assigned to Level 4, Level 5, and Level 

6. The commenters believed that the gap 

between the musculoskeletal procedure 

levels and payments is too large and 

results in APCs that include disparate 

procedures in terms of clinical 

complexity and resource use. 

Response: At this time, we continue 

to believe that the proposed C–APC 

levels for the musculoskeletal 

procedures C–APC family provide an 

appropriate distinction between the 

resource costs at each level and provide 

clinical homogeneity. We will continue 

to review this C–APC structure to 

determine if additional granularity is 

necessary for this C–APC family. 

16. Nasal/Sinus Endscopy Procedures 

(C–APC 5155) 

For CY 2018, the AMA CPT Editorial 

Panel established several new bundled 

nasal/sinus endoscopy CPT codes. Table 

44 below lists the complete descriptors 

for the new CPT codes. These codes 

were listed in Addendum B and 

Addendum O to the CY 2018 OPPS/ASC 

proposed rule (which is available via 

the Internet on the CMS Web site). 

Addendum B listed the proposed status 

indicator assignments for the new codes 

and assigned them to comment 

indicator ‘‘NP’’ (New code for the next 

calendar year or existing code with 

substantial revision to its code 

descriptor in the next calendar year as 

compared to current calendar year, 

proposed APC assignment; comments 

will be accepted on the proposed APC 

assignment for the new code), while 

Addendum O listed the proposed/ 

placeholder CY 2018 CPT codes and the 

long descriptors. We note that the CPT 

code descriptors that appeared in the 

OPPS Addendum B were short 

descriptors and did not accurately 

describe the complete procedure, 

service, or item described by the CPT 

code. Therefore, we included the 5-digit 

placeholder codes and their long 

descriptors in Addendum O to the 

proposed rule, specifically under the 

column labeled ‘‘CY 2018 OPPS/ASC 

Proposed Rule 5-Digit AMA Placeholder 

Code’’ so that the public could 

adequately comment on our proposed 

APC and status indicator assignments. 

We also indicated that the final CPT 

code numbers would be included in this 

CY 2018 OPPS/ASC final rule with 

comment period. The final CPT code 

numbers, along with their 

corresponding 5-digit placeholder 

codes, can be found in Table 45 below. 

As displayed in Table 44 below and 

in Addendum B of the CY 2018 OPPS/ 

ASC proposed rule, we proposed to 

assign CPT code 31241 to status 

indicator ‘‘C’’ to indicate that this is an 

inpatient only procedure, and to assign 

CPT codes 31253, 31257, 31259, and 

31298 to C–APC 5155 (Level 5 Airway 

Endoscopy), with a proposed payment 

rate of $4,628.89. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59301 

TABLE 44—PROPOSED CY 2018 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT RATES FOR THE NEW

NASAL/SINUS ENDOSCOPY CPT CODES EFFECTIVE JANUARY 1, 2018 

CPT code 

CY 2018 

OPPS/ASC 

proposed rule 

placeholder 

code 

Long descriptor 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS APC 

Proposed 

CY 2018 

OPPS 

payment 

rate 

31241 ............. 31XX1 ............ Nasal/sinus endoscopy, surgical; with ligation of sphenopalatine 

artery.

C N/A N/A 

31253 ............. 31XX2 ............ Nasal/sinus endoscopy, surgical with ethmoidectomy; total (anterior and posterior), including frontal sinus exploration, with removal of tissue from frontal sinus, when performed.J1 5155 $4,628.89 

31257 ............. 31XX3 ............ Nasal/sinus endoscopy, surgical with ethmoidectomy; total (anterior and posterior), including sphenoidotomy.J1 5155 4,628.89 

31259 ............. 31XX4 ............ Nasal/sinus endoscopy, surgical with ethmoidectomy; total (anterior and posterior), including sphenoidotomy, with removal of 

tissue from the sphenoid sinus.

J1 5155 4,628.89 

31298 ............. 31XX5 ............ Nasal/sinus endoscopy, surgical; with dilation of frontal and sphenoid sinus ostia (e.g., balloon dilation).J1 5155 4,628.89 

Comment: Several commenters 

expressed concern with the APC 

placement and indicated that 

assignment to C–APC 5155 in the OPPS 

would reduce the ASC payment for the 

procedures by 32 percent. The 

commenters requested that CMS assign 

the new bundled codes to a higher 

paying APC to provide appropriate 

payment in the ASC setting. Some 

commenters clarified that, in CY 2017, 

these bundled procedures were reported 

under two separate codes that were 

separately payable. Because of the effect 

on the ASC payment, the commenters 

recommended that CMS establish a new 

APC for multiple (five or more) sinus 

procedures, reconfigure the airway 

APCs to better recognize the complexity 

associated with performing multiple 

sinus procedures in a single surgery, or 

create a complexity adjustment for sinus 

procedures billed with a device or drug 

HCPCS C-code or J-code. 

Response: C–APC 5155 contains 

several endoscopic sinus procedures, 

including the single endoscopic sinus 

surgeries. Based on input from our 

medical advisors, we believe this APC is 

the most appropriate assignment for 

CPT codes 31253, 31257, 31259, and 

31298. C–APC 5155, which has a final 

rule geometric mean cost of 

approximately $4,861, is currently the 

highest paying APC within the airway 

endoscopy APC series. Because CPT 

codes 31253, 31257, 31259, and 31298 

are new codes for CY 2018, we believe 

that we should assign these codes to C– 

APC 5155 where similar endoscopic 

sinus procedures are assigned. 

With regards to the comment 

recommending separate payment for the 

single endoscopic sinus procedures 

performed in 2017, because the codes 

describing single endoscopic sinus 

surgery are assigned to status indicator 

‘‘J1’’, HOPDs receive one payment for 

the multiple surgeries, regardless of the 

number of endoscopic sinus procedures 

performed in a day. The status indicator 

assignment of ‘‘J1’’ to C–APC 5155 

indicates that the APC is designated as 

a comprehensive APC (C–APC) under 

the OPPS. C–APCs provide a single 

payment for a primary service, and 

payment for all adjunctive services 

reported on the same claim is packaged 

into payment for the primary service. 

With few exceptions, all other services 

reported on a hospital outpatient claim 

in combination with the primary service 

are considered to be related to the 

delivery of the primary service and 

packaged into the single payment for the 

primary service and, therefore, separate 

payment is not available. We note that 

C–APCs do not apply to ASCs; 

consequently, the procedures would not 

be packaged. Instead, the procedures 

would be separately payable in the ASC 

setting. As we stated in the CY 2017 

OPPS/ASC final rule with comment 

period, we did not implement C–APCs 

in the ASC payment system, and 

consequently, procedures paid 

separately through the ASC payment 

system are paid based on the standard 

ASC methodology (81 FR 79738). We 

refer readers to section II.A.2.b. 

(Comprehensive APCs) of this final rule 

with comment period for the discussion 

on the payment methodology for C– 

APCs and to section XII. (ASC Payment 

System) of this final rule with comment 

period for the discussion on the ASC 

Payment System. For the history on the 

establishment of C–APCs under the 

OPPS, we refer readers to the CY 2014 

OPPS/ASC final rule (78 FR 74861– 

4910). 

In summary, after consideration of the 

public comments we received, we are 

finalizing our proposal for CPT codes 

31241, 31253, 31257, 31259, and 31298 

without modification. Consistent with 

the statutory requirement under section 

1833(t)(9)(A) of the Act, we will 

reevaluate the APC assignment for these 

codes in the next rulemaking cycle. 

Table 45 below lists the final status 

indicator and APC assignments for CPT 

codes 31241, 31253, 31257, 31259, and 

31298 for CY 2018. We refer readers to 

Addendum B to this final rule with 

comment period for the payment rates 

for all codes reported under the OPPS. 

In addition, we refer readers to 

Addendum A to this final rule with 

comment period for the status indicator 

meanings for all codes reported under 

the OPPS. Both Addendum A and 

Addendum B are available via the 

Internet on the CMS Web site. 


sradovich on DSK3GMQ082PROD with RULES2
59302 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 45—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR THE NEW NASAL/SINUS ENDOSCOPY

CPT CODES EFFECTIVE JANUARY 1, 2018 

CPT code 

CY 2018 

OPPS/ASC 

proposed rule 

placeholder 

code 

Long descriptor CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

CY 2018 

OPPS payment 

rate 

31241 ............. 31XX1 ............ Nasal/sinus endoscopy, surgical; with ligation of 

sphenopalatine artery.

C N/A Refer to OPPS 

Addendum B. 

31253 ............. 31XX2 ............ Nasal/sinus endoscopy, surgical with ethmoidectomy; total 

(anterior and posterior), including frontal sinus exploration, 

with removal of tissue from frontal sinus, when performed.

J1 5155 Refer to OPPS 

Addendum B. 

31257 ............. 31XX3 ............ Nasal/sinus endoscopy, surgical with ethmoidectomy; total 

(anterior and posterior), including sphenoidotomy.

J1 5155 Refer to OPPS 

Addendum B. 

31259 ............. 31XX4 ............ Nasal/sinus endoscopy, surgical with ethmoidectomy; total 

(anterior and posterior), including sphenoidotomy, with removal of tissue from the sphenoid sinus.

J1 5155 Refer to OPPS 

Addendum B. 

31298 ............. 31XX5 ............ Nasal/sinus endoscopy, surgical; with dilation of frontal and 

sphenoid sinus ostia (eg, balloon dilation).

J1 5155 Refer to OPPS 

Addendum B. 

17. Nuclear Medicine Services (APCs 

5592 and 5593) 

For CY 2018, as illustrated in Table 46 

below, we proposed to continue to 

assign CPT codes 78018 and 78121 to 

APC 5592 (Level 2 Nuclear Medicine 

and Related Services) and to also 

continue to assign CPT codes 78110 and 

78111 to APC 5593 (Level 3 Nuclear 

Medicine and Related Services). 

TABLE 46—PROPOSED CY 2018 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT RATE FOR CPT CODES

78018, 78110, 78111, AND 78121 

CPT code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS APC 

Proposed 

CY 2018 

OPPS 

payment 

Rate 

78018 ............. Thyroid carcinoma metastases imaging; whole body.S 5592 $429.13 S 5592 $439.56 

78110 ............. Plasma volume, radiopharmaceutical 

volume-dilution technique (separate 

procedure); single sampling.

S 5593 1,138.94 S 5593 1,163.30 

78111 ............. Plasma volume, radiopharmaceutical 

volume-dilution technique (separate 

procedure); multiple samplings.

S 5593 1,138.94 S 5593 1,163.30 

78121 ............. Red cell volume determination (separate procedure); multiple samplings.S 5592 429.13 S 5592 439.56 

Comment: One commenter stated that 

CMS proposed to reassign CPT codes 

78018, 78110, 78111 and 78121 to new 

APC groups, and recommended that 

CMS maintain the CPT codes in the 

‘‘new APC groups’’ to ensure stability 

within the coding structure. The 

commenter added that CMS has moved 

these codes several times over the years 

and believed they are currently assigned 

to appropriate APC groups. This 

commenter noted that the codes are low 

volume with high costs, and 

recommended that CMS defer to the 

specialty societies for appropriate APC 

assignment. 

Response: For the CY 2017 update, as 

indicated in the OPPS Addendum B that 

was released with the CY 2017 OPPS/ 

ASC final rule with comment period, we 

assigned CPT codes 78018, 78110, 

78111 and 78121 to comment indicator 

‘‘CH’’ to indicate that their APC 

assignments were revised. However, as 

displayed in Table 46, we proposed to 

make no change to the APC assignments 

for all four codes for the CY 2018 OPPS 

update. Specifically, we proposed to 

continue to assign CPT codes 78018, 

78110, 78111, and 78121 to the same CY 

2017 APCs for CY 2018 based on claims 

data used for the CY 2018 OPPS/ASC 

proposed rule. We note that the 

proposed rule data was based on claims 

data submitted between January 1, 2016, 

and December 31, 2016, that were 

processed on or before December 31, 

2016. For CPT code 78018, our 

examination of the claims data revealed 

a geometric mean cost of approximately 

$418 based on 5,604 single claims (out 

of 6,327 total claims). Because the 

geometric mean cost of $418 is similar 

to the geometric mean cost of 

approximately $457 for APC 5592, we 

proposed to maintain the assignment of 

this code to APC 5592. For CPT code 

78110, our claims data showed a 

geometric mean cost of approximately 

$1,046 based on 12 single claims (out of 

14 total claims). We believe that the 

geometric mean cost of $1,046 for CPT 

code 78110 is comparable to the 

geometric mean cost of approximately 

$1,210 for APC 5593. Consequently, we 

proposed to maintain the assignment of 

this code to APC 5593. For CPT code 

78111, we had no claims data. However, 

based on its clinical similarity to CPT 

code 78110, we proposed to continue to 

assign the CPT code to APC 5593. For 

CPT code 78121, our analysis revealed 

a geometric mean cost of approximately 

$807 based on 3 single claims (out of 3 

total claims). Based on the low volume 

and because revising the assignment to 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59303 

APC 5593, which had a proposed 

geometric mean cost of approximately 

$1,210 would result in an overpayment 

for the test, we proposed to continue to 

assign CPT code 78121 to APC 5592, 

and to review the claims data for the 

final rule to determine whether a 

revision to the APC assignment would 

be necessary. 

For this final rule with comment 

period, we again analyzed updated 

claims data associated with the four 

codes. We note that, for this final rule 

with comment period, we used claims 

data with dates of service between 

January 1, 2016, and December 31, 2016, 

that were processed on or before June 

30, 2017. Our review of the final rule 

claims data revealed a similar pattern 

for all four codes. For CPT code 78018, 

we found a geometric mean cost of 

approximately $418 based on 6,113 

single claims (out of 6,923 total claims), 

which is similar to the geometric mean 

cost of approximately $453 for APC 

5592. Consequently, we believe that it 

continues to be appropriate to assign 

CPT code 78018 to APC 5592. For CPT 

code 78110, our claims data revealed a 

geometric mean cost of approximately 

$1,037 based on 12 single claims (out of 

14 total claims), which is similar to the 

geometric mean cost of approximately 

$1,202 for APC 5593. 

Consequently, we are maintaining 

CPT code 78110 in APC 5593. For CPT 

code 78111, we again had no claims 

data. However, because of its clinical 

similarity to CPT code 78110, we will 

maintain the assignment to APC 5593. 

For CPT code 78121, we found a 

geometric mean cost of approximately 

$808 based on 3 single claims (out of 3 

total claims). Based on the comment 

received that the APC assignment is 

appropriate, we will retain CPT code 

78121 in APC 5592, whose geometric 

mean cost is approximately $453, for CY 

2018. In addition, given the low volume 

for the CPT code, we do not believe that 

we should reassign CPT code 78121 to 

APC 5593, whose geometric mean cost 

is approximately $1,202 for CY 2018. To 

reassign CPT code 78121 to APC 5593 

would result in an overpayment for CPT 

code 78121. 

Further, we remind the commenter, 

that as we do every year, we review the 

latest OPPS claims data to set the 

payment rates for the following year. 

Section 1833(t)(9) of the Act requires 

that we annually review all the items 

and services within an APC group and 

revise the APC structures accordingly. 

Included in this review is the 

identification of any 2 times rule 

violations as provided under section 

1833(t)(2) of the Act and, to the extent 

possible, rectification of these 

violations. 

With regard to the comment of 

deferring to specialty societies for 

appropriate APC placement for 

designated codes, while we rely on our 

latest claims data to appropriately set 

payment rates under the OPPS, we 

welcome and appreciate comments from 

all stakeholders on our proposals. We 

note that every year we publish the 

OPPS/ASC proposed rules with requests 

for public comments on the OPPS and 

ASC payment assignments from 

interested parties, including hospitals, 

specialty societies, physicians, nurses, 

health care technicians, other health 

care professionals, interested 

individuals, patients, and any other 

stakeholders interested on commenting 

on our proposed payment assignments. 

In summary, after consideration of the 

public comment we received, we are 

finalizing our CY 2018 proposals, 

without modification, for CPT codes 

78018, 78110, 78111, and 78121. Table 

47 below lists the final status indicator 

and APC assignments for the CPT codes. 

We refer readers to Addendum B to this 

final rule with comment period for the 

payment rates for all codes reported 

under the OPPS. In addition, we refer 

readers to Addendum A to this final 

rule with comment period for the status 

indicator meanings for all codes 

reported under the OPPS. Both 

Addendum A and Addendum B are 

available via the Internet on the CMS 

Web site. 

TABLE 47—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR CPT CODES 78018, 78110, 78111, AND

78121 

CPT code Long descriptors CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

CY 2018 

OPPS 

payment rate 

78018 ............. Thyroid carcinoma metastases 

imaging; whole body.

S 5592 $429.13 S 5592 Refer to OPPS 

Addendum B. 

78110 ............. Plasma volume, radiopharmaceutical volume-dilution technique (separate procedure); single sampling.S 5593 1,138.94 S 5593 Refer to OPPS 

Addendum B. 

78111 ............. Plasma volume, radiopharmaceutical volume-dilution technique (separate procedure); 

multiple samplings.

S 5593 1,138.94 S 5593 Refer to OPPS 

Addendum B. 

78121 ............. Red cell volume determination 

(separate procedure); multiple 

samplings.

S 5592 429.13 S 5592 Refer to OPPS 

Addendum B. 

18. Percutaneous Transluminal 

Mechanical Thrombectomy (C–APC 

5192) 

For CY 2018, as noted in Table 48 

below and in Addendum B to the CY 

2018 OPPS/ASC proposed rule, we 

proposed to revise the APC assignment 

for the percutaneous transluminal 

mechanical thrombectomy procedures, 

specifically, CPT codes 37184 and 

37187. Specifically, we proposed to 

reassign CPT codes 37184 and 37187 

from APC 5183 (Level 3 Vascular 

Procedures) to APC 5184 (Level 4 

Vascular Procedures), with a proposed 

payment rate of $4,084.25. 


sradovich on DSK3GMQ082PROD with RULES2
59304 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 48—PROPOSED CY 2018 U (SI), APC ASSIGNMENT, AND PAYMENT RATE FOR CPT CODES 37184 AND 37187 

CPT code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS APC 

Proposed 

CY 2018 

OPPS 

payment 

rate 

37184 ............. Primary percutaneous transluminal 

mechanical thrombectomy, noncoronary, non-intracranial, arterial or arterial bypass graft, including 

fluoroscopic guidance and 

intraprocedural pharmacological 

thrombolytic injection(s); initial vessel.

T 5183 $3,924.28 T 5184 $4,084.25 

37187 ............. Percutaneous transluminal mechanical 

thrombectomy, vein(s), including 

intraprocedural pharmacological 

thrombolytic injections and 

fluoroscopic guidance.

T 5183 3,924.28 T 5184 4,084.25 

Comment: One commenter requested 

that CMS revise the proposed APC 

assignment for CPT codes 37184 and 

37187 from APC 5184 to C–APC 5192 

based on their clinical and resource 

homogeneity to the procedures assigned 

to C–APC 5192 (Level 2 Endovascular 

Procedures). The commenter indicated 

that both procedures are clinically 

similar to other percutaneous 

transluminal procedures assigned to C– 

APC 5192, including CPT code 36904 

(Percutaneous transluminal mechanical 

thrombectomy and/or infusion for 

thrombolysis, dialysis circuit, any 

method, including all imaging and 

radiological supervision and 

interpretation, diagnostic angiography, 

fluoroscopic guidance, catheter 

placement(s), and intraprocedural 

pharmacological thrombolytic 

injection(s)), which CMS proposed to 

assign to C–APC 5192 for CY 2018, with 

a proposed payment of $4,999.36. This 

commenter added that the geometric 

mean costs associated with the 

procedures described by CPT codes 

37184 and 37187 are similar to the 

geometric mean costs of other 

procedures currently assigned to C–APC 

5192. 

Response: For this final rule with 

comment period, we reviewed the 

updated CY 2016 claims data associated 

with CPT codes 37184 and 37187. We 

note that, for this final rule with 

comment period, we used claims data 

with dates of service between January 1, 

2016, and December 31, 2016, that were 

processed on or before June 30, 2017. 

Our analysis of the final rule claims data 

revealed that a change in the APC 

assignment for CPT codes 37184 and 

37187 to C–APC 5192 (rather than 

proposed APC 5184) is appropriate. 

Specifically, we found a geometric mean 

cost of approximately $8,459 for CPT 

code 37184 based on 149 single claims 

(out of 150 total claims), and a 

geometric mean cost of approximately 

$6,343 for CPT code 37187 based on 188 

single claims (out of 190 total claims). 

We believe that the geometric mean 

costs for CPT codes 37184 and 37187 

are more similar to the geometric mean 

costs of other procedures assigned to C– 

APC 5192, whose geometric mean cost 

is approximately $5,082, rather than the 

geometric mean costs of procedures 

assigned to APC 5184, whose geometric 

mean cost is approximately $4,262. We 

note that we also considered whether 

we should reassign CPT codes 37184 

and 37187 to C–APC 5193 (Level 3 

Endovascular Procedures), which has a 

geometric mean cost of approximately 

$10,504. However, based on our review, 

we believe that C–APC 5192 is more 

appropriate. Therefore, based on their 

clinical homogeneity and resource costs 

in relation to the other procedures 

assigned to C–APC 5192, we agree with 

the commenter that C–APC 5192 is the 

most appropriate APC assignment for 

CPT codes 37184 and 37187. 

After consideration of the public 

comment we received, we are finalizing 

our CY 2018 proposal, with 

modification, for CPT codes 37184 and 

37187. Specifically, we are reassigning 

CPT codes 37184 and 37187 from APC 

5183 to C–APC 5192 for CY 2018. As we 

do every year under the OPPS, we will 

reevaluate the cost of CPT codes 37184, 

and 37187 and their APC assignment for 

next year’s OPPS update. Table 49 

below lists the final status indicator and 

APC assignments for both CPT codes. 

We refer readers to Addendum B to this 

final rule with comment period for the 

payment rates for all codes reported 

under the OPPS. In addition, we refer 

readers to Addendum A to this final 

rule with comment period for the status 

indicator meanings for all codes 

reported under the OPPS. Both 

Addendum A and Addendum B are 

available via the Internet on the CMS 

Web site. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59305 

TABLE 49—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR CPT CODES 37184 AND 37187 

CPT code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

CY 2018 

OPPS payment 

rate 

37184 ............. Primary percutaneous 

transluminal mechanical 

thrombectomy, noncoronary, 

non-intracranial, arterial or arterial bypass graft, including 

fluoroscopic guidance and 

intraprocedural pharmacological 

thrombolytic injection(s); initial 

vessel.

T 5183 $3,924.28 J1 5192 Refer to OPPS 

Addendum B. 

37187 ............. Percutaneous transluminal mechanical thrombectomy, vein(s), 

including intraprocedural pharmacological thrombolytic injections and fluoroscopic guidance.

T 5183 3,924.28 J1 5192 Refer to OPPS 

Addendum B. 

19. Peripherally Inserted Central Venous 

Catheter (PICC) (APC 5182) 

For CY 2018, as noted in Table 50 

below, we proposed to reassign CPT 

code 36569 from APC 5181 (Level 1 

Vascular Procedures) to APC 5182 

(Level 2 Vascular Procedures), with a 

proposed payment rate of $945.33. 

TABLE 50—PROPOSED CY 2018 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT RATE FOR CPT CODE

36569 

CPT code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS APC 

Proposed 

CY 2018 

OPPS 

payment 

rate 

36569 ............. Insertion of peripherally inserted central venous catheter (picc), without 

subcutaneous port or pump; age 5 

years or older.

T 5181 $684.13 T 5182 $945.33 

We proposed to revise the APC 

assignment for CPT code 36569 based 

on claims data used for the CY 2018 

OPPS/ASC proposed rule. We note that 

the proposed rule data was based on 

claims data submitted between January 

1, 2016, and December 31, 2016, that 

were processed on or before December 

31, 2016. Our analysis of the proposed 

rule claims data revealed a geometric 

mean cost of approximately $934 for 

CPT code 36569 based on 29,514 single 

claims (out of 52,035 total claims). Our 

analysis further revealed a geometric 

mean cost of approximately $983 for 

APC 5182 and $610 for APC 5181. 

Based on the geometric mean costs of 

APCs 5181 and 5182, we believed it was 

necessary to revise the APC assignment 

for CPT code 36569 from APC 5181 to 

APC 5182 to pay appropriately for the 

procedure. Consequently, we proposed 

to revise the APC assignment for CPT 

code 36569, whose geometric mean cost 

of approximately $934 is comparable to 

the geometric mean cost of 

approximately $983 for APC 5182. 

For this final rule with comment 

period, we again reviewed the updated 

claims data associated with CPT code 

36569. We note that, for this final rule 

with comment period, we used claims 

data with dates of service between 

January 1, 2016, and December 31, 2016, 

that were processed on or before June 

30, 2017. Our analysis of the final rule 

claims data revealed a similar pattern 

for CPT code 36569. Specifically, we 

found a geometric mean cost of 

approximately $929 for CPT code 36569 

based on 31,559 single claims (out of 

56,891 total claims). We also found the 

geometric mean cost of approximately 

$982 for APC 5182 to be similar to the 

geometric mean cost of CPT code 36569 

compared to the geometric mean cost of 

approximately $612 for APC 5181. 

Comment: One commenter supported 

the proposed APC reassignment for CPT 

code 36569 and stated that APC 5182 

more appropriately reflects the 

resources to perform the procedure. 

Response: We appreciate the 

commenter’s support. Based on our 

latest analysis of the final rule claims 

data, we are finalizing our proposal to 

reassign CPT code 36569 from APC 

5181 to APC 5182. 

In summary, after consideration of the 

public comment we received, we are 

finalizing our CY 2018 proposal, 

without modification, to reassign CPT 

code 36569 to APC 5182. Table 51 

below lists the final status indicator and 

APC assignments for CPT code 36569 

for CY 2018. We refer readers to 

Addendum B to this final rule with 

comment period for the payment rates 

for all codes reported under the OPPS. 

In addition, we refer readers to 

Addendum A to this final rule with 

comment period for the status indicator 

meanings for all codes reported under 

the OPPS. Both Addendum A and 

Addendum B are available via the 

Internet on the CMS Web site. 


sradovich on DSK3GMQ082PROD with RULES2
59306 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 51—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR CPT CODE 36569 

CPT code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

CY 2018 

OPPS payment 

rate 

36569 ............. Insertion of peripherally inserted 

central venous catheter (picc), 

without subcutaneous port or 

pump; age 5 years or older.

T 5181 $684.13 T 5182 Refer to OPPS 

Addendum B. 

20. Pulmonary Rehabilitation Services 

(APCs 5732 and 5733) and Cardiac 

Rehabilitation Services (APC 5771) 

For CY 2018, as displayed in Table 52 

below, and as listed in Addendum B of 

the CY 2018 OPPS/ASC proposed rule, 

we did not propose to make any change 

to the APC assignments for the 

pulmonary rehabilitation services and 

cardiac rehabilitation services codes. 

Currently, there are four HCPCS codes 

that describe pulmonary rehabilitation 

services, specifically, HCPCS codes 

G0237, G0238, G0239, and G0424. For 

CY 2018, we proposed to continue to 

assign HCPCS codes G0237, G0238, and 

G0239 to APC 5732 (Level 2 Minor 

Procedures) and to continue to assign 

HCPCS code G0424 to APC 5733 (Level 

3 Minor Procedures) for CY 2018. In 

addition, there are currently four 

HCPCS codes that describe the cardiac 

rehabilitation services, specifically, 

HCPCS codes 93797, 93798, G0422, and 

G0423. For CY 2018, we proposed to 

continue to assign the cardiac 

rehabilitation services codes to APC 

5771 (Cardiac Rehabilitation) for CY 

2018. 

TABLE 52—PROPOSED CY 2018 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT RATE FOR THE PULMONARY

REHABILITATION SERVICES AND CARDIAC REHABILITATION SERVICES HCPCS CODES

HCPCS code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS APC 

Proposed 

CY 2018 

OPPS 

payment 

rate 

Pulmonary Rehabilitation Services 

G0237 ............ Therapeutic procedures to increase 

strength or endurance of respiratory 

muscles, face to face, one on one, 

each 15 minutes (includes monitoring).

S 5732 $28.38 S 5732 $29.65 

G0238 ............ Therapeutic procedures to improve 

respiratory function, other than described by g0237, one on one, face 

to face, per 15 minutes (includes 

monitoring).

S 5732 28.38 S 5732 29.65 

G0239 ............ Therapeutic procedures to improve 

respiratory function or increase 

strength or endurance of respiratory 

muscles, two or more individuals 

(includes monitoring).

S 5732 28.38 S 5732 29.65 

G0424 ............ Pulmonary rehabilitation, including exercise (includes monitoring), one 

hour, per session, up to two sessions per day.

S 5733 54.55 S 5733 53.22 

Cardiac Rehabilitation Services 

93797 ............. Physician or other qualified health 

care professional services for outpatient cardiac rehabilitation; without continuous ecg monitoring (per 

session).

S 5771 $110.22 S 5771 $113.71 

93798 ............. Physician or other qualified health 

care professional services for outpatient cardiac rehabilitation; with 

continuous ecg monitoring (per session).

S 5771 110.22 S 5771 113.71 

G0422 ............ Intensive cardiac rehabilitation; with or 

without continuous ecg monitoring 

with exercise, per session.

S 5771 110.22 S 5771 113.71 

G0423 ............ Intensive cardiac rehabilitation; with or 

without continuous ecg monitoring; 

without exercise, per session.

S 5771 110.22 S 5771 113.71 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59307 

Comment: Several commenters 

expressed concern that the payment 

rates for the pulmonary rehabilitation 

services are significantly less than those 

for the cardiac rehabilitation services. 

The commenters stated that, despite the 

legislative and clinical similarity 

between both services, CMS has taken 

different approaches to implementing 

the services, with pulmonary 

rehabilitation services paid less than 

cardiac rehabilitation services. One 

commenter indicated that, since 2010, 

the code describing pulmonary 

rehabilitation services has had three 

different status indicator assignments 

and payment volatility. This commenter 

recommended that CMS reassign the 

pulmonary rehabilitation HCPCS code 

G0464 from APC 5733 to the cardiac 

rehabilitation APC group, specifically, 

APC 5771. Another commenter 

recommended that CMS revisit its 

approach to payment for pulmonary 

rehabilitation services to improve access 

to care. One commenter recommended 

that both types of services be placed in 

one composite APC under the OPPS. 

Response: The payment rates for both 

the pulmonary and cardiac 

rehabilitation services are based on 

claims data that are analyzed each year. 

As we do every year, we review the 

latest OPPS claims data to set the 

payment rates for the following year. We 

note that section 1833(t)(9) of the Act 

requires that we annually review all the 

items and services within an APC group 

and revise the APC structures 

accordingly. Included in this review is 

the identification of any 2 times rule 

violations as provided under section 

1833(t)(2) of the Act and, to the extent 

possible, rectification of these 

violations. 

For the proposed rule, we based the 

proposed payment rates on claims data 

submitted between January 1, 2016, and 

December 31, 2016, that were processed 

on or before December 31, 2016. Based 

on our analysis, we found the costs for 

both types of services to be significantly 

different. 

For the pulmonary rehabilitation 

services, our analysis revealed a 

geometric mean cost of approximately 

$26 for HCPCS code G0237 (based on 

19,925 single claims), $22 for HCPCS 

code G0238 (based on 17,361 single 

claims), and $33 for HCPCS code G0239 

(based on 168,295 single claims). We 

note that the range of costs (between $26 

and $33) for HCPCS codes G0237, 

G0238, and G0239 are similar to the 

geometric mean cost of approximately 

$31 for APC 5732. Consequently, we 

proposed to continue to assign all three 

pulmonary rehabilitation services 

HCPCS codes to APC 5732 for CY 2018. 

In addition, we found a geometric mean 

cost of approximately $45 for HCPCS 

code G0424 (based on 468,571 single 

claims) that is comparable to the 

geometric mean cost of approximately 

$55 for APC 5733. Therefore, we 

proposed to continue to assign HCPCS 

code G0424 to APC 5733. 

For the cardiac rehabilitation services, 

our analysis revealed a geometric mean 

cost of approximately $101 for HCPCS 

code 93797 (based on 129,124 single 

claims), $118 for HCPCS code 93798 

(based on 2,698,534 single claims), $212 

for HCPCS code G0422 (based on 38,094 

single claims), and $174 for HCPCS 

code G0423 (based on 18,001 single 

claims). Because the range of costs 

(between $101 and $212) for the cardiac 

rehabilitation services are comparable to 

the geometric mean cost of 

approximately $118 for APC 5771, we 

proposed to continue to assign the 

cardiac rehabilitation HCPCS codes to 

APC 5771 for CY 2018. 

For this final rule with comment 

period, we again analyzed the updated 

claims data associated with the 

pulmonary and cardiac rehabilitation 

services. We note that, for this final rule 

with comment period, we used claims 

data with dates of service between 

January 1, 2016, and December 31, 2016, 

that were processed on or before June 

30, 2017. Similar to our proposed rule 

findings, we found the costs to be 

different for both services. 

For the pulmonary rehabilitation 

services, our final rule claims data 

revealed a geometric mean cost of 

approximately $25 for HCPCS code 

G0237 (based on 22,097 single claims), 

$22 for HCPCS code G0238 (based on 

18,900 single claims), and $33 for 

HCPCS code G0239 (based on 187,134 

single claims). Based on the range of 

costs (between $22 and $33), we believe 

that HCPCS codes G0237, G0238, and 

G0239 are appropriately assigned to 

APC 5732, whose geometric mean cost 

is approximately $32. Similarly, we 

believe that the geometric mean cost of 

approximately $44 (based on 514,478 

single claims) for HCPCS code G0424 is 

comparable to the geometric mean costs 

of those services assigned to APC 5733, 

whose geometric mean cost is 

approximately $56 for CY 2018. 

For the cardiac rehabilitation services, 

our final rule claims data revealed a 

geometric mean cost of approximately 

$224 for HCPCS code G0422 (based on 

44,754 single claims), $186 for HCPCS 

code G0423 (based on 22,188 single 

claims), $101 for HCPCS code 93797 

(based on 143,507 single claims), and 

$116 for HCPCS code 93798 (based on 

2,991,759 single claims). Based on the 

costs for the cardiac rehabilitation 

HCPCS codes (between $101 to $224), 

we believe that the geometric mean cost 

of approximately $117 for APC 5771 

appropriately reflects the resources in 

providing cardiac rehabilitation 

services. 

In addition, while the commenters 

believed that pulmonary and cardiac 

rehabilitation services are similar, our 

analysis of the available OPPS data 

reveals that their costs are significantly 

different. Consequently, we do not agree 

that we should assign both services to 

one APC, or even assign the pulmonary 

rehabilitation HCPCS code G0424 to the 

cardiac rehabilitation services group 

(APC 5771). We note that the 

commenters did not provide data to 

suggest that the hospital reported costs 

in our data are incorrect or that the 

resources (costs) incurred to furnish 

these two types of services are equal. 

Accordingly, we have no reason to 

believe that the data reported to us by 

hospitals are incorrect. 

Moreover, we do not agree that we 

should create a composite APC for the 

pulmonary and cardiac rehabilitation 

services. Composite APCs provide a 

single payment for groups of services 

that are typically performed together 

during a single clinical encounter that 

result in the provision of a complete 

service. Combining payment for 

multiple, independent services into a 

single OPPS payment in this way 

enables hospitals to manage their 

resources with maximum flexibility by 

monitoring and adjusting the volume 

and efficiency of services themselves. 

Establishing a composite APC for these 

services would not be appropriate 

because pulmonary and cardiac 

rehabilitation services are generally not 

performed on the same day. We refer 

readers to the CY 2008 OPPS/ASC final 

rule with comment period for a full 

discussion of the development of the 

composite APC methodology (72 FR 

66611 through 66614 and 66650 through 

66652) and the CY 2012 OPPS/ASC 

final rule with comment period (76 FR 

74163) for more recent background. 

Comment: Some commenters stated 

that, despite evidence that pulmonary 

rehabilitation is a valuable service, few 

patients with chronic obstructive 

pulmonary disease (COPD) are able to 

access this treatment. The commenters 

further indicated that a study of 

Medicare beneficiaries revealed that 

only 3.7 percent of COPD patients 

received pulmonary rehabilitation in 

2012, and believe this number may be 

higher for non-Medicare beneficiaries. 

The commenters noted that payment for 

pulmonary rehabilitation is lower than 

cardiac rehabilitation (a similar service) 

in the Medicare program, and believed 


sradovich on DSK3GMQ082PROD with RULES2
59308 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

this difference is based on idiosyncratic 

hospital billing and OPPS rules, not 

based on rational policy or evidence. 

Specifically, the commenter indicated 

that, for CY 2017, payment for 1 hour 

of pulmonary rehabilitation is $54.55 

under the OPPS. These commenters 

suggested that the payment discrepancy 

between cardiac services and 

pulmonary rehabilitation services may 

be a contributing factor to inadequate 

access of the pulmonary rehabilitation 

services. 

Response: As stated in section III.B. of 

this final rule with comment period, 

payments for OPPS services and 

procedures are based on our analysis of 

the latest claims data. Under the OPPS, 

we pay for covered hospital outpatient 

services on a rate-per-service basis, 

where the service may be reported with 

one or more HCPCS codes. Payment 

varies according to the APC group to 

which the independent service or 

combination of services is assigned. 

Under the Medicare program, we pay 

separately for both cardiac and 

pulmonary rehabilitation services. We 

have not found evidence that there is an 

access to care issue for pulmonary 

rehabilitation services compared to 

cardiac rehabilitation services. We note 

that there are a variety of treatment 

options for patients with COPD and 

pulmonary rehabilitation remains a 

covered service for those beneficiaries 

for whom physicians order this service. 

We note that, under the Medicare 

program, when the service is provided 

in the hospital outpatient setting, we 

make two payments, one to the hospital 

outpatient department under the OPPS 

and another for the professional services 

under the MPFS. 

In addition, as illustrated in Table 52– 

1 below, the number of services paid by 

Medicare for both cardiac rehabilitation 

and pulmonary rehabilitation has grown 

in the last several years. For the CY 

2018 OPPS update, our claims data 

reveal over 514,000 single claims for 

pulmonary rehabilitation services as 

described by HCPCS code G0424 alone. 

Accordingly, we do not believe that 

beneficiary access to pulmonary 

rehabilitation services is inadequate. 

Details pertaining to the volume of these 

services furnished in the physician 

office setting can be derived from the 

CY 2018 MPFS final rule and associated 

public use files. 

TABLE 52–1—OPPS CLAIMS DATA FOR THE PULMONARY AND CARDIAC (INCLUDING INTENSIVE CARDIAC) REHABILITATION

HCPCS CODES FOR THE CY 2014 THROUGH CY 2018 OPPS UPDATES

HCPCS code Short descriptor 

2014 OPPS 

single claims 

data 

2015 OPPS 

single claims 

data 

2016 OPPS 

single claims 

data 

2017 OPPS 

single claims 

data 

2018 OPPS 

single claims 

data 

Cardiac Rehabilitation Services 

93797 .............. Cardiac rehab ......................................... 87,689 94,769 109,420 120,821 143,507 

93798 .............. Cardiac rehab/monitor ............................ 2,428,984 2,481,175 2,581,446 2,761,806 2,991,759 

G0422 ............. Intens cardiac rehab w/exerc .................. 12,060 12,043 17,646 30,165 44,754 

G0423 ............. Intens cardiac rehab no exer .................. 703 1,325 6,654 11,979 22,188 

Pulmonary Rehabilitation Services 

G0237 ............. Therapeutic procd strg endur ................. 15,337 43,591 47,046 19,098 22,097 

G0238 ............. Oth resp proc, indiv ................................ 14,437 22,736 23,960 18,482 18,900 

G0239 ............. Oth resp proc, group ............................... 132,475 111,755 127,425 165,799 187,134 

G0424 ............. Pulmonary rehab w exer ......................... 457,226 459,572 454,121 443,777 514,478 

In summary, after consideration of the 

public comments we received and after 

our analysis of the updated claims data 

for this final rule with comment period, 

we believe that the current APC 

assignments for the pulmonary and 

cardiac rehabilitation services 

appropriately reflects their clinical 

coherence and resource costs. 

Consequently, we are finalizing our 

proposal to continue the current APC 

assignment of the pulmonary and 

cardiac rehabilitation HCPCS codes, 

without modification, for CY 2018. As 

we do every year, we will review our 

claims data for these services for the CY 

2019 OPPS rulemaking. Table 53 below 

lists the final status indicator and APC 

assignments for the codes for pulmonary 

and cardiac rehabilitation services. We 

refer readers to Addendum B to this 

final rule with comment period for the 

payment rates for all codes reported 

under the OPPS. In addition, we refer 

readers to Addendum A to this final 

rule with comment period for the status 

indicator meanings for all codes 

reported under the OPPS. Both 

Addendum A and Addendum B are 

available via the Internet on the CMS 

Web site. 

TABLE 53—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR THE PULMONARY REHABILITATION

SERVICES AND CARDIAC REHABILITATION SERVICES

HCPCS code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

CY 2018 

OPPS 

payment rate 

Pulmonary Rehabilitation Services 

G0237 ............ Therapeutic procedures to increase strength or endurance of 

respiratory muscles, face to 

face, one on one, each 15 minutes (includes monitoring).

S 5732 $28.38 S 5732 Refer to OPPS 

Addendum B. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59309 

TABLE 53—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR THE PULMONARY REHABILITATION

SERVICES AND CARDIAC REHABILITATION SERVICES—Continued 

HCPCS code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

CY 2018 

OPPS 

payment rate 

G0238 ............ Therapeutic procedures to improve respiratory function, other 

than described by g0237, one 

on one, face to face, per 15 

minutes (includes monitoring).

S 5732 28.38 S 5732 Refer to OPPS 

Addendum B. 

G0239 ............ Therapeutic procedures to improve respiratory function or increase strength or endurance of 

respiratory muscles, two or 

more individuals (includes monitoring).

S 5732 28.38 S 5732 Refer to OPPS 

Addendum B. 

G0424 ............ Pulmonary rehabilitation, including 

exercise (includes monitoring), 

one hour, per session, up to 

two sessions per day.

S 5733 54.55 S 5733 Refer to OPPS 

Addendum B. 

Cardiac Rehabilitation Services 

93797 ............. Physician or other qualified health 

care professional services for 

outpatient cardiac rehabilitation; 

without continuous ecg monitoring (per session).

S 5771 $110.22 S 5771 Refer to OPPS 

Addendum B. 

93798 ............. Physician or other qualified health 

care professional services for 

outpatient cardiac rehabilitation; 

with continuous ecg monitoring 

(per session).

S 5771 110.22 S 5771 Refer to OPPS 

Addendum B. 

G0422 ............ Intensive cardiac rehabilitation; 

with or without continuous ecg 

monitoring with exercise, per 

session.

S 5771 110.22 S 5771 Refer to OPPS 

Addendum B. 

G0423 ............ Intensive cardiac rehabilitation; 

with or without continuous ecg 

monitoring; without exercise, 

per session.

S 5771 110.22 S 5771 Refer to OPPS 

Addendum B. 

21. Radiology and Imaging Procedures 

and Services 

a. Imaging APCs 

Section 1833(t)(9)(A) of the Act 

requires the Secretary to review not less 

often than annually, and revise the APC 

group assignments, relative payment 

weights, and the wage and other 

adjustments to take into account 

changes in medical practice, changes in 

technology, the addition of new 

services, new cost data, and other 

relevant information and factors. In 

addition, section 1833(t)(2)(G) of the Act 

requires the Secretary to create 

additional groups of covered OPD 

services that classify separately those 

procedures that utilize contrast agents 

from those procedures that do not 

utilize contrast agents. 

In CY 2016, as a part of our 

comprehensive review of the structure 

of the APCs and procedure code 

assignments, we restructured the APCs 

that contain imaging services (80 FR 

70392). The purpose of this 

restructuring was to more appropriately 

reflect the resource costs and clinical 

characteristics of the services classified 

within the imaging APCs. The 

restructuring of the imaging APCs 

resulted in broader groupings that 

removed the excessive granularity of 

grouping imaging services according to 

organ or physiologic system, which did 

not necessarily reflect either significant 

differences in resources or how these 

services are delivered in the hospital 

outpatient setting. In CY 2017, in 

response to public comments on the CY 

2017 OPPS/ASC proposed rule, we 

further consolidated the imaging APCs 

from 17 APCs in CY 2016 to 7 APCs in 

CY 2017 (81 FR 79633). These included 

four imaging APCs without contrast and 

three imaging APCs with contrast. 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33608), for 

CY 2018, we reviewed the services 

assigned to the imaging without contrast 

APCs and imaging with contrast APCs. 

Specifically, we evaluated the resource 

costs and clinical coherence of the 

procedures associated with the four 

levels of imaging without contrast APCs 

and the three levels of imaging with 

contrast APCs, as well as identified and 

corrected any 2 times rule violations as 

discussed in section III.B.2. of the CY 

2018 OPPS/ASC proposed rule. In 

addition, we reviewed and considered 

stakeholder recommendations to make 

additional refinements to the structure 

of the APC groupings of the imaging 

procedures classified within the 

imaging APCs that would maintain 

clinical homogeneity while more 

appropriately addressing resource cost 

fluctuation and volatility. As a result of 

our analysis and review of the claims 

data used for CY 2018 ratesetting, we 

stated in the proposed rule that we 

believed a Level 5 Imaging without 

Contrast APC was needed to more 

appropriately group certain imaging 

services with higher resource costs. 

Specifically, we stated our belief that 


sradovich on DSK3GMQ082PROD with RULES2
59310 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

the data supported splitting the current 

(CY 2017) Level 4 Imaging without 

Contrast APC into two APCs such that 

the Level 4 Imaging without Contrast 

APC would include high frequency, 

low-cost services and the proposed 

Level 5 Imaging without Contrast APC 

would include low frequency high-cost 

services. Therefore, for CY 2018, we 

proposed to add a fifth level within the 

Imaging without Contrast APCs. In 

Table 19 of the proposed rule, we listed 

the CY 2017 imaging APCs, and in Table 

20 of the proposed rule, we listed the 

proposed CY 2018 imaging APCs with 

the addition of a fifth level within the 

Imaging without Contrast APCs. The 

specific APC assignments for each 

service grouping were listed in 

Addendum B to the proposed rule, 

which is available via the Internet on 

the CMS Web site. We stated that this 

proposal would increase the imaging 

APCs from 7 APCs in CY 2017 to 8 in 

CY 2018. The specific APC assignments 

for each imaging service HCPCS code 

were listed in Addendum B to the 

proposed rule, which is available via the 

Internet on the CMS Web site. We noted 

that some of the imaging procedures are 

assigned to APCs that are not listed in 

the tables (for example, the vascular 

procedures APCs). Also, the nuclear 

medicine services APCs were not 

included in this proposal. These 

imaging services were not included in 

this proposal because we did not 

propose changes to their APC structure. 

We invited public comments on our 

proposal to add a Level 5 Imaging 

without Contrast APC in CY 2018. 

Comment: Commenters generally 

disagreed with CMS’ proposal to add a 

fifth level within the Imaging without 

Contrast APC series. These commenters 

represented various imaging specialty 

societies and individual practitioners 

who utilize various imaging modalities. 

Many of the commenters opposed 

adding a fifth level because of the 

proposed resultant reduction in 

payment to several vascular ultrasound 

procedures. The commenters urged 

CMS to not finalize the proposal 

because it would destabilize and 

drastically decrease payments for 

certain imaging services compared to 

CY 2017 rates. The commenters noted 

that the proposed rate for certain 

imaging services would cause certain 

providers to no longer be able to furnish 

these services, thereby impeding access 

to these important services for Medicare 

beneficiaries. However, some 

commenters recommended various 

alternative HCPCS code placements 

within the Imaging without Contrast 

APC series if CMS finalized its proposal 

to add a fifth level. Some of these same 

commenters suggested that maintaining 

the CY 2017 APC groupings and 

payment rates, to the extent possible, 

would address their concerns. 

Response: We appreciate these 

comments and recommendations on 

how to structure and assign HCPCS 

codes to the Imaging without Contrast 

APC series. We analyzed the various 

alternative suggestions for the various 

recommended HCPCS code placements, 

including maintaining the CY 2017 APC 

groupings. After consideration of the 

public comments and suggestions we 

received, we are not finalizing our 

proposal to add a fifth level to the 

Imaging without Contrast APC series. 

Instead, we are maintaining the CY 2017 

APC structure of four levels of Imaging 

Without Contrast APCs and making 

minor reassignments to the HCPCS 

codes within this series to resolve or 

mitigate any violations of the 2 times 

rule or both. We understand the 

importance of payment stability for 

providers and believe that continuation 

of the four levels of Imaging without 

Contrast APCs would minimize 

fluctuation in payment rates from CY 

2017 to CY 2018. As displayed in the ‘‘2 

Times Rule’’ for this final rule with 

comment period, which is available via 

the Internet on the CMS Web site, the 

APC geometric mean costs for APCs 

5521 through 5524 are consistent with 

the CY 2017 APC geometric mean costs 

for the same APCs, indicating the costbased relative weights that are used to 

calculate payment are stable. 

Comment: A few commenters 

objected to the proposed exception to 

the violation of the 2 times rule for APC 

5573 (Level 3 Imaging With Contrast) 

and recommended alternative 

approaches to resolving the violation, 

such as the creation of a Level 4 Imaging 

With Contrast or maintaining the CY 

2017 APC groupings. Commenters 

stated that the proposed reassignment of 

nine high-volume contrast magnetic 

resonance imaging (MRI) procedures 

from Level 2 (CY 2017 placement) to 

Level 3 (proposed CY 2018 placement) 

would result in a significant reduction 

and underpayment for contrast 

echocardiography procedures and 

would significantly lower the payment 

rate for contrast echocardiography 

procedures, which has been relatively 

stable for the past several years, 

consistent with the procedure costs. 

These nine high-volume contrast MRI 

procedures are described by the 

following CPT codes: 

• CPT code 70543 (Magnetic 

resonance imaging, orbit, face, and/or 

neck; without contrast material(s) and 

further sequences); 

• CPT code 70553 (Magnetic 

resonance imaging, brain (including 

brain stem); without contrast material, 

followed by contrast material(s) and 

further sequences); 

• CPT code 71552 (Magnetic 

resonance imaging, chest; without 

contrast material(s), followed by 

contrast material(s) and further 

sequences); 

• CPT code 72156 (Magnetic 

resonance imaging, spinal canal and 

contents, without contrast material, 

followed by contrast material(s) and 

further sequences; cervical); 

• CPT code 72157 (Magnetic 

resonance imaging spinal canal and 

contents, without contrast material, 

followed by contrast material(s) and 

further sequences; thoracic); 

• CPT code 72158 (Magnetic 

resonance imaging spinal canal and 

contents, without contrast material, 

followed by contrast material(s) and 

further sequences; lumbar); 

• CPT code 72197 (Magnetic 

resonance imaging pelvis; without 

contrast material(s), followed by 

contrast material(s) and further 

sequences); 

• CPT code 73223 (Magnetic 

resonance imaging, any joint of upper 

extremity; without contrast material(s), 

followed by contrast material(s) and 

further sequences); and 

• CPT code 74183 (Magnetic 

resonance imaging abdomen; without 

contrast material(s), followed by with 

contrast material(s) and further 

sequences). 

Response: We were persuaded by the 

points raised by the commenters and 

agree that continuation of the CY 2017 

groupings is appropriate to maintain 

payment stability for imaging services 

assigned to APC 5572 and APC 5573. 

Although the proposed grouping for 

APC 5573 achieved clinical similarity, 

based on analysis of the claims data 

used for this final rule with comment 

period, we believe we should take a 

deliberate approach to maintain 

consistency in payment assignment by 

not adopting the proposals to reassign 

the nine high-volume contrast MRI 

procedures from APC 5572 to APC 5573 

and to allow for an exception for APC 

5573 from the 2 times rule. Therefore, 

we are modifying our proposed 

grouping for APC 5573 by moving the 

nine high-volume contrast MRI 

procedures from Level 3 (Imaging with 

Contrast) to Level 2 (Imaging with 

Contrast), which is consistent with their 

CY 2017 APC assignment. In addition, 

we are making a few other code 

reassignments to resolve the 2 times rule 

violation in APC 5573. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59311 

In summary, after consideration of the 

public comments we received and for 

the reasons discussed above, we are not 

finalizing the proposal to create a Level 

5 (Imaging without Contrast) APC or the 

proposal to assign nine high-volume 

contrast MRI procedures to Level 3 

(Imaging with Contrast) for CY 2018. 

Table 54 below compares the CY 2017 

and 2018 APC geometric mean costs for 

the imaging APCs. 

TABLE 54—COMPARISON OF CY 2017 AND CY 2018 GEOMETRIC MEAN COSTS FOR THE IMAGING APCS

APC APC group title 

CY 2017 APC 

geometric 

mean cost 

CY 2018 APC 

geometric 

mean cost 

5521 ............... Level 1 Imaging without Contrast ................................................................................................ $61.53 $62.08 

5522 ............... Level 2 Imaging without Contrast ................................................................................................ 115.88 118.68 

5523 ............... Level 3 Imaging without Contrast ................................................................................................ 232.21 245.08 

5524 ............... Level 4 Imaging without Contrast ................................................................................................ 462.23 486.38 

5571 ............... Level 1 Imaging with Contrast ..................................................................................................... 272.40 252.58 

5572 ............... Level 2 Imaging with Contrast ..................................................................................................... 438.42 456.08 

5573 ............... Level 3 Imaging with Contrast ..................................................................................................... 675.23 681.45 

The specific APC assignments for 

each imaging procedure grouping are 

listed in Addendum B to this final rule 

with comment period, which is 

available via the Internet on the CMS 

Web site. 

b. Non-Ophthalmic Fluorescent 

Vascular Angiography (APC 5523) 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33609), for 

the CY 2018 OPPS update, we proposed 

to reassign HCPCS code C9733 (Nonophthalmic fluorescent vascular 

angiography) from APC 5523 (Level 3 

Imaging without Contrast) to APC 5524 

(Level 4 Imaging without Contrast) 

based on the latest claims data available 

for the proposed rule. We proposed to 

maintain the status indicator assignment 

of ‘‘Q2’’ (T-packaged) to indicate that 

the service is conditionally packaged 

when performed in conjunction with 

other procedures on the same day but 

paid separately when performed as a 

stand-alone service. 

Our claims data used for the proposed 

rule, which included claims submitted 

between January 1, 2016, and December 

31, 2016, and processed on or before 

December 31, 2016, showed a geometric 

mean cost of approximately $236 for 

HCPCS code C9733 based on 216 single 

claims (out of 953 total claims), which 

is closely aligned with the geometric 

mean cost of approximately $275 for 

APC 5524. Because HCPCS code C9733 

is an imaging service which is similar to 

the codes assigned to APC 5524, we 

proposed to reassign HCPCS code C9733 

from APC 5523 to APC 5524. We stated 

that we believe this proposed 

reassignment would improve the 

clinical homogeneity of APC 5524 and 

appropriately align the resource costs of 

HCPCS code C9733 to the resource costs 

of those procedures assigned to APC 

5524. 

As we have stated in previous OPPS/ 

ASC final rules, specifically, in the CY 

2013 OPPS/ASC final rule with 

comment period (77 FR 68345 through 

68346), the CY 2014 OPPS/ASC final 

rule with comment period (78 FR 74976 

through 74977), and the CY 2017 OPPS/ 

ASC final rule with comment period (81 

FR 79632), the service described by 

HCPCS code C9733 is primarily an 

intraoperative imaging service that is 

performed in combination with a 

number of primary procedures, 

including facial reconstruction and 

reanimation, muscle flaps, trauma 

reconstruction, digital and limb 

reattachment, and breast reconstruction. 

Therefore, payment for the service 

described by HCPCS code C9733 is 

conditionally packaged under 42 CFR 

419.2(b)(14), which contains the 

policies governing packaging of 

intraoperative items and services. 

Consequently, we proposed to maintain 

the status indicator assignment of ‘‘Q2’’ 

to indicate that the payment for the 

service will be packaged in the APC 

payment if billed on the same date of 

service as a HCPCS code assigned to 

status indicator ‘‘T’’, but in all other 

circumstances, a separate APC payment 

for the service will be made. We believe 

that the OPPS payments, separate or 

packaged, for surgical procedures with 

which this service is performed are 

more than adequate to cover the cost of 

the service described by HCPCS code 

C9733 for Medicare beneficiaries in 

need of this service. 

Comment: Several commenters 

supported the proposed APC 

reassignment for HCPCS code C9733 to 

APC 5524. A few commenters also 

suggested assignment of HCPCS code 

C9733 in a higher payment APC 

(compared to the CY 2017 payment rate) 

that would cover the cost of the service, 

but did not recommend a specific APC. 

In addition, commenters requested that 

CMS change the status indicator 

assignment from ‘‘Q2’’ to a separately 

payable status indicator ‘‘S’’. The 

commenters noted that status indicator 

‘‘Q2’’ indicates that payment for the 

procedure described by HCPCS code 

C9733 is conditionally packaged when 

provided in conjunction with other 

procedures assigned to status indicator 

‘‘T,’’ which are primarily surgical 

procedures. 

Response: Regarding the status 

indicator assignment of HCPCS code 

C9733, we have addressed this comment 

in prior rules (81 FR 79632). The service 

described by HCPCS code C9733 is 

primarily an intraoperative imaging 

service. Therefore, payment for the 

service is conditionally packaged under 

§ 419.2(b)(14), which packages 

intraoperative items and services. When 

the procedure described by HCPCS code 

C9733 is not furnished in conjunction 

with a surgical procedure, the service is 

paid separately. We believe that the 

OPPS payments, separate or packaged, 

for surgical procedures with which this 

test is performed (for example, breast 

reconstruction) are more than adequate 

to cover the cost of the service described 

by HCPCS code C9733 for Medicare 

beneficiaries in need of this service. 

With respect to the APC reassignment 

for APC 5524, because we are 

maintaining the CY 2017 APC group 

assignments for imaging services, we are 

not finalizing our proposal to reassign 

HCPCS code C9733 from APC 5523 to 

APC 5524. Rather, we are maintaining 

the assignment of the procedure 

described by HCPCS code C9733 to APC 

5523 for CY 2018. Based on our review 

of the CY 2018 final rule claims data, 

the procedure described by HCPCS code 

C9733 has a geometric mean unit cost of 

approximately $237 and the geometric 

mean cost of APC 5523 is approximately 

$245 for CY 2018. Therefore, it is not 

necessary to reassign the procedure 

described by HCPCS code C9733 to APC 

5524, which has a geometric mean unit 

cost of about $486. It is more 

appropriate to maintain the assignment 


sradovich on DSK3GMQ082PROD with RULES2
59312 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

of the procedure described by HCPCS 

code C9733 to APC 5523 because of the 

similarity in clinical characteristics and 

resource use for this procedure and 

other imaging procedures assigned to 

APC 5523. 

After consideration of the public 

comments we received, we are not 

finalizing our proposal to reassign 

HCPCS code C9733 from APC 5523 to 

APC 5524 for CY 2018. Instead, for CY 

2018, we are continuing to assign 

HCPCS code C9733 to APC 5523 and 

continuing to assign the code to status 

indicator ‘‘Q2’’ to indicate that the 

service is conditionally packaged. The 

final CY 2018 OPPS payment rate for 

HCPCS code C9733 can be found in 

OPPS Addendum B to this final rule 

with comment period, which is 

available via the Internet on the CMS 

Web site. 

22. Sclerotherapy (APC 5054) 

For CY 2018, the AMA CPT Editorial 

Panel established two new codes to 

describe the injection of a 

noncompounded foam sclerosant for 

treatment of incompetent veins. Table 

55 below lists the complete descriptors 

for the new CPT codes. These codes 

were listed in Addendum B and 

Addendum O to the CY 2018 OPPS/ASC 

proposed rule (which are available via 

the Internet on the CMS Web site). 

Addendum B listed the proposed status 

indicator assignments for the new codes 

and assigned them to comment 

indicator ‘‘NP’’ (New code for the next 

calendar year or existing code with 

substantial revision to its code 

descriptor in the next calendar year as 

compared to current calendar year, 

proposed APC assignment; comments 

will be accepted on the proposed APC 

assignment for the new code), while 

Addendum O listed the proposed/ 

placeholder CY 2018 CPT codes and the 

long descriptors. We note that the CPT 

code descriptors that appeared in 

Addendum B to the CY 2018 proposed 

rule were short descriptors and did not 

accurately describe the complete 

procedure, service, or item described of 

the CPT code. Therefore, we included 

the 5-digit placeholder codes and their 

long descriptors in Addendum O to the 

proposed rule, specifically under the 

column labeled ‘‘CY 2018 OPPS/ASC 

Proposed Rule 5-Digit AMA Placeholder 

Code’’ so that the public could 

adequately comment on our proposed 

APC and status indicator assignments. 

We also indicated that the final CPT 

code numbers would be included in this 

CY 2018 OPPS/ASC final rule with 

comment period. The final CPT code 

numbers, along with their 

corresponding 5-digit placeholder 

codes, can be found in Table 55 below. 

As displayed in Table 55 below and 

in Addendum B of the CY 2018 OPPS/ 

ASC proposed rule, we proposed to 

assign CPT codes 36465 and 36466 to 

APC 5053 (Level 3 Skin Procedures), 

with a proposed payment rate of 

$468.82. 

TABLE 55—PROPOSED CY 2018 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT RATES FOR CPT CODES

36465 AND 36466 

CPT code 

CY 2018 

OPPS/ASC 

proposed rule 

placeholder 

code 

Long descriptor 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS APC 

Proposed 

CY 2018 

OPPS 

payment 

rate 

36465 ............. 364X5 ............ Injection of non-compounded foam sclerosant with ultrasound 

compression maneuvers to guide dispersion of the injectate, inclusive of all imaging guidance and monitoring; single incompetent extremity truncal vein (e.g., great saphenous vein, accessory saphenous vein).

T 5053 $468.82 

36466 ............. 364X6 ............ Injection of non-compounded foam sclerosant with ultrasound 

compression maneuvers to guide dispersion of the injectate, inclusive of all imaging guidance and monitoring; multiple incompetent truncal veins (e.g., great saphenous vein, accessory saphenous vein), same leg.

T 5053 468.82 

Comment: Several commenters 

opposed the proposed assignment of 

new CPT codes 36465 and 36466 to APC 

5053 and requested the assignment to 

APC 5183 (Level 3 Vascular 

Procedures), which had a proposed 

payment rate of $2,409.72. The 

commenters stated that CMS 

inappropriately proposed to assign these 

codes to APC 5053 based on a 

comparison to CPT codes 36470 

(Injection of sclerosing solution; single 

vein) and 36471 (Injection of sclerosing 

solution; multiple veins, same leg). 

However, the commenters indicated that 

CPT codes 36465 and 36466 are 

dissimilar to the procedures assigned to 

APC 5053, which describe simple skin 

procedures (for example, debridement, 

Moh’s surgery, and skin lesion 

destruction). They stated that the 

procedures assigned to APC 5053 are 

not comparable to the procedures 

described by new CPT codes 36465 and 

36466 based on complexity, staff type, 

staff time, and use of ultrasound 

guidance. The commenters further 

added that the two procedures are most 

similar to the endovenous ablative 

procedures that treat incompetent veins 

in APC 5183, specifically, the 

procedures described by the following 

CPT codes: 

• CPT code 36473 (Endovenous 

ablation therapy of incompetent vein, 

extremity, inclusive of all imaging 

guidance and monitoring, percutaneous, 

mechanochemical; first vein treated); 

• CPT code 36474 (Endovenous 

ablation therapy of incompetent vein, 

extremity, inclusive of all imaging 

guidance and monitoring, percutaneous, 

mechanochemical; subsequent vein(s) 

treated in a single extremity, each 

through separate access sites (list 

separately in addition to code for 

primary procedure)); 

• CPT code 36475 (Endovenous 

ablation therapy of incompetent vein, 

extremity, inclusive of all imaging 

guidance and monitoring, percutaneous, 

radiofrequency; first vein treated); 

• CPT code 36476 (Endovenous 

ablation therapy of incompetent vein, 

extremity, inclusive of all imaging 

guidance and monitoring, percutaneous, 

radiofrequency; subsequent vein(s) 

treated in a single extremity, each 

through separate access sites (list 

separately in addition to code for 

primary procedure)) 

• CPT code 36478 (Endovenous 

ablation therapy of incompetent vein, 

extremity, inclusive of all imaging 

guidance and monitoring, percutaneous, 

laser; first vein treated); and 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59313 

• CPT code 36479 (Endovenous 

ablation therapy of incompetent vein, 

extremity, inclusive of all imaging 

guidance and monitoring, percutaneous, 

laser; subsequent vein(s) treated in a 

single extremity, each through separate 

access sites (list separately in addition 

to code for primary procedure)). 

One commenter stated that the 

procedures described by CPT codes 

36465 and 36466 share similar 

characteristics and comparable 

anticipated costs as the procedures 

assigned to APC 5183, and 

consequently, requested an assignment 

to APC 5183 for the two new CPT codes. 

Another commenter noted that CPT 

codes 36473, 36475, and 36478 are 

currently assigned to APC 5183, and 

requested that CMS also assign new CPT 

codes 36465 and 36466 to APC 5183. 

One commenter reported that, in the CY 

2018 MPFS proposed rule, CMS 

proposed a nonfacility payment of 

$1,605.17 for new CPT code 36465 and 

$1,678.23 for new CPT code 36466 for 

CY 2018. This commenter also listed a 

practice expense input price of $1,054 

for the Varithena (foam) used in the 

procedures. 

Response: Because CPT codes 36465 

and 36466 are new codes for CY 2018, 

we have no claims data on which to 

base our payment rate. However, in the 

absence of claims data, we reviewed the 

clinical characteristics of the procedures 

to determine whether they are similar to 

existing procedures. After reviewing 

information from the public 

commenters and input from our clinical 

advisors, we believe that new CPT codes 

36465 and 36466 are clinically similar 

to those procedures assigned to APC 

5053. However, in light of the 

commenter’s reported supply expense of 

$1,054 for the Varithena (foam), we 

believe that an assignment to APC 5054 

is necessary. We note that the final CY 

2018 geometric mean cost for APC 5054 

is approximately $1,567. Therefore, we 

believe that APC 5054 is a more 

appropriate APC assignment for the new 

CPT codes. Consistent with the statutory 

requirement under section 1833(t)(9)(A) 

of the Act, we will reevaluate the APC 

assignment for CPT codes 36465 and 

36466 in the next rulemaking cycle. 

In summary, after consideration of the 

public comments we received, we are 

finalizing our proposal for the APC 

assignment of the procedures described 

by new CPT codes 36465 and 36466, 

with modification. Specifically, we are 

assigning both codes to APC 5054, 

instead of proposed APC 5053, for CY 

2018. Table 56 below lists the final 

status indicator and APC assignments 

for CPT codes 36465 and 36466 for CY 

2018. We refer readers to Addendum B 

to this final rule with comment period 

for the payment rates for all codes 

reported under the OPPS. In addition, 

we refer readers to Addendum A to this 

final rule with comment period for the 

status indicator meanings for all codes 

reported under the OPPS. Both 

Addendum A and Addendum B are 

available via the Internet on the CMS 

Web site. 

TABLE 56—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR CPT CODES 36465 AND 36466 

CPT code 

CY 2018 

OPPS/ASC 

proposed rule 

placeholder 

code 

Long descriptor 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS APC 

CY 2018 OPPS 

payment rate 

36465 ............. 364X5 ............ Injection of non-compounded foam sclerosant with ultrasound 

compression maneuvers to guide dispersion of the 

injectate, inclusive of all imaging guidance and monitoring; 

single incompetent extremity truncal vein (e.g., great saphenous vein, accessory saphenous vein).

T 5054 Refer to OPPS 

Addendum B. 

36466 ............. 364X6 ............ Injection of non-compounded foam sclerosant with ultrasound 

compression maneuvers to guide dispersion of the 

injectate, inclusive of all imaging guidance and monitoring; 

multiple incompetent truncal veins (e.g., great saphenous 

vein, accessory saphenous vein), same leg.

T 5054 Refer to OPPS 

Addendum B. 

23. Skin Substitutes (APCs 5053, 5054, 

and 5055) 

For CY 2018, we proposed to assign 

skin substitute procedures to APCs 5053 

through 5055 (Level 3 through 5 Skin 

Procedures). The cost of the procedures 

is affected by whether the skin 

substitute product is low cost or high 

cost, the surface area of the wound, and 

the location of the wound. 

Comment: Commenters requested that 

CPT codes for large wounds be assigned 

to higher paying APCs. One commenter 

asked that HCPCS code C5277 

(Application of low cost skin substitute 

graft to face, scalp, eyelids, mouth, neck, 

ears, orbits, genitalia, hands, feet, and/ 

or multiple digits, total wound surface 

area greater than or equal to 100 sq cm; 

first 100 sq cm wound surface area, or 

1% of body area of infants and children) 

be moved from APC 5053 (Level 3 Skin 

Procedures) to APC 5054 (Level 4 Skin 

Procedures) and that CPT code 15277 

(Application of skin substitute graft to 

face, scalp, eyelids, mouth, neck, ears, 

orbits, genitalia, hands, feet, and/or 

multiple digits, total wound surface area 

greater than or equal to 100 sq cm; first 

100 sq cm wound surface area, or 1% 

of body area of infants and children) be 

moved from APC 5054 (Level 4 Skin 

Procedures) to APC 5055 (Level 5 Skin 

Procedures). Another commenter 

focused on the payment for large venous 

leg ulcers that are over 100 cm2. This 

commenter requested that the skin 

substitute procedures used to treat large 

venous leg ulcers and other large 

wounds be moved to a higher paying 

APC. 

Response: We reviewed the 

procedures assigned to both APC 5053 

and APC 5054 and continue to believe 

that the procedures described by HCPCS 

code C5277 and CPT code 15277 are 

appropriately assigned to APCs 5053 

and 5054, respectively. While the 

geometric mean cost of the procedure 

described by HCPCS code C5277 

($2,187) is higher than the geometric 

mean cost of other procedures assigned 

to APC 5053 ($488), there are fewer than 

25 single claims billed for the procedure 

described by HCPCS code C5277. 

Therefore, HCPCS code C5277 is not a 

significant procedure code and does not 

create a 2 times rule violation in APC 

5053. Likewise, while the geometric 

mean cost of the procedure described by 

CPT code 15277 ($2,464) is higher than 

the geometric mean cost for all 

procedures assigned to APC 5054 

($1,567), there are fewer than 80 single 

claims billed for the procedure 

described by CPT code 15277. 


sradovich on DSK3GMQ082PROD with RULES2
59314 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

Therefore, CPT code 15277 is not a 

significant procedure and does not 

create a 2 times violation in APC 5054. 

Accordingly, we continue to believe that 

both HCPCS code C5277 and CPT code 

15277 are appropriately assigned to 

APCs 5053 and 5054, respectively. As 

we do every year, we will evaluate the 

costs and APC assignment of both of 

these codes in the next annual 

rulemaking cycle. 

After consideration of the public 

comments we received, we are 

finalizing our proposal for CY 2018 for 

assignment of skin substitute 

procedures to APCs 5053 through 5055, 

including the assignment of HCPCS 

code C5277 to APC 5053 and CPT code 

15277 to APC 5054. 

24. Subdermal Drug Implants for the 

Treatment of Opioid Addiction (APC 

5735) 

In the CY 2018 MPFS proposed rule 

(82 FR 34011 through 34012), CMS 

proposed to establish three G-codes to 

appropriately report the insertion and 

removal of buprenorphine 

hydrochloride, formulated as a 4-rod, 80 

mg, long-acting subdermal drug implant 

for the treatment of opioid addiction (82 

FR 34011 through 34012). Specifically, 

we proposed to establish the following 

HCPCS G-codes: 

• Placeholder HCPCS Code GDDD1 

(Insertion, non-biodegradable drug 

delivery implants, 4 or more); 

• Placeholder HCPCS Code GDDD2 

(Removal, non-biodegradable drug 

delivery implants, 4 or more); and 

• Placeholder HCPCS code GDDD3 

(Removal with reinsertion, nonbiodegradable drug delivery implants, 4 

or more). 

We did not make any proposal related 

to HCPCS codes GDDD1 through 

GDDD3 in the CY 2018 OPPS/ASC 

proposed rule because there are existing 

codes that can be used to report the 

insertion and removal of buprenorphine 

hydrochloride, as well as a HCPCS Jcode to report use of the buprenorphine 

hydrochloride drug. Listed below in 

Table 57 are the specific CPT and 

HCPCS codes for the buprenorphine 

hydrochloride subdermal drug and its 

administration, and the proposed OPPS 

payment rates for CY 2018. 

TABLE 57—PROPOSED CY 2018 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT RATE FOR CPT CODES

11981, 11982, AND 11983 AND HCPCS CODE J0570 

HCPCS code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS APC 

Proposed 

CY 2018 

OPPS 

payment 

rate 

11981 ............. Insertion, non-biodegradable drug delivery implant.Q1 5734 $100.02 Q1 5734 $94.27 

11982 ............. Removal, non-biodegradable drug delivery implant.Q1 5735 263.61 Q1 5735 265.20 

11983 ............. Removal with reinsertion, non-biodegradable drug delivery implant.Q1 5735 263.61 Q1 5735 265.20 

J0570 ............. Buprenorphine implant, 74.2 mg ......... G 9058 * 1,260.59 G 9058 ** 1,261.31 

* The proposed payment rate of $1,260.59 was based on the April 1, 2017 OPPS update. 

** The payment rate of $1,261.31 was based on the October 1, 2017 OPPS update. Payments for the HCPCS drug codes are updated on a 

quarterly basis, and this payment rate will be updated for the January 2018 OPPS update. Refer to the January 2018 OPPS Addendum B payment file for the payment rate. 

Comment: Some commenters 

requested that the MPFS proposal for 

establishment of HCPCS G-codes for 

insertion and removal of buprenorphine 

hydrochloride also apply to the OPPS 

and ASC payment systems. In addition, 

the commenters recommended that 

CMS assign the HCPCS G-codes to APC 

5735 (Level 5 Minor Procedures), which 

had a proposed payment rate of $265.20, 

for CY 2018. 

Response: We agree with the 

commenters that the HCPCS G-codes 

GDDD1 through GDDD3 (now HCPCS 

codes G0516, G0517, and G0518 in this 

final rule with comment period) should 

also be recognized under the OPPS 

because the service associated with the 

insertion and removal of buprenorphine 

hydrochloride can be performed in the 

hospital outpatient department. 

However, because these services are 

conditionally packaged under the OPPS, 

they will be packaged when performed 

in the ASC and, therefore, not separately 

paid. Accordingly, to adequately track 

and improve data collection and 

analysis associated with subdermal 

buprenorphine implants, we are 

recognizing these HCPCS G-codes in the 

OPPS. 

In summary, after consideration of the 

public comments we received, we are 

establishing HCPCS G-codes G0516, 

G0517, and G0518 under the OPPS, 

effective January 1, 2018. Table 58 

below lists the final status indicator and 

APC assignments for HCPCS G-codes 

G0516, G0517, G0518, and HCPCS code 

J0570 for CY 2018. We remind hospitals 

that the HCPCS drug code for 

buprenorphine hydrochloride (HCPCS 

code J0570) should also be reported 

when billing for the subdermal 

administration of the drug. We refer 

readers to Addendum B to this final rule 

with comment period for the payment 

rates for all codes reported under the 

OPPS. In addition, we refer readers to 

Addendum A to this final rule with 

comment period for the status indicator 

meanings for all codes reported under 

the OPPS. Both Addendum A and 

Addendum B are available via the 

Internet on the CMS Web site. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59315 

TABLE 58—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR HCPCS CODES G0516, G0517, G0518 

AND HCPCS CODE J0570 

HCPCS code 

CY 2018 

MPFS 

proposed rule 

placeholder 

code 

Long descriptor CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

CY 2018 OPPS 

payment rate 

G0516 ............ GDDD1 .......... Insertion of non-biodegradable drug delivery implants, 4 or 

more (services for subdermal implants).

Q1 5735 Refer to OPPS 

Addendum B. 

G0517 ............ GDDD2 .......... Removal of non-biodegradable drug delivery implants, 4 or 

more (services for subdermal implants).

Q1 5735 Refer to OPPS 

Addendum B. 

G0518 ............ GDDD3 .......... Removal with reinsertion, non-biodegradable drug delivery 

implants, 4 or more (services for subdermal implants).

Q1 5735 Refer to OPPS 

Addendum B. 

J0570 ............. N/A ................. Buprenorphine implant, 74.2 mg .............................................. G 9058 Refer to OPPS 

Addendum B. 

25. Suprachoroidal Delivery of 

Pharmacologic Agent (APC 5694) 

For CY 2018, as noted in Table 59 

below, we proposed to continue to 

assign CPT codes 67028 and 0465T to 

APC 5694 (Level 4 Drug 

Administration), with a proposed 

payment rate of $286.62. We also 

proposed to continue to assign CPT 

code 67028 to status indicator ‘‘S’’ 

(Procedure or Service, Not Discounted 

When Multiple) and to continue to 

assign CPT code 0465T to status 

indicator ‘‘T’’ (Procedure or Service, 

Multiple Procedure Reduction Applies). 

TABLE 59—PROPOSED CY 2018 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT RATE FOR CPT CODES

67028 AND 0465T 

CPT code Long descriptors CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS APC 

Proposed 

CY 2018 

OPPS 

payment 

rate 

67028 ............. Intravitreal injection of a pharmacologic agent (separate procedure).S 5694 $279.45 S 5694 $286.62 

0465T ............. Suprachoroidal injection of a pharmacologic agent (does not include supply of medication).T 5694 279.45 T 5694 286.62 

Comment: Some commenters stated 

that the different status indicator 

assignment for both CPT codes 67028 

and 0465T appears to be an error and 

contradicts CMS’ decision in the CY 

2017 OPPS/ASC final rule with 

comment period where CMS indicated 

that both procedures are similar from a 

clinical and resource consideration (81 

FR 79617). The commenters reported 

that the different status indicators 

suggest that the procedures are not 

similar. Consequently, the commenters 

requested the reassignment of CPT code 

0465T from status indicator ‘‘T’’ to ‘‘S’’. 

Response: We note that while many 

HCPCS codes within a given APC may 

have the same status indicator, having 

an identical status indicator is not a 

prerequisite for APC assignment. That 

is, assignment of a HCPCS code to an 

APC is based on the resource and 

clinical similarity of the service 

described by the HCPCS code, while 

assignment of a status indicator is based 

on service-specific characteristics. 

Status indicator ‘‘T’’ is used to denote 

that the procedure is subject to the 

multiple procedure reduction under the 

OPPS, while status indicator ‘‘S’’ 

describes a procedure or service that is 

not discounted. Within APC 5694, there 

are four CPT codes that are assigned to 

status indicator ‘‘T’’. These include the 

following procedures: 

• CPT code 0465T (Suprachoroidal 

injection of a pharmacologic agent (does 

not include supply of medication)); 

• CPT code 36593 (Declotting by 

thrombolytic agent of implanted 

vascular access device or catheter); 

• CPT code 37195 (Thrombolysis, 

cerebral, by intravenous infusion); and 

• CPT code 92977 (Thrombolysis, 

coronary; by intravenous infusion). 

As stated earlier, status indicator ‘‘T’’ 

indicates that the service will be 

reduced by 50 percent if it is the lower 

priced service on the same claim with 

another procedure that is also assigned 

to a status indicator ‘‘T’’. For CPT code 

0465T, we expect this reduction to 

occur when there is a separate 

procedure performed on the same day as 

the suprachoroidal injection due to 

significant efficiencies in administering 

the pharmacologic agent. If the 

suprachoroidal injection is performed 

by itself or with a visit, or with a service 

or procedure assigned to status indicator 

‘‘S’’, the multiple procedure reduction 

will not apply. We remind hospitals 

that, when reporting CPT code 0465T, 

the appropriate HCPCS drug code 

should also be reported on the claim. 

Therefore, after consideration of the 

public comments we received, we are 

finalizing our CY 2018 proposal, 

without modification, to continue to 

assign CPT codes 67028 and 0465T to 

status indicator ‘‘S’’ and ‘‘T’’ 

respectively, and to continue to assign 

the CPT codes to APC 5694. Table 60 

below lists the final status indicator and 

APC assignments for both codes for CY 

2018. We refer readers to Addendum B 

to this final rule with comment period 

for the payment rates for all codes 

reported under the OPPS. In addition, 

we refer readers to Addendum A to this 

final rule with comment period for the 

status indicator meanings for all codes 

reported under the OPPS. Both 

Addendum A and Addendum B are 

available via the Internet on the CMS 

Web site. 


sradovich on DSK3GMQ082PROD with RULES2
59316 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 60—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR CPT CODES 67028 AND 0465T 

HCPCS code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

CY 2018 OPPS 

payment rate 

67028 ............. Intravitreal injection of a pharmacologic agent (separate procedure).S 5694 $279.45 S 5694 Refer to OPPS 

Addendum B. 

0465T ............. Suprachoroidal injection of a 

pharmacologic agent (does not 

include supply of medication).

T 5694 279.45 T 5694 Refer to OPPS 

Addendum B. 

26. Transperineal Placement of 

Biodegradeable Material (C–APC 5375) 

For CY 2018, the AMA CPT Editorial 

Panel deleted CPT code 0438T and 

replaced the code with CPT code 55874, 

effective January 1, 2018. CPT code 

0438T was effective July 1, 2016 and 

will be deleted on December 31, 2017. 

Prior to July 2016, the transperineal 

placement of biodegradable material 

procedure was described by HCPCS 

code C9743 (Injection/implantation of 

bulking or spacer material (any type) 

with or without image guidance (not to 

be used if a more specific code applies)), 

which was effective October 1, 2015 and 

was deleted on June 30, 2016, when it 

was replaced with CPT code 0438T, 

effective July 1, 2016. 

Table 61 below lists the complete 

descriptors for the deleted and 

replacement CPT codes. We note that 

the deleted and replacement CPT codes 

were both listed in Addendum B and 

Addendum O to the CY 2018 OPPS/ASC 

proposed rule (which are available via 

the Internet on the CMs Web site). 

Addendum B listed the proposed status 

indicator assignment for the 

replacement code and assigned it to 

comment indicator ‘‘NP’’ (New code for 

the next calendar year or existing code 

with substantial revision to its code 

descriptor in the next calendar year as 

compared to current calendar year, 

proposed APC assignment; comments 

will be accepted on the proposed APC 

assignment for the new code), while 

Addendum O listed the proposed/ 

placeholder CY 2018 CPT codes and the 

long descriptors. 

TABLE 61—CODING CHANGES FOR CPT CODE 55874 

CPT code 

CY 2018 

OPPS/ASC 

proposed rule 

placeholder 

code 

Long descriptor 

0438T ............. N/A ................. Transperineal placement of biodegradable material, peri-prostatic (via needle), single or multiple, includes 

image guidance. 

55874 .............. 55X87 ............ Transperineal placement of biodegradable material, peri-prostatic, single or multiple injection(s), including 

image guidance, when performed. 

As listed in Table 63 below and in 

Addendum B of the CY 2018 OPPS/ASC 

proposed rule, we proposed to delete 

CPT code 0438T (status indicator ‘‘D’’) 

and assign its replacement code, CPT 

code 55874 (placeholder code 55X87), 

to C–APC 5375 (Level 5 Urology and 

Related Services) with a proposed 

payment rate of $3,597.65. As noted in 

Table 62, the predecessor code 0438T 

was assigned to C–APC 5374 (Level 4 

Urology and Related Services), while 

this replacement code is proposed to be 

reassigned to C–APC 5375. We proposed 

to revise the APC assignment for CPT 

code 55874 based on claims data used 

for the CY 2018 OPPS/ASC proposed 

rule. We note that the proposed rule 

claims data was based on claims data 

submitted between January 1, 2016, and 

December 31, 2016, that were processed 

on or before December 31, 2016. For the 

predecessor codes HCPCS codes C9743 

and 0438T that were in effect during CY 

2016, our analysis of the proposed rule 

claims data revealed a geometric mean 

cost of approximately $4,504 based on 

157 single claims (out of 159 total 

claims), which is similar to the 

geometric mean cost of approximately 

$3,742 for C–APC 5375 rather than the 

geometric mean cost of approximately 

$2,714 for C–APC 5374 or the geometric 

mean cost of approximately $7,747 for 

C–APC 5376 (Level 6 Urology and 

Related Services). Based on its clinical 

homogeneity and resource similarity to 

the other procedures assigned to C–APC 

5375, we proposed to reassign 

replacement CPT code 55874 from C– 

APC 5374 to C–APC 5375 for CY 2018. 

TABLE 62—PROPOSED CY 2018 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT RATE FOR CPT CODE

55874 

CPT code 

CY 2018 

OPPS/ASC 

proposed rule 

placeholder 

code 

Short descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS 

APC 

CY 2017 

OPPS 

payment 

rate 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS 

APC 

Proposed 

CY 2018 

OPPS 

payment 

rate 

0438T .............. ......................... Tprnl plmt biodegrdabl matrl ............................. T 5374 $2,542.56 D N/A N/A

55874 ............... 55X87 .............. Tprnl plmt biodegrdabl matrl ............................. N/A N/A N/A T 5375 $3,597.65 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59317 

Comment: One commenter supported 

the reassignment to C–APC 5375 for 

CPT code 55874 and urged CMS to 

finalize the proposal. The commenter 

further indicated that C–APC 5375 is the 

appropriate APC assignment for CPT 

code 55874 based on its clinical and 

resource coherence to the other 

procedures assigned to C–APC 5375. 

While supportive of the assignment to 

C–APC 5375, this same commenter 

expressed concern with the payment for 

the procedure under the ASC payment 

system. The commenter suggested that 

CPT code 55874 should be designated as 

a device-intensive procedure. 

Response: We appreciate the 

commenter’s support. For this final rule 

with comment period, we again 

reviewed the updated claims data 

associated with predecessor HCPCS 

codes C9743 and 0438T. We note that, 

for this final rule with comment period, 

we used claims data with dates of 

service between January 1, 2016, and 

December 31, 2016, that were processed 

on or before June 30, 2017. Our analysis 

of the final rule claims data shows a 

similar pattern for the predecessor 

codes. Specifically, we found a 

geometric mean cost of approximately 

$4,452 for the predecessor codes based 

on 157 single claims (out of 160 total 

claims), which is similar to the 

geometric mean cost of approximately 

$3,704 for C–APC 5375. In addition, our 

analysis of the significant procedures 

within C–APC 5375 shows that the 

geometric mean cost of $4,452 for the 

predecessor codes are similar to the 

costs of the procedures assigned to C– 

APC 5375. Specifically, our analysis 

revealed the range of the significant 

procedures assigned to C–APC 5375 is 

between $3,134 (for CPT code 52320) 

and $5,004 (for CPT code 55875). 

Consequently, we believe that C–APC 

5375 is the most appropriate APC 

assignment for CPT code 55874. 

With regards to the device-intensive 

designation for CPT code 55874, based 

on our analysis of the predecessor 

HCPCS code C9743, this code is not 

eligible for device-intensive status 

because it does not meet the criteria of 

a device offset that is greater than 40 

percent. For more information on how 

codes are designated as device-intensive 

status, we refer readers to section IV.B. 

of this final rule with comment period. 

In summary, after consideration of the 

public comments we received and our 

analysis of the updated claims data for 

this final rule with comment period, we 

are finalizing our CY 2018 proposal, 

without modification, and assigning 

CPT code 55874 to C–APC 5375. Table 

63 below lists the final status indicator 

and APC assignments for CPT code 

55874 for CY 2018. We refer readers to 

Addendum B to this final rule with 

comment period for the payment rates 

for all codes reported under the OPPS. 

In addition, we refer readers to 

Addendum A to this final rule with 

comment period for the status indicator 

meanings for all codes reported under 

the OPPS. Both Addendum A and 

Addendum B are available via the 

Internet on the CMS Web site. 

TABLE 63—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR CPT CODE 55874 

CPT code 

CY 2018 

OPPS/ASC 

proposed rule 

placeholder 

code 

Short descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS 

APC 

CY 2017 

OPPS 

payment 

rate 

CY 2018 

OPPS SI 

CY 2018 

OPPS 

APC 

CY 2018 OPPS 

payment rate 

0438T .............. ......................... Tprnl plmt biodegrdabl matrl ................ T 5374 $2,542.56 D N/A N/A. 

55874 ............... 55X87 .............. Tprnl plmt biodegrdabl matrl ................ N/A N/A N/A T 5375 Refer to OPPS Addendum B. 

27. Transcranial Magnetic Stimulation 

(TMS) Therapy (APCs 5721 and 5722) 

For CY 2018, as listed in Table 64 

below, we proposed to continue to 

assign CPT code 90867 to APC 5722 

(Level 2 Diagnostic Tests and Related 

Services) and to also continue to assign 

CPT code 90869 to APC 5721 (Level 1 

Diagnostic Tests and Related Services). 

However, we proposed to reassign CPT 

code 90868 from APC 5722 to APC 

5721. 

TABLE 64—PROPOSED CY 2018 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT RATE FOR THE

TRANSCRANIAL MAGNETIC STIMULATION (TMS) THERAPY CPT CODES

CPT code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS APC 

Proposed 

CY 2018 

OPPS 

payment 

rate 

90867 ...... Therapeutic repetitive transcranial magnetic stimulation (tms) treatment; initial, 

including cortical mapping, motor threshold determination, delivery and management.

S 5722 $232.31 S 5722 $242.21 

90868 ...... Therapeutic repetitive transcranial magnetic stimulation (tms) treatment; subsequent delivery and management, per 

session.

S 5722 232.31 S 5721 129.59 

90869 ...... Therapeutic repetitive transcranial magnetic stimulation (tms) treatment; subsequent motor threshold re-determination 

with delivery and management.

S 5721 127.10 S 5721 129.59 

Comment: Several commenters 

disagreed with CMS’ proposal to 

reassign CPT code 90868 to APC 5721 

and stated that the proposed payment 

rate does not cover the cost of providing 

the service. One commenter stated that 


sradovich on DSK3GMQ082PROD with RULES2
59318 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

transcranial magnetic stimulation (TMS) 

therapy requires the use of an expensive 

machine, technicians to assist with the 

service, staff to work on insurance 

approvals, and significant time with 

physicians. Another commenter stated 

that the proposed payment rate for CPT 

codes 90868 and 90869 is insufficient, 

and that the cost of providing the 

service exceeds the payment rate. 

Several commenters requested that CMS 

reconsider and increase the payment 

rates for CPT codes 90868 and 90869. 

Response: We proposed to revise the 

APC assignment for CPT code 90868 

and to continue the APC assignment for 

CPT code 90869 based on CY 2016 

claims data used for the CY 2018 OPPS/ 

ASC proposed rule. We note that the 

proposed rule data was based on claims 

data submitted between January 1, 2016, 

and December 31, 2016, that were 

processed on or before December 31, 

2016. For CPT code 90868, our analysis 

of the claims data showed a geometric 

mean cost of approximately $152 for the 

code based on 6,433 single claims (out 

of 6,493 total claims), which is similar 

to the geometric mean cost of 

approximately $135 for APC 5721 rather 

than the geometric mean cost of 

approximately $252 for APC 5722. 

Consequently, we proposed to revise the 

APC assignment for CPT code 90868 to 

APC 5721 rather than continue to assign 

it to APC 5722. For CPT code 90869, our 

claims data showed a geometric mean 

cost of approximately $119 for CPT code 

90869 based on 95 single claims (out of 

96 total claims), which is similar to the 

geometric mean cost of approximately 

$135 for APC 5721. Consequently, we 

proposed to continue to assign CPT 

code 90869 to APC 5721. 

For this final rule with comment 

period, we again reviewed the updated 

claims data associated with CPT codes 

90868 and 90869. We note that, for this 

final rule with comment period, we 

used claims data with dates of service 

between January 1, 2016, and December 

31, 2016, that were processed on or 

before June 30, 2017. Our analysis of the 

final rule claims data revealed a similar 

pattern for both codes. Specifically, we 

found a geometric mean cost of 

approximately $148 for CPT code 90868 

based on 7,258 single claims (out of 

7,312 total claims), which is similar to 

the geometric mean cost of 

approximately $136 for APC 5721, 

rather than the geometric mean cost of 

approximately $249 for APC 5722. Our 

analysis also revealed a geometric mean 

cost of approximately $125 for CPT code 

90869 based on 105 single claims (out 

of 106 total claims), which is 

comparable to the geometric mean cost 

of $136 for APC 5721. Based on our 

analysis of the final rule claims data, we 

believe that APC 5721 is the appropriate 

APC assignment for both CPT codes 

90868 and 90869 based on their clinical 

homogeneity and resource costs to the 

other procedures in APC 5721. 

With regards to the comment that 

TMS therapy requires significant time 

with physicians, we remind readers that 

payments under the OPPS are for 

services provided by hospital outpatient 

facilities, not physician services. We 

note that physician services are paid 

under the MPFS. Medicare payment 

rates for physician services can be found 

on the CMS Physician Fee Schedule 

Web site, specifically at: https://

www.cms.gov/apps/physician-feeschedule/overview.aspx. 

In summary, after consideration of the 

public comments we received, we are 

finalizing our CY 2018 proposal, 

without modification, for CPT codes 

90867, 90868, and 90869. Table 65 

below lists the final status indicator and 

APC assignments for all three CPT 

codes. We refer readers to Addendum B 

to this final rule with comment period 

for the payment rates for all codes 

reported under the OPPS. In addition, 

we refer readers to Addendum A to this 

final rule with comment period for the 

status indicator meanings for all codes 

reported under the OPPS. Both 

Addendum A and Addendum B are 

available via the Internet on the CMS 

Web site. 

TABLE 65—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR THE TRANSCRANIAL MAGNETIC

STIMULATION (TMS) THERAPY CPT CODES

CPT code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

CY 2018 OPPS 

payment rate 

90867 ............. Therapeutic repetitive transcranial 

magnetic stimulation (tms) treatment; initial, including cortical 

mapping, motor threshold determination, delivery and management.

S 5722 $232.31 S 5722 Refer to OPPS 

Addendum B. 

90868 ............. Therapeutic repetitive transcranial 

magnetic stimulation (tms) treatment; subsequent delivery and 

management, per session.

S 5722 232.31 S 5721 Refer to OPPS 

Addendum B. 

90869 ............. Therapeutic repetitive transcranial 

magnetic stimulation (tms) treatment; subsequent motor threshold re-determination with delivery and management.

S 5721 127.10 S 5721 Refer to OPPS 

Addendum B. 

28. Transurethral Waterjet Ablation of 

the Prostate (C–APC 5375) 

On June 5, 2017, the Category B 

Investigational Device Exemption (IDE) 

study associated with the ‘‘Waterjet 

Ablation Therapy for Endoscopic 

Resection of Prostate Tissue II 

(WATER)’’ met CMS’ standards for 

coverage. According to the National 

Institutes of Health (NIH) 

clinicaltrials.gov Web site, the estimated 

completion date of this study is August 

2020. Under Medicare, studies with 

Category A designation are approved for 

coverage of routine services only, while 

studies with the Category B designation 

are approved for coverage of the 

Category B device and related services, 

and routine services. We note that the 

procedure associated with this study is 

currently described by CPT code 0421T. 

Based on the recent Medicare coverage 

of the IDE study, we revised the OPPS 

status indicator assignment for CPT 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59319 

code 0421T from ‘‘E1’’ (Not paid by 

Medicare when submitted on outpatient 

claims (any outpatient bill type)) to ‘‘J1’’ 

(Hospital Part B services paid through a 

comprehensive APC) and assigned the 

code to C–APC 5374 (Level 4 Urology 

and Related Services) to indicate that 

the procedure would be paid separately 

under the OPPS. We announced this 

change through the October 2017 OPPS 

quarterly update CR (Transmittal 3864, 

Change Request 10236, dated September 

15, 2017), and further stated in this 

same CR that the payment would be 

effective on June 5, 2017, which is the 

date of Medicare’s approval for 

coverage. 

In the CY 2018 OPPS/ASC proposed 

rule, we solicited public comments on 

the proposed APC and status indicator 

assignments for the code. Specifically, 

as listed in Table 66 below, we 

proposed to continue to assign CPT 

code 0421T to C–APC 5374 for CY 2018. 

TABLE 66—PROPOSED CY 2018 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT FOR CPT CODE 0421T 

CPT code Long descriptor CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

Proposed 

CY 2018 

OPPS SI 

Proposed 

CY 2018 

OPPS APC 

Proposed 

CY 2018 

OPPS 

payment 

rate 

0421T ............. Transurethral waterjet ablation of 

prostate, including control of postoperative bleeding, including 

ultrasound guidance, complete (vasectomy, meatotomy, 

cystourethroscopy, urethral calibration and/or dilation, and internal 

urethrotomy are included when performed).

J1 5374 $2,542.56 J1 5374 $2,609.60 

Comment: Several commenters 

expressed concern over the proposed 

payment rate for CPT code 0421T and 

requested a reassignment to either C– 

APC 5375 (Level 5 Urology and Related 

Services), which had a proposed 

payment rate of $3,597.65, or C–APC 

5376 (Level 6 Urology and Related 

Services), which had a proposed 

payment rate of $7,448.11 for the 

Aquablation procedure. The 

commenters stated that the proposed 

payment rate for C–APC 5374 does not 

take into account the cost of the device, 

the overhead costs, and the personnel 

costs associated with providing the 

Aquablation procedure. One commenter 

stated that the Aquablation procedure is 

dissimilar to the other procedures 

assigned to C–APC 5374, some of which 

require the use of reusable equipment. 

This same commenter reported that the 

level of complexity in the performing 

the Aquablation procedure is 

comparable to those procedures in C– 

APC 5375 and C–APC 5376. 

Specifically, as indicated by the 

commenter, the Aquablation procedure 

is similar to implanting brachytherapy 

seeds into the prostate (CPT code 55875, 

proposed for assignment to C–APC 

5375), cryoablation of the prostate (CPT 

code 55873, proposed for assignment to 

C–APC 5376), and high intensity 

focused ultrasound (HIFU) of the 

prostate (HCPCS code C9747, proposed 

for assignment to C–APC 5376). Another 

commenter believed the Aquablation 

procedure requires more effort than the 

traditional transurethral resection of the 

prostate (TURP) procedure (CPT code 

52601, proposed for assignment to C– 

APC 5375) or the laser ablation of the 

prostate procedure (GreenLight Laser 

Therapy described by CPT code 52648, 

proposed for assignment to C–APC 

5375), and added that the TURP and 

Aquablation each require general 

anesthesia and take approximately 1 

hour to perform. Several commenters 

stated that the complexity of performing 

the Aquablation procedure is similar to 

the cryoablation of the prostate and 

HIFU procedures, of which both were 

proposed to be assigned to C–APC 5376. 

Consequently, these same commenters 

requested that CMS revisit the APC 

assignment for CPT code 0421T and 

consider a reassignment to C–APC 5376. 

Response: Based on our review of the 

procedure and input from our clinical 

advisors, we believe that a reassignment 

from C–APC 5374 to C–APC 5375 for 

the Aquablation is appropriate. We note 

that this procedure is currently in 

clinical trial with an estimated study 

completion date of August 2020. We 

believe that the procedure is clinically 

similar to other procedures that are 

currently assigned to C–APC 5375. As 

we do every year under the OPPS, we 

will reevaluate the cost of the procedure 

described by CPT code 0421T and its 

APC assignment for next year’s 

rulemaking update. 

In summary, after consideration of the 

public comments, we are finalizing our 

CY 2018 proposal with modification. 

Specifically, we are revising the APC 

assignment for CPT code 0421T from 

proposed C–APC 5374 to C–APC 5375 

for CY 2018. Table 67 below lists the 

final status indicator and APC 

assignments for CPT code 0421T for CY 

2018. We refer readers to Addendum B 

to this final rule with comment period 

for the payment rates for all codes 

reported under the OPPS. In addition, 

we refer readers to Addendum A to this 

final rule with comment period for the 

status indicator meanings for all codes 

reported under the OPPS. Both 

Addendum A and Addendum B are 

available via the Internet on the CMS 

Web site. 


sradovich on DSK3GMQ082PROD with RULES2
59320 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 67—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR CPT U0421T 

CPT code Long descriptors CY 2017 

OPPS SI 

CY 2017 

OPPS APC 

CY 2017 

OPPS 

payment 

rate 

CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

CY 2018 OPPS 

payment 

rate 

0421T ............. Transurethral waterjet ablation of 

prostate, including control of 

post-operative bleeding, including ultrasound guidance, complete (vasectomy, meatotomy, 

cystourethroscopy, urethral calibration and/or dilation, and internal urethrotomy are included 

when performed).

J1 5374 $2,542.56 J1 5375 Refer to OPPS 

Addendum B. 

29. Transurethral Water Vapor Thermal 

Therapy of the Prostate (C–APC 5373) 

For CY 2018, CMS received a New 

Technology APC application requesting 

a new HCPCS code for the Rezu ̄m 

therapy. The Rezu ̄m procedure is a new 

treatment, and the Rezu ̄m System 

associated with this procedure received 

a 510(k) FDA clearance on August 27, 

2015. The procedure utilizes water 

vapor for the treatment of benign 

prostatic hypertrophy (BPH). The 

applicant maintained that there was 

coding confusion about whether the 

procedure could be described by 

existing CPT code 53852 (Transurethral 

destruction of prostate tissue; by 

radiofrequency thermotherapy). We note 

that CPT code 53852 is assigned to C– 

APC 5375 (Level 5 Urology and Related 

Services), which has a geometric mean 

cost of approximately $3,704 for CY 

2018. 

Based on our review of the 

application, the procedure, and input 

from our clinical advisors, we agree that 

CPT code 53852 does not appropriately 

describe the Rezu ̄m procedure. 

Consequently, we are establishing 

HCPCS code C9748 to appropriately 

describe the procedure. Effective 

January 1, 2018, HOPDs should report 

HCPCS code C9748 to report the use of 

the Rezu ̄m procedure for the treatment 

of BPH. In addition, based on cost 

information submitted to CMS in the 

application, we believe that the 

procedure should appropriately be 

assigned to C–APC 5373 (Level 3 

Urology and Related Services), which 

has a geometric mean cost of 

approximately $1,695. We believe the 

Rezu ̄m procedure shares similar 

resource and clinical homogeneity to 

the other procedures currently assigned 

to C–APC 5373. 

Table 68 below lists the final status 

indicator and APC assignments for 

HCPCS code C9748 for CY 2018. We 

refer readers to Addendum B to this 

final rule with comment period for the 

payment rates for all codes reported 

under the OPPS. In addition, we refer 

readers to Addendum A to this final 

rule with comment period for the status 

indicator meanings for all codes 

reported under the OPPS. Both 

Addendum A and Addendum B are 

available via the Internet on the CMS 

Web site. 

TABLE 68—FINAL CY 2018 STATUS INDICATOR (SI) AND APC ASSIGNMENT FOR THE TRANSURETHRAL WATER VAPOR

THERMAL THERAPY OF THE PROSTATE

HCPCS code Long descriptor 

CY 2018 

OPPS 

SI 

CY 2018 

OPPS 

APC 

CY 2018 

OPPS 

payment rate 

C9748 ............ Transurethral destruction of prostate tissue; by radiofrequency water vapor 

(steam) thermal therapy.

J1 5373 Refer to OPPS 

Addendum B. 

We note that HCPCS code C9748 is 

assigned to comment indicator ‘‘NI’’ in 

Addendum B to this CY 2018 OPPS/ 

ASC final rule with comment period to 

indicate that we have assigned the code 

an interim OPPS payment status for CY 

2018. We are inviting public comments 

on the interim status indicator and APC 

assignments that will be finalized in the 

CY 2019 OPPS/ASC final rule with 

comment period. 

IV. OPPS Payment for Devices 

A. Pass-Through Payments for Devices 

1. Beginning Eligibility Date for Device 

Pass-Through Status and Quarterly 

Expiration of Device Pass-Through 

Payments 

a. Background 

Under section 1833(t)(6)(B)(iii) of the 

Act, the period for which a device 

category eligible for transitional passthrough payments under the OPPS can 

be in effect is at least 2 years but not 

more than 3 years. Prior to CY 2017, our 

regulation at 42 CFR 419.66(g) provided 

that this pass-through payment 

eligibility period began on the date CMS 

established a particular transitional 

pass-through category of devices, and 

we based the pass-through status 

expiration date for a device category on 

the date on which pass-through 

payment was effective for the category. 

In the CY 2017 OPPS/ASC final rule 

with comment period (81 FR 79654), in 

accordance with section 

1833(t)(6)(B)(iii)(II) of the Act, we 

amended § 419.66(g) to provide that the 

pass-through eligibility period for a 

device category begins on the first date 

on which pass-through payment is made 

under the OPPS for any medical device 

described by such category. 

In addition, prior to CY 2017, our 

policy was to propose and finalize the 

dates for expiration of pass-through 

status for device categories as part of the 

OPPS annual update. This means that 

device pass-through status would expire 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59321 

at the end of a calendar year when at 

least 2 years of pass-through payments 

have been made, regardless of the 

quarter in which the device was 

approved. In the CY 2017 OPPS/ASC 

final rule with comment period (81 FR 

79655), we changed our policy to allow 

for quarterly expiration of pass-through 

payment status for devices, beginning 

with pass-through devices approved in 

CY 2017 and subsequent calendar years, 

to afford a pass-through payment period 

that is as close to a full 3 years as 

possible for all pass-through payment 

devices. We refer readers to the CY 2017 

OPPS/ASC final rule with comment 

period (81 FR 79648 through 79661) for 

a full discussion of the changes to the 

device pass-through payment policy. 

We also have an established policy to 

package the costs of the devices that are 

no longer eligible for pass-through 

payments into the costs of the 

procedures with which the devices are 

reported in the claims data used to set 

the payment rates (67 FR 66763). 

b. Expiration of Transitional PassThrough Payments for Certain Devices 

As stated earlier, section 

1833(t)(6)(B)(iii) of the Act requires that, 

under the OPPS, a category of devices 

be eligible for transitional pass-through 

payments for at least 2 years, but not 

more than 3 years. There currently are 

three device categories eligible for passthrough payment: (1) HCPCS code 

C2623 (Catheter, transluminal 

angioplasty, drug-coated, non-laser), 

which was established effective April 1, 

2015; (2) HCPCS code C2613 (Lung 

biopsy plug with delivery system), 

which was established effective July 1, 

2015; and (3) HCPCS code C1822 

(Generator, neurostimulator 

(implantable), high frequency, with 

rechargeable battery and charging 

system), which was established effective 

January 1, 2016. The pass-through 

payment status of the device categories 

for HCPCS codes C2623, C2613, and 

C1822 will end on December 31, 2017. 

We note that our new policy adopted in 

the CY 2017 OPPS/ASC final rule with 

comment period to allow for quarterly 

expiration of pass-through payment 

status for devices applies to devices 

approved in CY 2017 and subsequent 

years. As all the devices in these three 

device categories were approved prior to 

CY 2017, we are applying our policy to 

expire them at the end of the calendar 

year when at least 2 years of passthrough payments have been made. 

Therefore, in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33610), we 

proposed, beginning in CY 2018, to 

package the costs of each of the devices 

described by HCPCS codes C2623, 

C2613, and C1822 into the costs related 

to the procedure with which each 

device is reported in the hospital claims 

data. 

Comment: Various stakeholders, 

including physicians, device 

manufacturers, and professional 

societies, opposed the proposal to 

package the costs of the device 

described by HCPCS code C2623 into 

the costs related to the procedure(s) 

with which the device is reported. The 

commenters specifically opposed 

packaging of the cost of the drug-coated 

balloons into the procedure described 

by CPT code 37224 (Revascularization, 

endovascular, open or percutaneous, 

femoral, popliteal artery(s), unilateral; 

with transluminal angioplasty). These 

commenters stated concerns that the 

proposed payment rate for this 

procedure did not adequately reflect the 

additional costs of drug-coated balloons 

over non-drug-coated balloons, which 

could limit patient access to the 

technology. Several commenters 

described the clinical benefits provided 

by the drug-coated balloon in the 

treatment of peripheral arterial disease 

(PAD) and supported the continuation 

of the pass-through status of the device 

category for HCPCS code C2623 beyond 

December 31, 2017. At the August 21, 

2017 meeting of the HOP Panel, the 

HOP Panel made a recommendation that 

CMS continue to track CPT code 37224 

(Revascularization, endovascular, open 

or percutaneous, femoral, popliteal 

artery(s), unilateral; with transluminal 

angioplasty) with HCPCS code C2623, 

and that the appropriate HOP Panel 

subcommittee review the APCs for 

endovascular procedures to determine 

whether more granularity (that is, more 

APCs) is warranted. One commenter 

supported the proposal to package the 

costs of the device described by HCPCS 

code C2623 into the costs related to the 

procedure(s) with which the device is 

reported. The commenter stated that the 

proposed payment rate provided under 

the OPPS for procedures using drugcoated balloons was appropriate. This 

commenter also stated concerns over a 

lack of scientific evidence of the 

effectiveness of these devices outside of 

clinical trials. 

Response: As mentioned earlier, 

under section 1833(t)(6)(B)(iii) of the 

Act, the period for which a device 

category eligible for transitional passthrough payments under the OPPS can 

be in effect is at least 2 years but not 

more than 3 years. Our policy for 

devices approved for pass-through 

payment status prior to CY 2017 is to 

propose and finalize the dates for 

expiration of pass-through payment 

status for device categories as part of the 

OPPS annual update. This means that 

device pass-through payment status 

would expire at the end of a calendar 

year when at least 2 years of passthrough payments had been made, 

regardless of the quarter in which the 

device was approved for pass-through 

payment status. According to our 

established policy (67 FR 66763), after 

this eligibility period expires, payments 

for the costs of the device(s) are 

packaged into payment for the 

procedures with which they are billed. 

The device category for HCPCS code 

C2623 was established effective April 1, 

2015, and will have been in effect for a 

period of at least 2 years, but not more 

than 3 years, when its eligibility expires 

on December 31, 2017. Therefore, this 

category is no longer eligible for passthrough payments. In accordance with 

our established policy, we are finalizing 

our proposal to package payment for the 

costs of the device(s) described by this 

category into payment for the costs of 

the procedures with which they are 

reported. In response to the 

recommendation of the HOP Panel from 

the August 21, 2017 meeting, we will 

continue to track CPT code 37224 

(Revascularization, endovascular, open 

or percutaneous, femoral, popliteal 

artery(s), unilateral; with transluminal 

angioplasty) with HCPCS code C2623. 

We will share information on all items 

and services paid under the OPPS, 

including endovascular procedures, so 

that the appropriate HOP Panel 

subcommittee may review the APCs for 

endovascular procedures and advise on 

whether more granularity (that is, more 

APCs) is warranted. 

Comment: Some commenters, 

including device manufacturers and 

associations, stated that the geometric 

mean costs of the procedure described 

by CPT code 37224 involving a drugcoated balloon were higher than the 

geometric mean costs of the same 

angioplasty procedure when a drugcoated balloon was not used and a plain 

balloon angioplasty catheter was used 

instead. Specifically, these commenters 

presented their analysis of Medicare 

claims data which suggested that when 

CPT code 37224 is billed with HCPCS 

code C2623, the geometric mean cost of 

these claims is $8,483, while the 

geometric mean cost of claims including 

CPT code 37224 without HCPCS code 

C2623 is $6,396. The commenters also 

noted that the total geometric mean 

costs for CPT code 37224, regardless of 

whether HCPCS code C2623 is billed 

with CPT code 37224, is approximately 

$7,153. These commenters requested 

that CMS create a new procedural 

HCPCS C-code or G-code for hospitals to 


sradovich on DSK3GMQ082PROD with RULES2
59322 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

use to differentiate procedures 

described by CPT code 37224 that use 

drug-coated balloons from procedures 

described by CPT code 37224 that use 

plain balloon angioplasty catheters, 

with a suggested descriptor of 

‘‘Revascularization, endovascular, open 

percutaneous, femoral, popliteal 

artery(s), unilateral; with transluminal 

drug-coated balloon angioplasty’’. 

One commenter also referenced the 

proposal in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33579 and 33580) 

to establish a HCPCS C-code to describe 

blue light cystoscopy (HCPCS code 

C9738 (Adjunctive blue light cystoscopy 

with fluorescent imaging agent (List 

separately in addition to code for 

primary procedure)) and to apply the 

C–APC complexity adjustment policy 

when this C-code is billed with specific 

white light cystoscopy codes. The 

commenter pointed out that, in the 

proposed rule, CMS stated that 

establishment of this C-code was 

appropriate because CMS believed that 

blue light cystoscopy is a 

distinguishable service in comparison to 

white light cystoscopy alone. CMS 

further stated that, with the C–APC 

complexity adjustment, qualifying 

combinations of the blue light 

cystoscopy C-code and white light 

cystoscopy codes are paid at the next 

higher paying C–APC when billed 

together on the same claim. The 

commenter requested that CMS take 

comparable steps to separately identify 

and pay for angioplasty procedures 

involving drug-coated balloons. 

Finally, several commenters 

referenced the HOP Panel’s 

recommendation that CMS examine the 

number of APCs for endovascular 

procedures for CY 2018 and requested 

CMS create two new levels within the 

Endovascular C–APCs to provide higher 

payment for angioplasty procedures 

using a drug-coated balloon. 

Response: We believe that procedures 

with which the drug-coated balloons are 

used, specifically the procedure 

described by CPT code 37224, are 

appropriately described by the existing 

procedure code and do not believe it is 

necessary at this time to establish a 

HCPCS C-code or G-code to distinguish 

an angioplasty procedure with a drugcoated balloon from an angioplasty 

procedure without a drug-coated 

balloon. The OPPS is a prospective 

payment system that relies on the 

principles of averaging, with some cases 

in an APC being more costly than others 

(and some cases being less costly). 

Although there is some evidence of 

higher geometric mean costs when a 

drug-coated balloon is used for certain 

angioplasty procedures versus a plain 

balloon angioplasty catheter, the higher 

costs of the procedures involving the 

drug-coated balloon are reflected in the 

claims data. Our analysis of the final 

rule claims data revealed a geometric 

mean cost of approximately $7,029 for 

CPT code 37224 based on 11,346 single 

claims (out of 11,437 total claims). CPT 

code 37224 is assigned to C–APC 5192 

(Level 2 Endovascular Procedures), 

which has a geometric mean cost of 

approximately $5,081. There is no 2 

times violation in this C–APC. We also 

do not believe a C–APC complexity 

adjustment would be applicable, based 

on existing criteria used to assign a 

complexity adjustment. We do not 

believe that the example the commenter 

raised is entirely analogous because the 

HCPCS C-code that the commenter 

referenced necessarily involves an 

additional procedure (blue light 

cystoscopy) in addition to white light 

cystoscopy and the administration of 

the fluorescent imaging agent is 

required, which adds additional 

procedure time. In contrast, the use of 

a drug coated balloon does not involve 

a separate procedure. 

We note that stakeholders who are 

interested in the establishment of a CPT 

procedure code to describe angioplasty 

procedures involving the use of drugcoated balloons may request a new 

procedure code from the AMA CPT 

Editorial Panel. 

With regard to the request to create 

additional levels within the Vascular C– 

APC clinical family, this issue is 

discussed in greater detail in section 

III.D. of this final rule with comment 

period. As we do every year, we will 

review and evaluate the APC groupings 

based on the latest available data in the 

next rulemaking cycle. 

Comment: Several commenters 

requested that HCPCS code C1822 

(Generator, neurostimulator 

(implantable), high frequency, with 

rechargeable battery and charging 

system), otherwise known as the Senza 

SCS System, receive an additional year 

of pass-through payment status for CY 

2018. Reasons stated by the commenters 

included: (1) A belief that CMS has the 

authority under current law to extend 

pass-through payment status for one 

more year, for a total of 3 years, and 

that, although CMS’ policy to allow 

devices with transitional pass-through 

payment status as close to 3 years as 

possible was effective for device 

approvals on or after January 1, 2017, 

CMS has the authority to grant the third 

year of pass-through payment status on 

a case-by-case basis for devices that 

were granted pass-through payment 

status prior to CY 2017 based on 

specific characteristics of the device and 

procedure with which it is used; (2) the 

reported costs for devices described by 

HCPCS code C1822 in CY 2016 were 

lower than actual cost for the device due 

to hospital CCR ratios used to calculate 

device cost instead of implantable 

device CCRs, which were used for many 

hospitals to calculate device costs 

starting in CY 2017; (3) the reported 

costs for devices described by HCPCS 

C1822 in CY 2016 were lower than 

actual costs due to hospital cost 

reporting errors, billing of HCPCS code 

C1822 by hospitals that, according to 

the device manufacturer, had not 

purchased the device, hospitals not 

reporting use of the device, and other 

claims reporting problems; and (4) 

ending pass-through payment status 

would reduce access to the Senza SCS 

System. The commenters stated that the 

Senza SCS System helps beneficiaries 

manage chronic pain and reduces 

opioid usage among beneficiaries with 

the device. 

Response: Historically, a device 

approved for pass-through payment 

status under the OPPS had an eligibility 

period of at least 2 years but no more 

than 3 years—with the pass-through 

payment period starting on the date 

when CMS established a particular 

transitional category of devices (80 FR 

70415) and expiring at the end of a 

calendar year when at least 2 years but 

no more than 3 years have passed. 

Effective January 1, 2017, we revised 

our policy to allow for a quarterly 

expiration of pass-through payment 

status for devices to afford a passthrough payment period that is as close 

to a full 3 years as possible for all passthrough payment devices (81 FR 79655). 

HCPCS code C1822 was established as 

a pass-through payment category on 

January 1, 2016, and will have received 

2 years of pass-through payment status 

on December 31, 2017, in accordance 

with the statutory requirement of 

receiving at least 2 years of pass-through 

payments, but not more than 3 years, 

and consistent with the policy in effect 

at the time the device pass-through 

payment period began for HCPCS code 

C1822. Accordingly, the policy adopted 

in CY 2017 does not apply to devices 

approved for pass-through payment 

status prior to that date. Likewise, the 

change in CY 2017 from using the 

average hospital-wide CCR to the 

implantable device CCR also was a 

prospective policy change to use the 

best available data in a given year to 

determine device pass-through 

payment. 

With respect to comments expressing 

concerns that the reported costs for 

HCPCS code C1822 for CY 2016 were 

lower due to hospital cost reporting 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59323 

errors, as we have stated in Section 20.5 

(Clarification of HCPCS Code to 

Revenue Code Reporting) of Chapter 4 

of the Medicare Claims Processing 

Manual, hospitals are responsible for 

reporting the correct revenue code on 

the claim form. Specifically, we state 

that we do not instruct hospitals on how 

to report the assignment of HCPCS 

codes to revenue codes for services 

provided under OPPS because hospitals’ 

costs vary. Where explicit instructions 

are not provided, providers should 

report their charges under the revenue 

code that will result in the charges being 

assigned to the same cost center to 

which the cost of those services are 

assigned in the cost report. We note that 

the Medicare cost report form allows 

hospitals to report in a manner that is 

consistent with their own financial 

accounting systems and, therefore, 

should be accurate for each individual 

hospital. Moreover, we believe that the 

cost report data and their use in the 

OPPS cost estimation and payment rate 

development process, combined with 

potential penalties for inaccurate 

reporting, provide financial incentives 

for hospitals to report costs accurately. 

Furthermore, as we have stated 

repeatedly, beyond our standard OPPS 

trimming methodology that we apply to 

those claims that have passed various 

types of claims processing edits, it is not 

our general policy to judge the accuracy 

of hospital coding and charging for 

purposes of ratesetting. (We refer 

readers to the CY 2011 OPPS/ASC final 

rule with comment period (75 FR 

71838) for further discussion.) 

Commenters writing in support of 

extending the pass-through payment 

period for HCPCS code C1822 also 

stated that access to the service covered 

by HCPCS code C1822 could be reduced 

if pass-through payment status for 

HCPCS code C1822 is removed. Because 

reported costs for CPT code 63685 

appear to be consistent with or without 

being reported in combination with 

HCPCS code C1822, we do not 

anticipate a significant impact to the 

payment amount for CPT code 63685 

once HCPCS code C1822 is removed 

from pass-through payment status. We 

anticipate that hospitals will be able to 

adjust to any possible changes to the 

payment for the service. 

Comment: One commenter, another 

device manufacturer, agreed with CMS’ 

proposal to end pass-through payment 

status of HCPCS code C1822 on 

December 31, 2017, stating that the 

decision to end pass-through payment 

status is consistent with CMS policy 

and there is no need to apply the policy 

established in CY 2017 retroactively. 

Response: We appreciate the 

commenter’s support. 

We did not receive any public 

comments regarding the proposal to 

package the payment for the costs of the 

device described by HCPCS code C2623 

into the payment for the costs related to 

the procedure with which the device is 

reported. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to package the payment 

for the costs of each of the devices 

described by HCPCS codes C2623, 

C2613, and C1822 into the payment for 

the costs related to the procedure with 

which each device is reported in the 

hospital claims data. 

2. New Device Pass-Through 

Applications 

a. Background 

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

for pass-through payments for devices, 

and section 1833(t)(6)(B) of the Act 

requires CMS to use categories in 

determining the eligibility of devices for 

pass-through payments. As part of 

implementing the statute through 

regulations, we have continued to 

believe that it is important for hospitals 

to receive pass-through payments for 

devices that offer substantial clinical 

improvement in the treatment of 

Medicare beneficiaries to facilitate 

access by beneficiaries to the advantages 

of the new technology. Conversely, we 

have noted that the need for additional 

payments for devices that offer little or 

no clinical improvement over 

previously existing devices is less 

apparent. In such cases, these devices 

can still be used by hospitals, and 

hospitals will be paid for them through 

appropriate APC payment. Moreover, a 

goal is to target pass-through payments 

for those devices where cost 

considerations might be most likely to 

interfere with patient access (66 FR 

55852; 67 FR 66782; and 70 FR 68629). 

As specified in regulations at 42 CFR 

419.66(b)(1) through (b)(3), to be eligible 

for transitional pass-through payment 

under the OPPS, a device must meet the 

following criteria: (1) If required by 

FDA, the device must have received 

FDA approval or clearance (except for a 

device that has received an FDA 

investigational device exemption (IDE) 

and has been classified as a Category B 

device by the FDA), or another 

appropriate FDA exemption; and the 

pass-through payment application must 

be submitted within 3 years from the 

date of the initial FDA approval or 

clearance, if required, unless there is a 

documented, verifiable delay in U.S. 

market availability after FDA approval 

or clearance is granted, in which case 

CMS will consider the pass-through 

payment application if it is submitted 

within 3 years from the date of market 

availability; (2) the device is determined 

to be reasonable and necessary for the 

diagnosis or treatment of an illness or 

injury or to improve the functioning of 

a malformed body part, as required by 

section 1862(a)(1)(A) of the Act; and (3) 

the device is an integral part of the 

service furnished, is used for one 

patient only, comes in contact with 

human tissue, and is surgically 

implanted or inserted (either 

permanently or temporarily), or applied 

in or on a wound or other skin lesion. 

In addition, according to § 419.66(b)(4), 

a device is not eligible to be considered 

for device pass-through payment if it is 

any of the following: (1) Equipment, an 

instrument, apparatus, implement, or 

item of this type for which depreciation 

and financing expenses are recovered as 

depreciation assets as defined in 

Chapter 1 of the Medicare Provider 

Reimbursement Manual (CMS Pub. 15– 

1); or (2) a material or supply furnished 

incident to a service (for example, a 

suture, customized surgical kit, or clip, 

other than a radiological site marker). 

Separately, we use the following 

criteria, as set forth under § 419.66(c), to 

determine whether a new category of 

pass-through payment devices should 

be established. The device to be 

included in the new category must— 

• Not be appropriately described by 

an existing category or by any category 

previously in effect established for 

transitional pass-through payments, and 

was not being paid for as an outpatient 

service as of December 31, 1996; 

• Have an average cost that is not 

‘‘insignificant’’ relative to the payment 

amount for the procedure or service 

with which the device is associated as 

determined under § 419.66(d) by 

demonstrating: (1) The estimated 

average reasonable costs of devices in 

the category exceeds 25 percent of the 

applicable APC payment amount for the 

service related to the category of 

devices; (2) the estimated average 

reasonable cost of the devices in the 

category exceeds the cost of the devicerelated portion of the APC payment 

amount for the related service by at least 

25 percent; and (3) the difference 

between the estimated average 

reasonable cost of the devices in the 

category and the portion of the APC 

payment amount for the device exceeds 

10 percent of the APC payment amount 

for the related service (with the 

exception of brachytherapy and 

temperature-monitored cryoblation, 

which are exempt from the cost 


sradovich on DSK3GMQ082PROD with RULES2
59324 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

requirements as specified at 

§§ 419.66(c)(3) and (e)); and 

• Demonstrate a substantial clinical 

improvement, that is, substantially 

improve the diagnosis or treatment of an 

illness or injury or improve the 

functioning of a malformed body part 

compared to the benefits of a device or 

devices in a previously established 

category or other available treatment. 

Beginning in CY 2016, we changed 

our device pass-through evaluation and 

determination process. Device passthrough applications are still submitted 

to CMS through the quarterly 

subregulatory process, but the 

applications will be subject to noticeand-comment rulemaking in the next 

applicable OPPS annual rulemaking 

cycle. Under this process, all 

applications that are preliminarily 

approved upon quarterly review will 

automatically be included in the next 

applicable OPPS annual rulemaking 

cycle, while submitters of applications 

that are not approved upon quarterly 

review will have the option of being 

included in the next applicable OPPS 

annual rulemaking cycle or 

withdrawing their application from 

consideration. Under this notice-andcomment process, applicants may 

submit new evidence, such as clinical 

trial results published in a peerreviewed journal or other materials for 

consideration during the public 

comment process for the proposed rule. 

This process allows those applications 

that we are able to determine meet all 

the criteria for device pass-through 

payment under the quarterly review 

process to receive timely pass-through 

payment status, while still allowing for 

a transparent, public review process for 

all applications (80 FR 70417 through 

70418). 

More details on the requirements for 

device pass-through payment 

applications are included on the CMS 

Web site in the application form itself 

at: http://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

HospitalOutpatientPPS/passthrough_

payment.html, in the ‘‘Downloads’’ 

section. In addition, CMS is amenable to 

meeting with applicants or potential 

applicants to discuss research trial 

design in advance of any device passthrough application or to discuss 

application criteria, including the 

substantial clinical improvement 

criterion. 

b. Applications Received for Device 

Pass-Through Payment for CY 2018 

We received five applications by the 

March 1, 2017 quarterly deadline, 

which was the last quarterly deadline 

for applications to be received in time 

to be included for the CY 2018 OPPS/ 

ASC proposed rule. All applications 

were received in the second quarter of 

2016. None of the five applications were 

approved for device pass-through 

payment during the quarterly review 

process. 

Applications received for the later 

deadlines for the remaining 2017 

quarters (June 1, September 1, and 

December 1), if any, will be presented 

in the CY 2019 OPPS/ASC proposed 

rule. We note that the quarterly 

application process and requirements 

have not changed in light of the 

addition of rulemaking review. Detailed 

instructions on submission of a 

quarterly device pass-through payment 

application are included on the CMS 

Web site at: https://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/ 

Downloads/catapp.pdf. A discussion of 

the five applications received by the 

March 1, 2017 deadline is presented 

below, as detailed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33611 

through 33618). 

(1) Architect® Px 

Harbor MedTech, Inc. submitted an 

application for a new device category 

for transitional pass-through payment 

status for Architect® Px. Architect® Px 

is a collagen biomatrix comprised of a 

stabilized extracellular matrix derived 

from equine pericardium. The equine 

pericardium is stabilized to become a 

catalyst and scaffold for use by 

autologous tissue regeneration factors. 

Architect® Px is packaged as an 

individual unit in sizes ranging from 2 

cm x 2 cm up to 10 cm x 15 cm and 

is approximately 0.75 mm thick. 

Architect® Px typically requires only 

one application. The applicant asserted 

that it is clinically superior to other skin 

substitutes that work by flooding the 

wound with nonautologous collagen 

and growth factors because Architect®

Px attracts and concentrates the 

patient’s own autologous collagen and 

growth factors to support healing. 

With respect to the newness criterion 

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

FDA clearance for Architect® Px on 

September 12, 2014, and its June 1, 2016 

application was submitted within 3 

years of FDA clearance. However, Unite 

BioMatrix, cleared by the FDA on June 

20, 2007, is claimed as a predicate of 

Architect® Px. The Architect® Px 

application states that ‘‘. . . while 

packaged differently, Architect® Px and 

Unite BioMatrix are identical . . . they 

are both stabilized equine pericardium 

manufactured using the same processes 

. . . .’’ If the date for FDA clearance for 

Unite BioMatrix is used to evaluate the 

newness criterion, Architect® Px may 

not meet the newness criterion. We 

invited public comments on this issue. 

Comment: One commenter, the 

manufacturer, stated that Architect® Px 

is substantially different than its 

predicate product, Unite Biomatrix, and 

should be considered to meet the 

newness criterion for device passthrough payment. The commenter 

pointed out the following: Architect® Px 

uses a different process from Unite 

Biomatrix to stabilize the equine 

pericardium. Architect® Px is dehydrated, packaged dry in a foil pouch, 

and is sterilized by radiation. Unite 

Biomatrix is packaged wet in a jar and 

is not sterilized using radiation. The 

new process that is used to 

manufacturer Architect® Px was found 

by researchers in 2016 to add key 

properties to the device that promote 

the use of endogenous collagen and 

growth factors to support healing. The 

commenter implied that Unite 

Biomatrix does not contain these key 

properties. 

Response: The statements by the 

manufacturer about the differences in 

performance between Architect® Px and 

Unite Biomatrix appear to be different 

than what was stated in the device passthrough application. The application 

stated that, despite different packaging, 

the two products were identical. 

However, we acknowledge that the 

research cited by the manufacturer of 

substantial performance differences 

between Architect® Px and Unite 

Biomatrix is from 2016, and the findings 

may not have been available when the 

device pass-through payment 

application was submitted. For 

purposes of the device pass-through 

payment process, we are persuaded by 

this additional information and have 

determined that Architect® Px does 

meet the newness criterion based on the 

additional performance information 

supplied by the manufacturer. 

With respect to the eligibility criterion 

at § 419.66(b)(3), according to the 

applicant, Architect® Px is a skin 

substitute product that is integral to the 

service provided, is used for one patient 

only, comes in contact with human 

skin, and is surgically inserted into the 

patient. The applicant also claims 

Architect® Px meets the device 

eligibility requirements of § 419.66(b)(4) 

because Architect® Px is not an 

instrument, apparatus, implement, or 

item for which depreciation and 

financing expenses are recovered, and it 

is not a supply or material. 

The criteria for establishing new 

device categories are specified at 

§ 419.66(c). The first criterion, at 

§ 419.66(c)(1), provides that CMS 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59325 

3Snyder, D.L. et al. Skin Substitutes for Treating 

Chronic Wounds. Technology Assessment Report. 

Project ID: HCPR0610. AHRQ. December 18, 2012. 

4Alexander JH, Yeager DA, et al. Equine 

Pericardium as a Biological Covering for the 

Treatment of Diabetic Foot Wounds; a Prospective 

Study. J Am Podiatric Assoc., 2012 Sep–Oct.:102 

(5): 352–358. 

determines that a device to be included 

in the category is not appropriately 

described by any of the existing 

categories or by any category previously 

in effect, and was not being paid for as 

an outpatient service as of December 31, 

1996. We have not identified an existing 

pass-through category that describes 

Architect® Px. Harbor MedTech, Inc. 

suggested a new device category 

descriptor of ‘‘Stabilized Skin Substitute 

for Autologous Tissue Regeneration’’ for 

Architect® Px. We invited public 

comments on this issue. 

We did not receive any public 

comments on this issue. We are 

confirming that there is no existing 

pass-through category that describes 

Architect® Px and have determined that 

Architect® Px meets this eligibility 

criterion. 

The second criterion for establishing 

a device category, at § 419.66(c)(2), 

provides that CMS determines that a 

device to be included in the category 

has demonstrated that it will 

substantially improve the diagnosis or 

treatment of an illness or injury or 

improve the functioning of a malformed 

body part compared to the benefits of a 

device or devices in a previously 

established category or other available 

treatment. With regard to the substantial 

clinical improvement criterion, the 

applicant only identified two references, 

neither of which we believe provide 

evidence of substantial clinical 

improvement. One reference is a 2012 

summary report 3 of skin substitute 

products that can be used to treat 

chronic wounds that only describes 

characteristics of the predecessor 

product to Architect® Px with no 

efficacy or performance information. 

The second reference 4 is a small 

observational study of 34 subjects with 

no comparison group. We invited public 

comments on whether Architect® Px 

meets the substantial clinical 

improvement criterion. 

Comment: One commenter, the 

manufacturer, stated that the inclusion 

of stabilized equine pericardium is an 

extremely important property of 

Architect® Px and Unite Biomatrix, and 

that this property allows these products 

to stay on a chronic wound, resist 

degradation, and remain on the wound 

until it heals. The commenter stated that 

Architect® Px is a nondegrading skin 

substitute that constantly supports 

healing and does not need to be 

reapplied. The commmenter also stated 

that skin substitutes that degrade need 

to be reapplied multiple times and there 

is the risk that reapplying the skin 

substitute may interrupt the wound 

healing process which drives up the 

costs of medical care. The commenter 

believed that Architect® Px is the first 

skin substitute that totally aligned with 

the Quality and Value of Care objectives 

of the Medicare Access and CHIP 

Reauthorization Act of 2015 (MACRA). 

Lastly, the commenter stated that other 

skin substitute products have previously 

received pass-through payment 

approval by presenting similar data as 

have been presented for Architect® Px. 

Response: The commenter has 

provided additional information about 

the potential beneficial qualities of 

Architect® Px. However, the commenter 

has provided no additional studies that 

demonstrate that its use results in a 

substantial clinical improvement 

relative to other skin substitute and 

wound healing products available on 

the market. The commenter mentioned 

that skin substitutes had previously 

received pass-through payment status 

based on the same type of information 

the manufacturer provided in its device 

pass-through payment application and 

in its comments on the proposed rule. 

However, the commenter is referring to 

a previous process to evaluate skin 

substitutes for pass-through payment 

eligibility (the drugs and biological 

pass-through payment process), which 

did not require evidence of a substantial 

clinical improvement. Since CY 2015, 

skin substitutes have been evaluated 

using the medical device pass-through 

payment process (79 FR 66885 through 

66888), which includes the criterion for 

substantial clinical improvement. 

Applicants must demonstrate that the 

device under consideration for passthrough payment status will 

substantially improve the diagnosis or 

treatment of an illness or injury or 

improve the functioning of a malformed 

body part compared to the benefits of a 

device or devices in a previously 

established category or other available 

treatment. The commenter has not 

provided additional information 

showing substantial clinical 

improvement. Therefore, we determine 

that Architect® Px does not meet the 

criterion for substantial clinical 

improvement. 

The third criterion for establishing a 

device category, at § 419.66(c)(3), 

requires us to determine that the cost of 

the device is not insignificant, as 

described in § 419.66(d). Section 

419.66(d) includes three cost 

significance criteria that must each be 

met. The applicant provided the 

following information in support of the 

cost significance requirements: 

Architect® Px would be reported with 

CPT codes 15271 through 15278, which 

cover the application of skin substitute 

grafts to different areas of the body for 

high-cost skin substitutes. To meet the 

cost criterion for device pass-through 

payment, a device must pass all three 

tests of the cost criteria for at least one 

APC. CPT codes 15271 through 15278 

are assigned to either APC 5054 (Level 

4 Skin Procedures), with a CY 2016 

payment rate of $1,411.21 and a device 

offset of $4.52, or APC 5055 (Level 5 

Skin Procedures), with a CY 2016 

payment rate of $2,137.49 and a device 

offset of $25.44. According to the 

applicant, the cost of the substitute graft 

procedures when performed with 

Architect® Px is $5,495. 

Section 419.66(d)(1), the first cost 

significance requirement, provides that 

the estimated average reasonable cost of 

devices in the category must exceed 25 

percent of the applicable APC payment 

amount for the service related to the 

category of devices. The estimated 

average reasonable cost of $5,495 for 

Architect® Px exceeds the applicable 

APC amount for the service related to 

the category of devices of $1,411.21 by 

389 percent ($5,495/$1,411.21 × 100 

percent = 389 percent). Therefore, it 

appears that Architect® Px meets the 

first cost significance test. 

The second cost significance test, at 

§ 419.66(d)(2), provides that the 

estimated average reasonable cost of the 

devices in the category must exceed the 

cost of the device-related portion of the 

APC payment amount for the related 

service by at least 25 percent, which 

means the device cost needs to be at 

least 125 percent of the offset amount 

(the device-related portion of the APC 

found on the offset list). The estimated 

average reasonable cost of $5,495 for 

Architect® Px exceeds the devicerelated portion of the APC payment 

amount for the related service of $4.52 

by 121,571 percent ($5,495/$4.52 × 100 

percent = 121,571 percent). Therefore, 

we stated in the proposed rule that it 

appears that Architect® Px meets the 

second cost significance test. 

Section 419.66(d)(3), the third cost 

significance test, requires that the 

difference between the estimated 

average reasonable cost of the devices in 

the category and the portion of the APC 

payment amount for the device must 

exceed 10 percent of the APC payment 

amount for the related service. The 

difference between the estimated 

average reasonable cost of $5,495 for 

Architect® Px and the portion of the 

APC payment amount for the device of 


sradovich on DSK3GMQ082PROD with RULES2
59326 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

5Connell et al., Human placental connective 

tissue matrix in the treatment of chronic wounds: 

A prospective multi-center case series. 2015 at 

$4.52 exceeds 10 percent at 389 percent 

(($5,495¥$4.52)/$1,411.21) × 100 

percent = 389 percent). Therefore, it 

appears that Architect® Px meets the 

third cost significance test. Based on the 

costs submitted by the applicant and the 

calculations noted earlier, we believe 

that Architect® Px meets the cost 

criterion at § 419.66(c)(3) for new device 

categories. 

We invited public comments on 

whether Architect® Px meets the device 

pass-through payment criteria discussed 

in this section. 

We did not receive any public 

comments relating to whether 

Architect® Px meets the device passthrough payment cost criterion. As 

stated earlier, we believe that Architect®

Px meets the cost criterion at 

§ 419.66(c)(3) for new device categories. 

However after consideration of the 

public comments we received, we are 

not approving device pass-through 

payment status for Architect® Px for CY 

2018. 

(2) Dermavest and Plurivest Human 

Placental Connective Tissue Matrix 

(HPCTM) 

Aedicell, Inc. submitted an 

application for a new device category 

for transitional pass-through payment 

status for Dermavest and Plurivest 

human placental connective tissue 

matrix (HPCTM). Dermavest and 

Plurivest HPCTM use tissue sourced 

from the placental disk, amnion/ 

chorion, and umbilical cord to replace 

or supplement damaged tissue. The 

applicant stated that Dermavest and 

Plurivest replace or supplement 

damaged or inadequate integumental 

tissue by providing a scaffold to entrap 

migrating cells for repopulation. The 

applicant stated that the products may 

be clinically indicated for the following 

conditions: Partial and full thickness 

wounds; pressure ulcers; venous ulcers; 

chronic vascular ulcers; diabetic ulcers; 

trauma wounds (abrasions, lacerations, 

second degree burns, and skin tears); 

drainage wounds; and surgical wounds 

(donor sites/grafts post mohs surgery, 

post laser surgery, and podiatric). 

Dermavest and Plurivest HPCTM are 

applied to the area of inadequate or 

damaged tissue, moistened if necessary 

and covered with a nonadherent 

secondary dressing. While the 

application does not distinguish 

between the Dermavest and Plurivest 

products, the AediCell Inc. Web site 

states that the two products differ by 

dosage. According to information on the 

Web site at www.aedicell.com, each 

product contains different tissue cell 

attachment proteins (CAP) and 

cytokine/growth factors (GF) profiles. 

There is a lower cytokine/GF 

concentration profile in Plurivest and a 

higher concentration of CAP and 

cytokine/GF in Dermavest. 

With respect to the newness criterion 

at § 419.66(b)(1), the applicant indicated 

that the product conforms to the 

requirements for Human Cells, Tissues, 

and Cellular and Tissue-Based Products 

(HCT/Ps) regulated solely under section 

361 of the Public Health Service (PHS) 

Act and 21 CFR part 1271. For these 

products, FDA requires, among other 

things, that the manufacturer register 

and list its HCT/Ps with the Center for 

Biologics Evaluation and Research 

(CBER) within 5 days after beginning 

operations and update their registrations 

annually. AediCell, Inc. has an FDA 

field establishment identifier (FEI) 

under the HHS-FDA-Establishment 

Registration and Listing for Human 

Cells, Tissues, and Cellular and TissueBased Products (HCT/Ps) and submitted 

with its application the annual 

registration/listing for Dermavest and 

Plurivest dated November 9, 2015. The 

applicant noted that the initial 

registration for the manufacture of 

Dermavest was submitted to the CBER 

on October 28, 2013, and the 

registration of Plurivest was submitted 

the following year on November 14, 

2014. The registration forms including 

these dates were not included in the 

application. Therefore, it is unclear if 

the newness criterion is met. 

Comment: One commenter, the 

manufacturer, provided an FDA 

registration form for the product that 

indicated that there was change in 

information for the Dermavest product 

submitted on December 18, 2013. The 

manufacturer also submitted a 

document indicating that a registration 

form was submitted to FDA on October 

20, 2014 to change the name of the 

product to Dermavest/Plurivest. 

Response: Based on the information 

submitted by the manufacturer, we are 

unable to determine that Dermavest and 

Plurivest meet the newness criterion at 

§ 419.66(b)(1). 

With respect to the eligibility criterion 

at § 419.66(b)(3), according to the 

applicant, Dermavest and Plurivest are 

skin substitute products that are integral 

to the service provided, are used for one 

patient only, come in contact with 

human skin, and are applied in or on a 

wound or other skin lesion. The 

applicant also claimed Dermavest and 

Plurivest meet the device eligibility 

requirements of § 419.66(b)(4) because 

they are not instruments, apparatuses, 

implements, or items for which 

depreciation and financing expenses are 

recovered, and they are not supplies or 

materials furnished incident to a 

service. 

The criteria for establishing new 

device categories are specified at 

§ 419.66(c). The first criterion, at 

§ 419.66(c)(1), provides that CMS 

determines that a device to be included 

in the category is not appropriately 

described by any of the existing 

categories or by any category previously 

in effect, and was not being paid for as 

an outpatient service as of December 31, 

1996. We have not identified an existing 

pass-through payment category that 

describes Dermavest and Plurivest 

HPCTM. The applicant proposed a 

category descriptor for Dermavest and 

Plurivest of ‘‘Human placental 

connective tissue matrix (HPCTM), 

comprised of tissue sourced from the 

placental disk, amnion/chorion, and 

umbilical cord for the intention of 

replacing or supplementing damaged or 

inadequate integumental issue.’’ We 

invited public comments on this issue. 

Comment: One commenter, the 

manufacturer, supported CMS’ 

statement that CMS had not identified 

an existing pass-through payment 

category that describes Dermavest and 

Plurivest HPTCM. 

Response: At this time, we still have 

not identified an existing pass-through 

payment category that describes 

Dermavest and Plurivest HPCTM. 

The second criterion for establishing 

a device category, at § 419.66(c)(2), 

provides that CMS determines that a 

device to be included in the category 

has demonstrated that it will 

substantially improve the diagnosis or 

treatment of an illness or injury or 

improve the functioning of a malformed 

body part compared to the benefits of a 

device or devices in a previously 

established category or other available 

treatment. With respect to this criterion, 

the applicant provided several 

background studies showing general 

evidence that placental tissue, umbilical 

cord, and amnion membrane products 

are effective in the treatment of various 

wounds and ulcers. However, these 

studies were not specific to Dermavest 

and Plurivest HPCTM. The applicant 

submitted two poster presentations 

describing case studies that evaluated 

the wound healing time and wound 

characteristics of patients with diabetic 

and venous ulcers treated with 

Dermavest and Plurivest HPCTM. Both 

studies were described as case series 

and, as such, lacked blinding, 

randomization, and control groups. The 

first poster,5 presented in 2015, 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59327 

Society of Advanced Wound Healing (SAWC) 

Spring meeting. 

6McGuire and Sebag, The use of a new placental 

acellular tissue product in the management of 

chronic wounds: A case series. 2016 at the Society 

of Advanced Wound Healing (SAWC) Spring 

meeting. 

described a prospective, multi-center 

case series with a small number of 

participants (n=15). The study evaluated 

wound healing time and wound 

characteristics of patients with various 

etiologies. The patients were treated 

with up to two 6 cm2 pieces of 

Dermavest per application on wounds 

up to 44 cm2. Results were presented for 

diabetic and venous ulcer cases and 

showed a week 4 percent area reduction 

(PAR) of 71 percent for diabetic ulcers 

and 50 percent for venous ulcers. Eighty 

percent of the diabetic ulcer cases and 

50 percent of the venous ulcer cases had 

a week 4 PAR of greater than 40 percent. 

The second poster,6 presented in 

2016, also described a case series that 

evaluated wound healing time and 

wound characteristics of patients with 

various etiologies (n=8). The poster 

stated that the patients were treated 

with pieces of HPCTM according to 

manufacturer guidelines on wounds 

ranging in size up to 3.8 cm2. The 

methods presented in the poster do not 

specify whether the patients were 

treated with Dermavest or Plurivest, or 

both. The results presented in the poster 

compile Dermavest data from two case 

series presented at the Society for 

Advanced Wound Care (SAWC) annual 

meeting. It was unclear whether there 

was overlap between the patients used 

in the 2015 and 2016 case series 

included in the application. The 

compiled Dermavest data were 

compared to the 4-week PAR results for 

diabetic and venous ulcers from two 

other noncontemporaneous studies 

evaluating different skin replacement 

products. The results showed, at week 

4, approximately 80 percent of the 

Dermavest-treated diabetic ulcer cases 

had a PAR of greater than 50 percent in 

comparison to approximately 60 percent 

of cases and approximately 30 percent 

of cases, respectively, in the comparison 

studies using other skin replacement 

products. The results also showed that, 

at week 4, approximately 60 percent of 

the Dermavest-treated venous ulcer 

cases had a PAR of greater than 40 

percent in comparison to approximately 

50 percent of cases and approximately 

30 percent of cases in the comparison 

studies treated with other skin 

replacement products. There were 

multiple differences between the 

Dermavest studies included in the 

poster presentations and these two 

additional studies presented as 

comparators, including the number of 

patients included in the studies, the 

number of wounds treated, and the 

purpose of the study. Based on the 

results presented in the poster, the 

applicant concluded that HPCTM 

provides an effective alternative to other 

skin replacement products. 

In the CY 2018 OPPS/ASC proposed 

rule, we stated that we were concerned 

that the research provided did not 

clinically demonstrate the active 

ingredients of the product(s) that might 

distinguish the product from others, the 

correct dosing of the product(s), the 

amount of durable wound closure with 

the product(s) compared to standard of 

care in studies with rigorous trial 

design/implementation, and the amount 

of durable wound closure with the 

product(s) compared to other products 

in studies with rigorous trial design/ 

implementation. We stated in the 

proposed rule that, based on the 

evidence submitted with the 

application, we were not yet convinced 

that the Dermavest and Plurivest 

HPCTM provide a substantial clinical 

improvement over other treatments for 

wound care. We invited public 

comments on whether the Dermavest 

and Plurivest HPCTM meet this 

criterion. 

Comment: One commenter, the 

manufacturer, provided information 

regarding the active ingredients and 

concentrations of active ingredients of 

the product as compared to other skin 

substitutes. The comment also included 

personal statements from physicians 

who used the product and attested to its 

clinical benefit over the current 

standard of care. The physicians’ 

statements also noted that a randomized 

controlled trial that compares the 

product to the standard of care and to 

other advanced human tissue products, 

as well as registry studies, would be 

helpful in proving the substantial 

clinical improvement provided by 

Dermavest/Plurivest HPTCM. The 

manufacturer also stated that it was 

endeavoring to enter into a registry 

study and two randomized controlled 

trials using other high tiered skin 

substitutes as comparators. 

Response: We appreciate the 

commenters’ responses on the 

Dermavest and Plurivest HPCTM 

application. However, the commenters 

did not provide new empirical evidence 

that addressed our concerns that the 

studies included with the application 

were described as case series and, as 

such, lacked blinding, randomization, 

and control groups. At this time, we 

have not been able to determine that 

Dermavest and Plurivest HPCTM 

represents a substantial clinical 

improvement relative to existing 

therapies currently available for wound 

care. 

The third criterion for establishing a 

device category, at § 419.66(c)(3), 

requires us to determine that the cost of 

the device is not insignificant, as 

described in § 419.66(d). Section 

419.66(d) includes three cost 

significance criteria that must each be 

met. The applicant provided the 

following information in support of the 

cost significance requirements. The 

applicant stated that Dermavest and 

Plurivest HPCTM would be reported 

with CPT codes 15271, 15272, 15273, 

15274, 15275, 15276, 15277, and 15278. 

CPT codes 15272, 15274, 15276, and 

15278 are add-on codes assigned status 

indicator ‘‘N’’, which means payment is 

packaged under the OPPS. CPT codes 

15271 and 15275 are assigned to APC 

5054 (Level 4 Skin Procedures), and 

CPT codes 15273 and 15277 are 

assigned to APC 5055 (Level 5 Skin 

Procedures). To meet the cost criterion 

for device pass-through payment, a 

device must pass all three tests of the 

cost criterion for at least one APC. For 

our calculations, we used APC 5054 

(Level 4 Skin Procedures), which had a 

CY 2016 payment rate of $1,411 and a 

device offset amount of $4.52 at the time 

the application was received. According 

to the applicant, the cost of a sheet of 

2x3 cm Dermavest is $550, and the cost 

of a sheet of 2x3 cm Plurivest is $500. 

Section 419.66(d)(1), the first cost 

significance requirement, provides that 

the estimated average reasonable cost of 

devices in the category must exceed 25 

percent of the applicable APC payment 

amount for the service related to the 

category of devices. The estimated 

average reasonable cost of $550 for 

Dermavest and Plurivest exceeds 39 

percent of the applicable APC payment 

amount for the service related to the 

category of devices of $1,411 ($550/ 

$1,411 × 100 = 39 percent). Therefore, 

we stated in the proposed rule that we 

believe Dermavest and Plurivest meet 

the first cost significance test. 

The second cost significance test, at 

§ 419.66(d)(2), provides that the 

estimated average reasonable cost of the 

devices in the category must exceed the 

cost of the device-related portion of the 

APC payment amount for the related 

service by at least 25 percent, which 

means that the device cost needs to be 

at least 125 percent of the offset amount 

(the device-related portion of the APC 

found on the offset list). The estimated 

average reasonable cost of $550 for 

Dermavest and Plurivest exceeds the 

cost of the device-related portion of the 

APC payment amount for the related 

service of $4.52 by 12,168 percent 


sradovich on DSK3GMQ082PROD with RULES2
59328 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

7Bregman, Peter. (2014). Addressing Morton’s 

Nerve Entrapment Surgically and Non-surgically 

with FloGraft. 

($550/$4.52) × 100 = 12,168 percent). 

Therefore, we stated in the proposed 

rule that we believe that Dermavest and 

Plurivest meet the second cost 

significance test. 

The third cost significance test, at 

§ 419.66(d)(3), requires that the 

difference between the estimated 

average reasonable cost of the devices in 

the category and the portion of the APC 

payment amount for the device must 

exceed 10 percent of the APC payment 

amount for the related service. The 

difference between the estimated 

average reasonable cost of $550 for 

Dermavest and Plurivest and the portion 

of the APC payment amount for the 

device of $4.52 exceeds the APC 

payment amount for the related service 

of $1,411 by 38.6 percent 

(($550¥$4.52)/$1,411 × 100 = 38.6 

percent). Therefore, we stated in the 

proposed rule that we believe that 

Dermavest and Plurivest meet the third 

cost significance test. 

We invited public comments on 

whether Dermavest and Plurivest meet 

the device pass-through payment cost 

criteria discussed in this section. 

We did not receive any public 

comments on this issue. We continue to 

believe that Dermavest and Plurivest 

meet the device pass-through payment 

cost criteria. 

After consideration of the public 

comments we received, we are not 

approving device pass-through payment 

status for the Dermavest and Plurivest 

HPCTM for CY 2018. 

(3) Flo ̄Graft®/Flo ̄graft Neogenesis®

Applied Biologics, LLC submitted an 

application for a new device category 

for transitional pass-through payment 

status for Flo ̄Graft®/Flo ̄graft 

Neogenesis®. Flo ̄Graft®/Flo ̄graft 

Neogenesis® is an injectable, human 

placental amniotic fluid. It is an 

allograft derived from human birth 

tissue recovered from a live, healthy Csection birth. The allograft is used to 

augment tissue to bone and tissue to 

tissue repairs. The allograft is implanted 

at the surgical site at the end of the 

procedure using a needle and syringe 

under direct visualization. The 

applicant claimed that the product 

helps drive healing towards native 

tissue regeneration and away from scar 

formation. Flo ̄Graft® has a standardized 

potency of 2 million cells. Flo ̄Graft 

Neogenesis® has a standardized potency 

of 1.5 million cells. The applicant 

indicated that the product may be used 

with several surgical procedures, 

including joint replacement procedures, 

traumatic bone and soft tissue injury, 

meniscal repairs, meniscal 

transplantation, articular cartilage 

restoration, foot and ankle repairs, and 

chronic wounds. 

With respect to the newness criterion 

at § 419.66(b)(1), the applicant indicated 

that Flo ̄Graft® and Flo ̄graft Neogenesis®

conform to the requirements for Human 

Cells, Tissues, and Cellular and TissueBased Products (HCT/Ps) regulated 

solely under section 361 of the PHS Act 

and 21 CFR part 1271. For these 

products, FDA requires, among other 

things, that the manufacturer register 

and list their HCT/Ps with the Center for 

Biologics Evaluation and Research 

(CBER) within 5 days after beginning 

operations and update their registrations 

annually. Applied Biologics, LLC has 

two FDA field establishment identifiers 

(FEI) under the HHS-FDA-Establishment 

Registration and Listing for Human 

Cells, Tissues, and Cellular and TissueBased Products (HCT/Ps). Both 

registration forms list the product as 

‘‘Flo ̄Graft®’’. The applicant submitted 

an initial registration/listing for one FEI 

dated June 8, 2015, as well as an annual 

registration/listing for a different FEI 

dated December 1, 2014. The first date 

of U.S. sale for Flo ̄Graft® was May 23, 

2013. It is not clear when the initial 

CBER filing occurred for the Flo ̄Graft®

product. Therefore, it is unclear if the 

newness criterion for the Flo ̄Graft®

product is met. 

Comment: One commenter, the 

manufacturer, supplied information 

indicating that the initial registration 

forms for Flo ̄Graft® and Flo ̄Graft 

Neogenesis® were submitted on 

February 24, 2015 and were validated 

by FDA on June 8, 2015. 

Response: Based on the information 

submitted by the manufacturer, we 

believe that the product meets the 

newness criterion at § 419.66(b)(1). 

With respect to the eligibility criterion 

at § 419.66(b)(3), according to the 

applicant, Flo ̄Graft® and Flo ̄graft 

Neogenesis® are integral to the service 

provided, are used for one patient only, 

come in contact with human skin, and 

are applied in or on a wound or other 

skin lesion. The applicant also claimed 

Flo ̄Graft® and Flo ̄graft Neogenesis meet 

the device eligibility requirements of 

§ 419.66(b)(4) because they are not 

instruments, apparatuses, implements, 

or items for which depreciation and 

financing expenses are recovered, and 

they are not supplies or materials 

furnished incident to a service. 

The criteria for establishing new 

device categories are specified at 

§ 419.66(c). The first criterion, at 

§ 419.66(c)(1), provides that CMS 

determines that a device to be included 

in the category is not appropriately 

described by any of the existing 

categories or by any category previously 

in effect, and was not being paid for as 

an outpatient service as of December 31, 

1996. We have not identified an existing 

pass-through payment device category 

that describes Flo ̄Graft®/Flo ̄graft 

Neogenesis®. The application suggested 

a payment device category for 

Flo ̄Graft®/Flo ̄graft Neogenesis® with a 

category descriptor of ‘‘Injectable 

Amniotic Fluid Allograft’’. We invited 

public comments on this issue. 

We did not receive any public 

comments on this issue, and at this 

time, we have not identified an existing 

pass-through category that describes 

Flo ̄Graft®/Flo ̄graft Neogenesis®. 

The second criterion for establishing 

a device category, at § 419.66(c)(2), 

provides that CMS determines that a 

device to be included in the category 

has demonstrated that it will 

substantially improve the diagnosis or 

treatment of an illness or injury or 

improve the functioning of a malformed 

body part compared to the benefits of a 

device or devices in a previously 

established category or other available 

treatment. With respect to the 

substantial clinical improvement 

criterion, the applicant submitted 

several peer-reviewed publications that 

provided general evidence that amniotic 

fluid and amniotic membrane-based 

products significantly reduce recovery 

time. However, these studies did not 

include the use of the Flo ̄Graft®/Flo ̄graft 

Neogenesis® product. The applicant did 

list several studies in the application 

that involved the use of the Flo ̄Graft®/ 

Flo ̄graft Neogenesis® product. Of these 

studies, five unpublished studies were 

available for review. The five studies 

submitted with the application were 

described as case studies, case series, or 

retrospective cohort studies. The studies 

lacked random allocation, blinding, and 

a comparison group. The first study 7

described a retrospective cohort study of 

30 patients. The studies showed that 93 

percent of the patients (n=14) who 

received a Flo ̄Graft® injection, coupled 

with conservative, nonsurgical 

treatment plan to treat their Morton’s 

Nerve entrapment condition, had their 

issue resolved compared to 20 percent 

of patients (n=3) who did not receive 

Flo ̄Graft® injection, coupled with 

conservative, nonsurgical treatment 

plan to treat their Morton’s Nerve 

entrapment condition. A greater 

percentage of patients who did not 

receive a Flo ̄Graft® injection with their 

conservative treatment required surgery 

(80 percent versus 7 percent). Patients 

who required surgery had a 95-percent 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59329 

8 Gottleib, et al. FloGraft Rapidly Moves Stalled 

Wounds Into the Proliferative Phase. 

9 Jacoby, Richard. Case Study 221: Non-surgical 

Resolution of Distal Fibula Fracture with Flograft 

Implant; 82 YO Male. 

10 Jacoby, Richard. Tarsal Tunnel Compression 

Neuropathy Case Study Using Flograft. 

11Maling, Scott. A Case Series: A retrospective 

analysis of 34 patients receiving modified 

Bronstom-Evans procedure with Flograft reduce 

time to full mobility by 52%. 

success rate when surgery was coupled 

with a Flo ̄Graft® injection. 

The next study 8 was a retrospective 

analysis that involved 27 patients who 

were treated for stalled wounds. The 

patients had a broad spectrum of 

etiologies. Over a 12-month period, the 

applicant indicated that 96 percent of 

wounds that had stalled demonstrated 

rapid acceleration towards closure 

within a 21-day period when treated 

with Flo ̄Graft®. The article 

recommended a randomized controlled 

trial (RCT) to confirm the results. The 

applicant also submitted two case 

studies,9 10 each involving one patient, 

which described the use of Flo ̄Graft® to 

treat distal fibula fracture and tarsal 

tunnel compression neuropathy. Lastly, 

the application included a study 11

which presented the results from a case 

study of one patient as well as a 

retrospective cohort of 34 patients who 

received a Brostro ̈m-Evans procedure 

with the Flo ̄Graft® product. In general, 

the studies submitted lacked a clear 

description of the outcome variable and 

study population, and did not include 

statistical analysis. 

Based on the evidence submitted, we 

stated in the proposed rule that we 

believe there is insufficient data to 

determine whether Flo ̄Graft®/Flo ̄graft 

Neogenesis® offers a substantial clinical 

improvement over other treatments for 

wound care. We invited public 

comments on whether the Flo ̄Graft®/ 

Flo ̄graft Neogenesis® meets the 

substantial clinical improvement 

criterion. 

Comment: Several commenters 

described the clinical benefits that they 

have observed using the Flo ̄Graft®

product in the treatment of wounds, 

bone, and soft tissue repairs. Other 

commenters described their current, 

ongoing studies involving the impact of 

Flo ̄Graft® on rotator cuff healing after 

repair. One study described a 

randomized single blind study (n=20). 

One commenter was enthusiastic about 

the potential impact the product could 

have on improving healing for patients 

with rotator cuff injuries, while another 

commenter presented a more neutral 

position and stated that he could not 

confirm that the use of the product 

would impact the healing, but hoped 

that the study would guide the use of 

the product in the future. Other 

commenters submitted case studies of 

wound care patients treated with 

Flo ̄Graft®. One commenter submitted 

several studies related to amniotic fluid 

and amniotic membrane-based 

products; however, none of these 

studies were specific to the Flo ̄Graft®

product. 

Response: We appreciate the 

commenters’ responses on the 

Flo ̄Graft®/Flo ̄graft Neogenesis® product. 

However, the commenters did not 

provide new empirical evidence that 

addressed our concerns regarding the 

evidence of substantial clinical 

improvement that was submitted with 

the application. These concerns 

included the lack of a clear description 

of the outcome variable and study 

population and the lack of statistical 

analysis. The comments also did not 

address our concerns that the studies 

submitted with the application were 

case studies, case series, or retrospective 

cohort studies that lacked random 

allocation, blinding, and a comparison 

group. The commenters also discussed 

studies that did not include the use of 

Flo ̄Graft®/Flo ̄graft Neogenesis® and 

studies that were still in progress. At 

this time, we have not been able to 

determine that Flo ̄Graft®/Flo ̄graft 

Neogenesis® represents a substantial 

clinical improvement relative to existing 

therapies currently available for wound 

care. 

The third criterion for establishing a 

device category, at § 419.66(c)(3), 

requires us to determine that the cost of 

the device is not insignificant, as 

described in § 419.66(d). Section 

419.66(d) includes three cost 

significance criteria that must each be 

met. The applicant provided the 

following information in support of the 

cost significance requirements. The 

applicant stated several CPT codes 

would be used to report Flo ̄Graft®/ 

Flo ̄graft Neogenesis®, including CPT 

codes 29826, 29827, 29828, 23473, 

23420, 23412, 27605, 27650, 29891, 

29888, 29889, 28008, 22551, 22856, 

27179, 29861, and 29862. To meet the 

cost criterion for device pass-through 

payment, a device must pass all three 

tests of the cost criterion for at least one 

APC. These CPT codes are assigned to 

APCs 5121 through 5125 (Level 1 

through Level 5 Musculoskeletal 

Procedures). For our calculations, we 

used APC 5121 (Level 1 

Musculoskeletal Procedures), which had 

a CY 2016 payment rate of $1,455 and 

a device offset of $15.86 at the time the 

application was received. According to 

the applicant, the Flo ̄Graft®/Flo ̄graft 

Neogenesis® product is available in a 

variety of vial sizes, the largest size 

being 18 cc with a cost of $19,925. 

Section 419.66(d)(1), the first cost 

significance requirement, provides that 

the estimated average reasonable cost of 

devices in the category must exceed 25 

percent of the applicable APC payment 

amount for the service related to the 

category of devices. We used the highest 

priced product for this determination. 

The estimated average reasonable cost of 

$19,925 for Flo ̄Graft®/Flo ̄graft 

Neogenesis® exceeds the applicable 

APC payment amount for the service 

related to the category of devices of 

$1,455 by 1,369 percent ($19,925/$1,455 

× 100 = 1,369 percent). Therefore, we 

stated in the proposed rule that we 

believe Flo ̄Graft®/Flo ̄graft Neogenesis®

meets the first cost significance test. 

The second cost significance test, at 

§ 419.66(d)(2), provides that the 

estimated average reasonable cost of the 

devices in the category must exceed the 

cost of the device-related portion of the 

APC payment amount for the related 

service by at least 25 percent, which 

means that the device cost needs to be 

at least 125 percent of the offset amount 

(the device-related portion of the APC 

found on the offset list). The average 

reasonable cost of $19,925 for Flo ̄Graft®/ 

Flo ̄graft Neogenesis® exceeds the 

device-related portion of the APC 

payment amount of $15,86 by 125,360 

percent ($19,925/$15.86) × 100 = 

125,630 percent). Therefore, in the 

proposed rule, we stated that we believe 

that Flo ̄Graft®/Flo ̄graft Neogenesis®

meets the second cost significance test. 

The third cost significance test, at 

§ 419.66(d)(3), requires that the 

difference between the estimated 

average reasonable cost of the devices in 

the category and the portion of the APC 

payment amount for the device must 

exceed 10 percent of the APC payment 

amount for the related service. The 

difference between the average 

reasonable cost of $19,925 for Flo ̄Graft®/ 

Flo ̄graft Neogenesis® and the portion of 

the APC payment amount for the device 

of $15.86 exceeds the APC payment 

amount for the related service of $1,455 

by 1,368 percent (($19,925¥$15.86)/ 

$1,455 × 100 = 1,368 percent). 

Therefore, in the proposed rule, we 

stated that we believe Flo ̄Graft®/Flo ̄graft 

Neogenesis® meets the third cost 

significance test. 

We invited public comments on 

whether Flo ̄Graft®/Flo ̄graft Neogenesis®

meets the device pass-through payment 

cost criteria discussed in this section. 

We did not receive any public 

comments on this issue. We continue to 

believe that Flo ̄Graft®/Flo ̄graft 

Neogenesis® meets the device passthrough payment cost criteria. 


sradovich on DSK3GMQ082PROD with RULES2
59330 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

12Tumi Baldursson, T, MD, Ph.D. et al. Healing 

Rate and Autoimmune Safety of Full-Thickness 

Wounds Treated With Fish Skin Acellular Dermal 

Matrix Versus Porcine Small-Intestine Submucosa: 

A Noninferiority Study; The International Journal of 

Lower Extremity Wounds 2015, Vol. 14(1) 37–43. 

13 Yang, CK et al. A Prospective, Postmarket, 

Compassionate Clinical Evaluation of a Novel 

Acellular Fish-skin Graft Which Contains Omega-3 

Fatty Acids for the Closure of Hard-to-heal Lower 

Extremity Chronic Ulcers. Wounds 2016;28(4): 112– 

118. 

After consideration of the public 

comments we received, we are not 

approving device pass-through payment 

status for the Flo ̄Graft®/Flo ̄graft 

Neogenesis® product for CY 2018. 

(4) KerecisTM Omega3 Wound (Skin 

Substitute) 

Kerecis, LLC submitted an application 

for a new device category for 

transitional pass-through payment 

status for KerecisTM Omega3 Wound. 

KerecisTM Omega3 Wound is made from 

acellular fish skin from wild Atlantic 

cod (Gadus morhua) caught in the North 

Atlantic Ocean that is used to regenerate 

damaged human tissue in chronic 

wounds. The applicant claimed that 

there is no disease transmission risk and 

noted that the fish skin is not required 

to undergo the viral inactivation process 

that the FDA dictates for tissues from 

farm animals. The applicant noted that 

the Omega3 fatty acids offer multiple 

health benefits, including antiinflammation. KerecisTM Omega3 

Wound is supplied as a sterile, singleuse sheet in peel-open pouches. 

KerecisTM Omega3 Wound does not 

elicit an immune response because the 

major antigenic components present 

within cell membranes are removed in 

a gentle manner during processing. 

Unlike mammalian and human sourced 

products, the fish skin possesses 

extremely low risk of disease 

transmission and offers no known 

cultural or religious constraints for 

usage. The fish skin product is both 

halal and kosher compatible and avoids 

potential conflicts with Sikhism and 

Hinduism (Vaishnavism). 

With respect to the newness criterion 

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

FDA clearance for KerecisTM Omega3 

Wound through the premarket 

notification section 510(k) process on 

October 23, 2013 and its June 1, 2016 

application was within 3 years of FDA 

clearance. 

With respect to the eligibility criterion 

at § 419.66(b)(3), according to the 

applicant, KerecisTM Omega3 Wound is 

a skin substitute product that is integral 

to the service provided, is used for one 

patient only, comes in contact with 

human skin, and is surgically inserted 

into the patient. The applicant also 

claimed KerecisTM Omega3 Wound 

meets the device eligibility 

requirements of § 419.66(b)(4) because it 

is not an instrument, apparatus, 

implement, or item for which 

depreciation and financing expenses are 

recovered, and it is not a supply or 

material. 

The criteria for establishing new 

device categories are specified at 

§ 419.66(c). The first criterion, at 

§ 419.66(c)(1), provides that CMS 

determines that a device to be included 

in the category is not appropriately 

described by any of the existing 

categories or by any category previously 

in effect, and was not being paid for as 

an outpatient service as of December 31, 

1996. We have not identified an existing 

pass-through payment category that 

describes KerecisTM Omega3 Wound. 

The applicant proposed a pass-through 

payment device category for KerecisTM

Omega3 Wound with category 

descriptor of ‘‘Piscine skin substitute.’’ 

We invited public comments on this 

issue. 

We did not receive any public 

comments on this issue. As we stated 

earlier, we have not identified an 

existing pass-through category that 

describes KerecisTM Omega3 Wound. 

Therefore, for the reasons discussed 

earlier, we believe KerecisTM Omega3 

Wound meets the eligibility criterion. 

The second criterion for establishing 

a device category, at § 419.66(c)(2), 

provides that CMS determines that a 

device to be included in the category 

has demonstrated that it will 

substantially improve the diagnosis or 

treatment of an illness or injury or 

improve the functioning of a malformed 

body part compared to the benefits of a 

device or devices in a previously 

established category or other available 

treatment. With regard to the substantial 

clinical improvement criterion, the 

applicant stated that individuals who 

would normally refuse to use skin 

substitute products from animal 

sources, including pigs, cows, horses, 

and sheep, would use KerecisTM

Omega3 Wound because it is a fishbased skin substitute. The applicant also 

asserted that KerecisTM Omega3 Wound 

provides several beneficial outcomes, 

including faster resolution of the disease 

process compared to similar products, 

decreased antibiotic use, decreased 

pain, and reduced amounts of devicerelated complications. 

The applicant cited three studies in 

support of the application. The first 

study 12 was a parallel-group, doubleblinded, randomized controlled trial 

undertaken to determine if healing time 

of whole thickness biopsy wounds 

treated with KerecisTM Omega3 Wound 

is noninferior to that of wounds treated 

with porcine SIS ECM (Oasis). The 

study was an intention-to-treat study. 

Participants had two 4-mm full 

thickness punch wounds made on the 

proximal anterolateral aspect of their 

nondominant arm. The study 

population was comprised of volunteers 

aged between 18 and 67 years with most 

volunteers between the ages of 18 and 

30. There were 80 volunteers who 

received KerecisTM Omega3 Wound and 

82 volunteers who received porcine SIS 

ECM (Oasis). 

The results showed that, at 21 days, 

58 (72.5 percent) of the fish skin ADM 

group were healed, compared with 46 

(56 percent) of the porcine SIS ECM 

group. At 25 days, 62 (77.5 percent) of 

the fish skin ADM and 53 (65 percent) 

of the porcine SIS ECM group had 

healed. At the completion of the trial 

(28 days), 76 of the 80 wounds treated 

with fish skin ADM (95 percent) and 79 

of the 82 wounds treated with porcine 

SIS ECM (96.3 percent) were healed. 

The odds ratio of a fish skin ADMtreated wound being healed as 

compared with that treated with porcine 

SIS ECM at any given time point was 

estimated to be 4.75. The difference 

between the treatments was statistically 

significant (P = 0.041). The 

immunological part of the study was 

designed to detect autoimmune 

reactions in those individuals treated 

with KerecisTM Omega3 Wound. There 

was no evidence of antibodies forming 

in the presence of KerecisTM Omega3 

Wound. 

There were issues with this study that 

may limit its usefulness to determine 

substantial clinical improvement 

including the use of nonpatient 

volunteers; studying the healing of 

biopsy sites rather than actual wounds 

requiring treatment; and the use of a 1- 

month endpoint of care instead of a 

longer period, such as a 6-month 

endpoint of care. 

The second study 13 was a case series 

study of 18 patients to assess the 

percentage of wound closure area from 

baseline after 5 weekly fish-skin graft 

applications with at least one ‘‘hard-toheal’’ criterion. Patients underwent 

application of the fish skin for 5 

sequential weeks, followed by 3 weeks 

of standard care. Wound area, skin 

assessments, and pain were analyzed 

weekly. 

The study results showed a 40- 

percent decrease in wound surface area 

(P <0.05) and a 48-percent decrease in 

wound depth was seen with 5 weekly 

applications of the fish-skin graft and 

secondary dressing (P <0.05). Complete 

closure was seen in 3 of 18 patients by 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59331 

14Trinh, TT, et al. Marine Omega3 wound matrix 

for: the treatment of complicated wounds; 

Phlebologie 2016; 45: 93–98. 

15Tumi Baldursson, T, MD, Ph.D. et al. Healing 

Rate and Autoimmune Safety of Full-Thickness 

Wounds Treated With Fish Skin Acellular Dermal 

Matrix Versus Porcine Small-Intestine Submucosa: 

A Noninferiority Study; The International Journal of 

Lower Extremity Wounds 2015, Vol. 14(1) 37–43. 

the end of the study phase. This study 

did not use a comparator group to 

measure whether there is substantial 

clinical improvement with KerecisTM

Omega3 Wound compared to other skin 

substitute products. 

The third study 14 was a case series 

study of five patients with diabetes 

mellitus and complicated wounds in the 

lower limbs with exposed bone 

segments. The five patients had a total 

of seven wounds. Initial debridement 

occurred in the operating room, 

followed by application of wound 

matrix and covered with silicone mesh. 

All seven wounds healed and the 

patients did not have to have planned 

amputations on the limbs with the 

wounds. The mean duration of 

treatment to achieve full closure of the 

wound was 25 ± 10 weeks and ranged 

from 13 to 41 weeks. This study did not 

have a comparator group to determine if 

there was substantial clinical 

improvement with KerecisTM Omega3 

Wound compared to other skin 

substitute products. 

There are no clinical data provided by 

the applicant to suggest that KerecisTM

Omega3 Wound provides a substantial 

clinical improvement over other similar 

skin substitute products. We invited 

public comments on whether KerecisTM

Omega3 Wound meets the substantial 

clinical improvement criterion. 

Comment: One commenter, the 

manufacturer, stated that KerecisTM

Omega3 Wound significantly improves 

acute wound healing, nearly eliminates 

risk from side effects and adverse 

events, and provides a skin substitute 

option for beneficiaries who have 

allergic reactions or personal objections 

to mammalian or human sourced skin 

substitutes. The commenter referred to a 

study, believed to be the first study 

reviewed in the proposed rule,15 and 

stated that it was the largest study 

performed in skin substitute research 

and that the study showed substantial 

clinical improvement from KerecisTM

Omega3 Wound. The commenter 

believed it had submitted more 

comparative data than skin substitute 

products that had previously received 

pass-through payment approval. 

Lastly, the commenter believed that a 

skin substitute product that eliminates 

religious objections to its use, because 

KerecisTM Omega3 Wound is fish 

sourced and not a mammalian or human 

sourced skin substitute, provides a 

significant benefit to beneficiaries with 

those objections, as they now have 

access to skin substitute products when 

previously skin substitute products may 

not be available to them. 

Response: The commenter did not 

provide information to demonstrate that 

KerecisTM Omega3 Wound represents a 

substantial clinical improvement 

relative to other wound care products 

currently available on the market. The 

commenter did not provide additional 

studies to support its claims of 

improvement with acute wound healing 

and low risk of side effects and adverse 

events. The commenter also did not 

address the concerns of the first study 

reviewed for this criterion, including 

the use of nonpatient volunteers; 

studying the healing of biopsy sites 

rather than actual wounds requiring 

treatment; and the use of an unrealistic 

1-month endpoint of care instead of a 6- 

month endpoint of care. Instead, the 

manufacturer simply stated the study 

‘‘epitomizes’’ substantial clinical 

improvement. 

The commenter stated that other skin 

substitute products that had presented 

less evidence of substantial clinical 

improvement had previously been 

approved for pass-through payment 

status. However, we believe that the 

commenter may have been referring to 

skin substitutes approved for 

transitional pass-through payments 

before these products were subject to 

the transitional pass-through payment 

approval for medical devices. Since CY 

2015, skin substitutes have been 

evaluated using the medical device 

pass-through payment process (79 FR 

66885 through 66888), which includes 

the criterion for substantial clinical 

improvement. Applicants must 

demonstrate that the device under 

consideration for pass-through status 

will substantially improve the diagnosis 

or treatment of an illness or injury or 

improve the functioning of a malformed 

body part compared to the benefits of a 

device or devices in a previously 

established category or other available 

treatment. The commenter did not 

provided additional information 

showing substantial clinical 

improvement. 

Finally, the commenter stated that 

KerecisTM Omega3 Wound should meet 

the substantial clinical improvement 

criterion because it provides a skin 

substitute option for beneficiaries with 

allergies or personal objections to 

mammalian or human sourced products. 

However, the commenter did not 

provide any studies nor cite any data to 

show that this population would receive 

a substantial clinical improvement 

through the use of KerecisTM Omega3 

Wound, as compared to the wound care 

treatments available to this group of 

beneficiaries. Therefore, we determine 

that KerecisTM Omega3 Wound does not 

meet the criterion for substantial 

clinical improvement. 

The third criterion for establishing a 

device category, at § 419.66(c)(3), 

requires us to determine that the cost of 

the device is not insignificant, as 

described in § 419.66(d). Section 

419.66(d) includes three cost 

significance criteria that must each be 

met. The applicant provided the 

following information in support of the 

cost significance requirements. With 

respect to the cost criterion, the 

applicant stated that KerecisTM Omega3 

Wound would be reported with CPT 

codes 15271 through 15278, which 

cover the application of skin substitute 

grafts to different areas of the body for 

high-cost skin substitutes. To meet the 

cost criterion for device pass-through 

payment, a device must pass all three 

tests of the cost criterion for at least one 

APC. CPT codes 15271 through 15278 

are assigned to either APC 5054 (Level 

4 Skin Procedures), with a CY 2016 

payment rate of $1,411.21 and a device 

offset amount of $4.52, or APC 5055 

(Level 5 Skin Procedures), with a CY 

2016 payment rate of $2,137.49 and a 

device offset amount of $25.44. 

According to the applicant, the cost of 

substitute graft procedures when 

performed with KerecisTM Omega3 

Wound is $2,030. 

Section 419.66(d)(1), the first cost 

significance requirement, provides that 

the estimated average reasonable cost of 

devices in the category must exceed 25 

percent of the applicable APC payment 

amount for the service related to the 

category of devices. The estimated 

average reasonable cost of $2,030 for 

KerecisTM Omega3 Wound exceeds the 

applicable APC payment amount for the 

service related to the category of devices 

of $1,411.21 by 144 percent ($2,030/ 

$1,411.21 × 100 percent = 144 percent). 

Therefore, we stated in the proposed 

rule that it appears that KerecisTM

Omega3 Wound meets the first cost 

significance test. 

The second cost significance test, at 

§ 419.66(d)(2), provides that the 

estimated average reasonable cost of the 

devices in the category must exceed the 

cost of the device-related portion of the 

APC payment amount for the related 

service by at least 25 percent, which 

means that the device cost needs to be 

at least 125 percent of the offset amount 

(the device-related portion of the APC 

found on the offset list). The average 

reasonable cost of $2,030 for KerecisTM


sradovich on DSK3GMQ082PROD with RULES2
59332 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

16 Gaspar, M.P., et al. (2016). Recurrent cubital 

tunnel syndrome treated with revision neurolysis 

and amniotic membrane nerve wrapping. Journal of 

Shoulder and Elbow surgery, 25, 2057–2065. 

Omega3 Wound exceeds the devicerelated portion of the APC payment 

amount of $4.52 by 44,911 percent 

($2,030/$4.52 × 100 percent = 44,911 

percent). Therefore, it appears that 

KerecisTM Omega3 Wound meets the 

second cost significance test. 

The third cost significance test, at 

§ 419.66(d)(3), requires that the 

difference between the estimated 

average reasonable cost of the devices in 

the category and the portion of the APC 

payment amount for the device must 

exceed 10 percent of the APC payment 

amount for the related service. The 

difference between the average 

reasonable cost of $2,030 for KerecisTM

Omega3 Wound and the portion of the 

APC payment amount for the device of 

$4.52 exceeds the APC payment amount 

for the related service of $1,411 by 144 

percent (($2,030¥$4.52)/$1,411.21) × 

100 percent = 144 percent). Therefore, 

we stated in the proposed rule that it 

appears that KerecisTM Omega3 Wound 

meets the third cost significance test. 

Based on the costs submitted by the 

applicant and the calculations noted 

earlier, it appears that KerecisTM

Omega3 Wound meets the cost criterion. 

We invited public comments on 

whether KerecisTM Omega3 Wound 

meets the device pass-through payment 

criteria discussed in this section. 

We did not receive any public 

comments for this section. We confirm 

that KerecisTM Omega3 Wound meets 

the cost criteria for new device 

categories. 

After consideration of the public 

comments we received, we are not 

approving device pass-through payment 

status for KerecisTM Omega3 Wound for 

CY 2018. 

(5) X–WRAP®

Applied Biologics, LLC submitted an 

application for a new device category 

for transitional pass-through payment 

status for X–WRAP®. X–WRAP® is a 

chorion-free, amnion membrane 

allograft that can be used as a biological 

wrap or patch at any surgical site. It is 

used as a treatment for surgical or 

traumatic injury to bone or soft tissue. 

It is used to minimize adhesions, reduce 

inflammation, and promote soft tissue 

healing. The X–WRAP® is made from 

the intermediate amniotic epithelial 

layer of the placenta, recovered from a 

Cesarean delivery of pre-screened 

donors. It is available in a variety of 

sizes and is used as a biologic 

augmentation to a variety of orthopedic 

repairs. 

With respect to the newness criterion 

at § 419.66(b)(1), the applicant indicated 

that X–WRAP® conforms to the 

requirements for Human Cells, Tissues, 

and Cellular and Tissue-Based Products 

(HCT/Ps) regulated solely under section 

361 of the PHS Act and 21 CFR part 

1271. For these products, FDA requires, 

among other things, that the 

manufacturers register and list their 

HCT/Ps with the Center for Biologics 

Evaluation and Research (CBER) within 

5 days after beginning operations and 

update their registrations annually. 

Applied Biologics, LLC has a FDA field 

establishment identifier (FEI) under the 

HHS-FDA-Establishment Registration 

and Listing for Human Cells, Tissues, 

and Cellular and Tissue-Based Products 

(HCT/Ps). The applicant submitted an 

annual registration/listing dated 

December 30, 2015. It is not clear when 

the initial CBER filing occurred for the 

X–WRAP® product, and therefore, it is 

unclear if the newness criterion for X– 

WRAP® is met. 

Comment: One commenter, the 

manufacturer, supplied information 

indicating that the initial registration 

form for X–WRAP® was submitted on 

February 24, 2015 and validated by FDA 

on June 8, 2015. 

Response: Based on the information 

submitted by the manufacturer, we 

believe that the product meets the 

newness criterion at § 419.66(b)(1). 

With respect to the eligibility criterion 

at § 419.66(b)(3), according to the 

applicant, X–WRAP® is integral to the 

service provided, is used for one patient 

only, comes in contact with human 

skin, and is applied in or on a wound 

or other skin lesion. The applicant also 

claimed X–WRAP® meets the device 

eligibility requirements of § 419.66(b)(4) 

because it is not an instrument, 

apparatus, implement or item for which 

depreciation and financing expenses are 

recovered, and it is not a supply or 

material furnished incident to a service. 

The criteria for establishing new 

device categories are specified at 

§ 419.66(c). The first criterion, at 

§ 419.66(c)(1), provides that CMS 

determines that a device to be included 

in the category is not appropriately 

described by any of the existing 

categories or by any category previously 

in effect, and was not being paid for as 

an outpatient service as of December 31, 

1996. We have not identified an existing 

pass-through payment device category 

that describes X–WRAP®. The applicant 

proposed a pass-through device category 

for X–WRAP® with a category 

descriptor of ‘‘Amniotic Membrane Soft 

Tissue Allografts’’. We invited public 

comments on this issue. 

We did not receive any public 

comments on this issue, and at this 

time, we have not identified an existing 

pass-through category that describes X– 

WRAP®. 

The second criterion for establishing 

a device category, at § 419.66(c)(2), 

provides that CMS determines that a 

device to be included in the category 

has demonstrated that it will 

substantially improve the diagnosis or 

treatment of an illness or injury or 

improve the functioning of a malformed 

body part compared to the benefits of a 

device or devices in a previously 

established category or other available 

treatment. With regard to the substantial 

clinical improvement criterion, the 

applicant submitted a list of studies in 

the application that showed general 

effectiveness of amniotic fluid and 

amniotic membrane-based products. 

However, these studies were not 

specific to the X–WRAP® product. The 

applicant also submitted one study 16

that was a retrospective review with 

prospective follow-up of patients (n=8) 

with recurrent surgical primary cubital 

tunnel syndrome (CuTS) who had 

undergone at least two previous ulnar 

nerve surgeries before having an ulnar 

neurolysis with X–WRAP® dry amniotic 

membrane barrier. The results showed 

that the participants experienced 

significant improvement in VAS pain 

scores, QuickDASH outcome scores, and 

grip strength in comparison to these 

scores prior to the surgery. Mean VAS 

improved by 3.5, from 7.3 to 3.8 (P 

<.0001). Mean QuickDASH improved by 

30, from 80 to 50 (P <.0001). Grip 

strength improved by 25 pounds on 

average (P <.0001), a mean improvement 

of 38 percent relative to the contralateral 

side compared with preoperative 

measurements. Also, none of the 

patients reported progression or 

worsening of their symptoms compared 

with preoperatively. The applicant’s 

conclusions from the article were that 

using the X–WRAP® amniotic 

membrane with revision neurolysis was 

a safe and effective treatment for 

primary cubital syndrome. The study 

lacked a comparison arm and did not 

include group assignment or blinding of 

patients. 

Based on the evidence submitted, we 

believe there are insufficient data to 

determine whether X–WRAP® offers a 

substantial clinical improvement over 

other treatments for wound care. We 

invited public comments on whether 

the X–WRAP® meets the substantial 

clinical improvement criterion. 

Comment: Commenters described the 

clinical benefits that they have observed 

using the X–WRAP® product in the 

treatment of wounds, bone, and soft 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59333 

tissue repairs. One commenter 

submitted several studies related to 

amniotic fluid and amniotic membranebased products; however, none of these 

studies were specific to the X–WRAP®

product. 

Response: We appreciate the 

commenters’ responses on the X– 

WRAP® product. However, the 

commenters did not provide new 

empirical evidence that addressed our 

concerns regarding the evidence of 

substantial clinical improvement that 

was submitted with the application, 

specifically that this evidence was 

limited to one retrospective study that 

lacked a comparison arm and did not 

include group assignment or blinding of 

patients. At this time, we have not been 

able to determine that X–WRAP®

represents a substantial clinical 

improvement relative to existing 

therapies currently available for wound 

care. 

The third criterion for establishing a 

device category, at § 419.66(c)(3), 

requires us to determine that the cost of 

the device is not insignificant, as 

described in § 419.66(d). Section 

419.66(d) includes three cost 

significance criteria that must each be 

met. The applicant provided the 

following information in support of the 

cost significance requirements. The 

applicant stated that several CPT codes 

would be used to report X–WRAP®, 

including: CPT codes 29826, 29827, 

29828, 23473, 23420, 23412, 27605, 

27650, 29891, 29888, 29889, 28008, 

22551, 22856, 27179, 29861, 29862, 

15271, 15272, 15273, and 15277. To 

meet the cost criterion for device passthrough payment, a device must pass all 

three tests for cost threshold for at least 

one APC. These CPT codes are assigned 

to APCs 5121 through 5125 (Level 1 

through Level 5 Musculoskeletal 

Procedures) and APCs 5054 and 5055 

(Level 4 and Level 5 Skin Procedures). 

For our calculations, we used APC 5121 

(Level 1 Musculoskeletal Procedures), 

which had a CY 2016 payment rate of 

$1,455 and a device offset amount of 

$15.86 at the time the application was 

received. According to the applicant, 

the X–WRAP® product is available in 

several sizes, the largest being 4x8 cm 

with a cost of $5,280. 

Section 419.66(d)(1), the first cost 

significance requirement, provides that 

the estimated average reasonable cost of 

devices in the category must exceed 25 

percent of the applicable APC payment 

amount for the service related to the 

category of devices. The estimated 

average reasonable cost of $5,280 for X– 

WRAP® exceeds the applicable APC 

payment amount for the service related 

to the category of devices of $1,455 by 

363 percent ($5,280/$1,455 × 100 = 363 

percent). Therefore, we stated in the 

proposed rule that it appears that X– 

WRAP® meets the first cost significance 

test. 

The second cost significance test, at 

§ 419.66(d)(2), provides that the 

estimated average reasonable cost of the 

devices in the category must exceed the 

cost of the device-related portion of the 

APC payment amount for the related 

service by at least 25 percent, which 

means that the device cost needs to be 

at least 125 percent of the offset amount 

(the device related portion of the APC 

found on the offset list). The average 

reasonable cost of $5,280 for X–WRAP®

exceeds the device-related portion of the 

APC payment amount of $15.86 by 

33,291 percent ($5,280/$15.86) × 100 = 

33,291 percent). Therefore, we stated in 

the proposed rule that it appears that X– 

WRAP® meets the second cost 

significance test. 

The third cost significance test, at 

§ 419.66(d)(3), requires that the 

difference between the estimated 

average reasonable cost of the devices in 

the category and the portion of the APC 

payment amount for the device must 

exceed 10 percent of the APC payment 

amount for the related service. The 

difference between the average 

reasonable cost of $5,280 for X–WRAP®

and the portion of the APC payment 

amount for the device of $15.86 exceeds 

the APC payment amount for the related 

service of $1,455 by 361 percent 

(($5280¥$15.86)/$1455 × 100 = 361 

percent). Therefore, we stated in the 

proposed rule that it appears that X– 

WRAP® meets the third cost 

significance test. 

We invited public comments on 

whether X–WRAP® meets the device 

pass-through payment cost criteria 

discussed in this section. 

We did not receive any public 

comments on this issue. We continue to 

believe that X–WRAP® meets the device 

pass-through payment cost criteria. 

After consideration of the public 

comments we received, we are not 

approving device pass-through payment 

status for the X–WRAP® product for CY 

2018. 

B. Device-Intensive Procedures 

1. Background 

Under the OPPS, prior to CY 2017, 

device-intensive APCs were defined as 

those APCs with a device offset greater 

than 40 percent (79 FR 66795). In 

assigning device-intensive status to an 

APC, the device costs of all of the 

procedures within the APC were 

calculated and the geometric mean 

device offset of all of the procedures had 

to exceed 40 percent. Almost all of the 

procedures assigned to device-intensive 

APCs utilize devices, and the device 

costs for the associated HCPCS codes 

exceed the 40-percent threshold. The no 

cost/full credit and partial credit device 

policy (79 FR 66872 through 66873) 

applies to device-intensive APCs and is 

discussed in detail in section IV.B.4. of 

this final rule with comment period. A 

related device policy was the 

requirement that certain procedures 

assigned to device-intensive APCs 

require the reporting of a device code on 

the claim (80 FR 70422). For further 

background information on the deviceintensive APC policy, we refer readers 

to the CY 2016 OPPS/ASC final rule 

with comment period (80 FR 70421 

through 70426). 

2. HCPCS Code-Level Device-Intensive 

Determination 

As stated above, prior to CY 2017, the 

device-intensive methodology assigned 

device-intensive status to all procedures 

requiring the implantation of a device, 

which were assigned to an APC with a 

device offset greater than 40 percent. 

Historically, the device-intensive 

designation was at the APC level and 

applied to the applicable procedures 

within that given APC. In the CY 2017 

OPPS/ASC final rule with comment 

period (81 FR 79658), we changed our 

methodology to assign device-intensive 

status to all procedures that require the 

implantation of a device and have an 

individual HCPCS code-level device 

offset of greater than 40 percent, 

regardless of the APC assignment. 

Under this policy, all procedures with 

significant device costs (defined as a 

device offset of more than 40 percent) 

are assigned device-intensive status, 

regardless of their APC placement. Also, 

we believe that a HCPCS code-level 

device offset is, in most cases, a better 

representation of a procedure’s device 

cost than an APC-wide average device 

offset based on the average device offset 

of all of the procedures assigned to an 

APC. Unlike a device offset calculated at 

the APC level, which is a weighted 

average offset for all devices used in all 

of the procedures assigned to an APC, 

a HCPCS code-level device offset is 

calculated using only claims for a single 

HCPCS code. We believe that such a 

methodological change results in a more 

accurate representation of the cost 

attributable to implantation of a highcost device, which ensures consistent 

device-intensive designation of 

procedures with a significant device 

cost. Further, we believe a HCPCS codelevel device offset removes 

inappropriate device-intensive status to 

procedures without a significant device 


sradovich on DSK3GMQ082PROD with RULES2
59334 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

cost but which are granted such status 

because of APC assignment. 

Under our CY 2017 finalized policy, 

procedures that have an individual 

HCPCS code-level device offset of 

greater than 40 percent are identified as 

device-intensive procedures and are 

subject to all the policies applicable to 

procedures assigned device-intensive 

status under our established 

methodology, including our policies on 

device edits and device credits. 

Therefore, all procedures requiring the 

implantation of a medical device and 

that have an individual HCPCS codelevel device offset of greater than 40 

percent are subject to the device edit 

and no cost/full credit and partial credit 

device policies, discussed in sections 

IV.B.3. and IV.B.4. of this final rule with 

comment period, respectively. 

In addition, for new HCPCS codes 

describing procedures requiring the 

implantation of medical devices that do 

not yet have associated claims data, in 

the CY 2017 OPPS/ASC final rule with 

comment period (81 FR 79658), we 

finalized a policy for CY 2017 to apply 

device-intensive status with a default 

device offset set at 41 percent for new 

HCPCS codes describing procedures 

requiring the implantation of a medical 

device that do not yet have associated 

claims data until claims data are 

available to establish the HCPCS codelevel device offset for the procedures. 

This default device offset amount of 41 

percent is not calculated from claims 

data; instead, it is applied as a default 

until claims data are available upon 

which to calculate an actual device 

offset for the new code. The purpose of 

applying the 41-percent default device 

offset to new codes that describe 

procedures that implant medical 

devices is to ensure ASC access for new 

procedures until claims data become 

available. However, in certain rare 

instances, for example, in the case of a 

very expensive implantable device, we 

may temporarily assign a higher offset 

percentage if warranted by additional 

information such as pricing data from a 

device manufacturer (81 FR 79658). 

Once claims data are available for a new 

procedure requiring the implantation of 

a medical device, device-intensive 

status will be applied to the code if the 

HCPCS code-level device offset is 

greater than 40 percent, according to our 

finalized policy of determining deviceintensive status by calculating the 

HCPCS code-level device offset. 

The full listing of proposed CY 2018 

device-intensive procedures was 

included in Addendum P to the 

proposed rule (which is available via 

the Internet on the CMS Web site). The 

full listing of the final CY 2018 deviceintensive procedures is included in 

Addendum P to this final rule with 

comment period. 

In response to comments received in 

the CY 2017 OPPS/ASC final rule with 

comment period, we specified that 

additional information for our 

consideration of an offset percentage 

higher than the default of 41 percent for 

new HCPCS codes describing 

procedures requiring the implantation 

(or in some cases the insertion) of a 

medical device that do not yet have 

associated claims data, such as pricing 

data or invoices from a device 

manufacturer, should be directed to the 

Division of Outpatient Care, Mail Stop 

C4–01–26, Centers for Medicare and 

Medicaid Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850, 

or electronically at outpatientpps@

cms.hhs.gov. Additional information 

can be submitted prior to issuance of an 

OPPS/ASC proposed rule or as a public 

comment in response to an issued 

OPPS/ASC proposed rule. Device offset 

percentages will be set in each year’s 

final rule. 

We did not propose any changes to 

this policy for CY 2018. 

Comment: Several commenters 

suggested that CMS use alternate device 

offset percentage thresholds for 

assigning device-intensive status. One of 

those commenters suggested that the 

device-intensive designation be given 

for any specified procedure with a 

HCPCS code level device offset 

percentage of greater than 30 percent. 

Another commenter suggested that CMS 

apply the device-intensive designation 

to any procedure for which the 

individual HCPCS code level device 

offset is greater than 40 percent of the 

procedure’s unadjusted ASC payment 

rate. In addition, one commenter 

requested that CMS provide clarification 

on the criteria for device-intensive 

procedures, specifically with respect to 

temporarily inserted devices. 

Response: We thank the commenters 

for their suggestions. However, we 

continue to believe that our current 

methodology to assign device-intensive 

status to all procedures that require the 

implantation of a device and have an 

individual HCPCS code-level device 

offset of greater than 40 percent is 

appropriate. With respect to the request 

for clarification about the criteria for 

device-intensive procedures pertaining 

to temporarily inserted devices, we 

would like to clarify that deviceintensive procedures require the 

implantation of a device and 

additionally are subject to the following 

criteria: (1) All procedures must involve 

implantable devices that would be 

reported if device insertion procedures 

were performed; (2) the required devices 

must be surgically inserted or implanted 

devices that remain in the patient’s 

body after the conclusion of the 

procedure (at least temporarily); and (3) 

the device offset amount must be 

significant, which is defined as 

exceeding 40 percent of the procedure’s 

mean cost. 

Comment: One commenter supported 

the proposed designation of CPT code 

28740 (Arthrodesis, midtarsal or 

tarsometatarsal, single joint) as a deviceintensive procedure. A few commenters 

requested that the following HCPCS 

codes be assigned device-intensive 

status: HCPCS codes 55874 (placeholder 

code 55X87) (Transperineal placement 

of biodegradable material, peri-prostatic, 

single or multiple injection(s), including 

image guidance, when performed); 

0275T (Percutaneous laminotomy/ 

laminectomy (interlaminar approach) 

for decompression of neural elements, 

(with or without ligamentous resection, 

discectomy, facetectomy and/or 

foraminotomy), any method, under 

indirect image guidance (e.g., 

fluoroscopic, ct), single or multiple 

levels, unilateral or bilateral; lumbar); 

and 28297 (Correction, hallux valgus 

(bunionectomy), with sesamoidectomy, 

when performed; with first metatarsal 

and medial cuneiform joint arthrodesis, 

any method). 

Response: We thank the commenter 

for its support for our proposed 

designation of CPT code 28740. With 

respect to the commenters’ request that 

we assign the device-intensive 

designation to HCPCS codes 55874, 

0275T, and 28297, we note that the 

device offset percentage for all three of 

these procedures (as identified by the 

above mentioned HCPCS codes or 

predecessor codes) is not above the 40 

percent threshold, and therefore, these 

procedures are not eligible to be 

assigned device-intensive status. 

Comment: Several commenters 

suggested that CMS develop a 

mechanism that prevents significant 

payment reductions for device-intensive 

procedures due to wage index 

adjustments. 

Response: In response to the 

commenters’ suggestion that CMS 

develop a mechanism that prevents 

significant payment reductions for 

device-intensive procedures due to 

wage index adjustments, we note that 

we did not include such a proposal in 

the CY 2018 proposed rule. However, 

we will take this comment into 

consideration for future rulemaking. 

3. Device Edit Policy 

In the CY 2015 OPPS/ASC final rule 

with comment period (79 FR 66795), we 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59335 

finalized a policy and implemented 

claims processing edits that require any 

of the device codes used in the previous 

device-to-procedure edits to be present 

on the claim whenever a procedure code 

assigned to any of the APCs listed in 

Table 5 of the CY 2015 OPPS/ASC final 

rule with comment period (the CY 2015 

device-dependent APCs) is reported on 

the claim. In addition, in the CY 2016 

OPPS/ASC final rule with comment 

period (80 FR 70422), we modified our 

previously existing policy and applied 

the device coding requirements 

exclusively to procedures that require 

the implantation of a device that are 

assigned to a device-intensive APC. In 

the CY 2016 OPPS/ASC final rule with 

comment period, we also finalized our 

policy that the claims processing edits 

are such that any device code, when 

reported on a claim with a procedure 

assigned to a device-intensive APC 

(listed in Table 42 of the CY 2016 OPPS/ 

ASC final rule with comment period (80 

FR 70422)) will satisfy the edit. 

In the CY 2017 OPPS/ASC final rule 

with comment period (81 FR 79658 

through 79659), we changed our policy 

for CY 2017 and subsequent years to 

apply the CY 2016 device coding 

requirements to the newly defined 

(individual HCPCS code-level device 

offset greater than 40 percent) deviceintensive procedures. For CY 2017 and 

subsequent years, we also specified that 

any device code, when reported on a 

claim with a device-intensive 

procedure, will satisfy the edit. In 

addition, we created HCPCS code C1889 

to recognize devices furnished during a 

device-intensive procedure that are not 

described by a specific Level II HCPCS 

Category C-code. Reporting HCPCS code 

C1889 with a device-intensive 

procedure will satisfy the edit requiring 

a device code to be reported on a claim 

with a device-intensive procedure. 

We did not propose any changes to 

this policy for CY 2018. 

Comment: One commenter requested 

that CMS restore the device-toprocedure and procedure-to-device 

edits. Another commenter requested 

that CMS adopt an additional policy for 

device-intensive procedures that have a 

device offset percentage above 75 

percent, that would implement deviceto-procedure and procedure-to-device 

edits for all such procedures (having a 

device offset percentage above 75 

percent) and would only utilize claims 

that passed those edits for establishing 

the geometric mean cost and the 

HCPCS-level device offset for those 

procedures. Also, as part of this 

commenter’s suggested new policy, the 

commenter requested that CMS only 

allow clinically similar, deviceintensive procedures with a device 

offset above 75 percent to be grouped 

into an APC together and that all other 

procedures be excluded (both 

nondevice-intensive procedures and 

device-intensive procedures that have a 

device offset percentage below 75 

percent). 

Response: As we stated in the CY 

2015 OPPS/ASC final rule with 

comment period (79 FR 66794), we 

continue to believe that the elimination 

of device-to-procedure edits and 

procedure-to-device edits is appropriate 

due to the experience hospitals now 

have in coding and reporting these 

claims fully. More specifically, for the 

more costly devices, we believe the C– 

APCs will reliably reflect the cost of the 

device if charges for the device are 

included anywhere on the claim. We 

remind commenters that, under our 

current policy, hospitals are still 

expected to adhere to the guidelines of 

correct coding and append the correct 

device code to the claim when 

applicable. We also remind commenters 

that, as with all other items and services 

recognized under the OPPS, we expect 

hospitals to code and report their costs 

appropriately, regardless of whether 

there are claims processing edits in 

place. In addition, we remind 

commenters that, under our current 

policy, the APC assignment of a deviceintensive procedure has no bearing on 

the procedure’s device-intensive 

designation. With respect to the 

commenter’s request for an additional 

policy specifically for device-intensive 

procedures that have a device offset 

percentage above 75 percent, for the 

reasons stated above in this comment 

response, we do not believe that such a 

policy is needed. 

4. Adjustment to OPPS Payment for No 

Cost/Full Credit and Partial Credit 

Devices 

a. Background 

To ensure equitable OPPS payment 

when a hospital receives a device 

without cost or with full credit, in CY 

2007, we implemented a policy to 

reduce the payment for specified 

device-dependent APCs by the 

estimated portion of the APC payment 

attributable to device costs (that is, the 

device offset) when the hospital receives 

a specified device at no cost or with full 

credit (71 FR 68071 through 68077). 

Hospitals were instructed to report no 

cost/full credit device cases on the 

claim using the ‘‘FB’’ modifier on the 

line with the procedure code in which 

the no cost/full credit device is used. In 

cases in which the device is furnished 

without cost or with full credit, 

hospitals were instructed to report a 

token device charge of less than $1.01. 

In cases in which the device being 

inserted is an upgrade (either of the 

same type of device or to a different 

type of device) with a full credit for the 

device being replaced, hospitals were 

instructed to report as the device charge 

the difference between the hospital’s 

usual charge for the device being 

implanted and the hospital’s usual 

charge for the device for which it 

received full credit. In CY 2008, we 

expanded this payment adjustment 

policy to include cases in which 

hospitals receive partial credit of 50 

percent or more of the cost of a specified 

device. Hospitals were instructed to 

append the ‘‘FC’’ modifier to the 

procedure code that reports the service 

provided to furnish the device when 

they receive a partial credit of 50 

percent or more of the cost of the new 

device. We refer readers to the CY 2008 

OPPS/ASC final rule with comment 

period for more background information 

on the ‘‘FB’’ and ‘‘FC’’ modifiers 

payment adjustment policies (72 FR 

66743 through 66749). 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75005 

through 75007), beginning in CY 2014, 

we modified our policy of reducing 

OPPS payment for specified APCs when 

a hospital furnishes a specified device 

without cost or with a full or partial 

credit. For CY 2013 and prior years, our 

policy had been to reduce OPPS 

payment by 100 percent of the device 

offset amount when a hospital furnishes 

a specified device without cost or with 

a full credit and by 50 percent of the 

device offset amount when the hospital 

receives partial credit in the amount of 

50 percent or more of the cost for the 

specified device. For CY 2014, we 

reduced OPPS payment, for the 

applicable APCs, by the full or partial 

credit a hospital receives for a replaced 

device. Specifically, under this 

modified policy, hospitals are required 

to report on the claim the amount of the 

credit in the amount portion for value 

code ‘‘FD’’ (Credit Received from the 

Manufacturer for a Replaced Medical 

Device) when the hospital receives a 

credit for a replaced device that is 50 

percent or greater than the cost of the 

device. For CY 2014, we also limited the 

OPPS payment deduction for the 

applicable APCs to the total amount of 

the device offset when the ‘‘FD’’ value 

code appears on a claim. For CY 2015, 

we continued our existing policy of 

reducing OPPS payment for specified 

APCs when a hospital furnishes a 

specified device without cost or with a 

full or partial credit and to use the three 


sradovich on DSK3GMQ082PROD with RULES2
59336 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

criteria established in the CY 2007 

OPPS/ASC final rule with comment 

period (71 FR 68072 through 68077) for 

determining the APCs to which our CY 

2015 policy will apply (79 FR 66872 

through 66873). In the CY 2016 OPPS/ 

ASC final rule with comment period (80 

FR 70424), we finalized our policy to no 

longer specify a list of devices to which 

the OPPS payment adjustment for no 

cost/full credit and partial credit 

devices would apply and instead apply 

this APC payment adjustment to all 

replaced devices furnished in 

conjunction with a procedure assigned 

to a device-intensive APC when the 

hospital receives a credit for a replaced 

specified device that is 50 percent or 

greater than the cost of the device. 

b. Policy for No Cost/Full Credit and 

Partial Credit Devices 

In the CY 2017 OPPS/ASC final rule 

with comment period (81 FR 79659 

through 79660), for CY 2017 and 

subsequent years, we finalized our 

policy to reduce OPPS payment for 

device-intensive procedures, by the full 

or partial credit a provider receives for 

a replaced device, when a hospital 

furnishes a specified device without 

cost or with a full or partial credit. 

Under our current policy, hospitals 

continue to be required to report on the 

claim the amount of the credit in the 

amount portion for value code ‘‘FD’’ 

when the hospital receives a credit for 

a replaced device that is 50 percent or 

greater than the cost of the device. 

In addition, for CY 2017 and 

subsequent years, we finalized our 

policy to use the following three criteria 

for determining the procedures to which 

our final policy applies: (1) All 

procedures must involve implantable 

devices that would be reported if device 

insertion procedures were performed; 

(2) the required devices must be 

surgically inserted or implanted devices 

that remain in the patient’s body after 

the conclusion of the procedure (at least 

temporarily); and (3) the procedure 

must be device intensive; that is, the 

device offset amount must be 

significant, which is defined as 

exceeding 40 percent of the procedure’s 

mean cost. 

We did not propose any changes to 

this policy for CY 2018 and did not 

receive any public comments on this 

policy. 

5. Payment Policy for Low-Volume 

Device-Intensive Procedures 

For CY 2016, we used our equitable 

adjustment authority under section 

1833(t)(2)(E) of the Act and used the 

median cost (instead of the geometric 

mean cost per our standard 

methodology) to calculate the payment 

rate for the implantable miniature 

telescope procedure described by CPT 

code 0308T (Insertion of ocular 

telescope prosthesis including removal 

of crystalline lens or intraocular lens 

prosthesis), which is the only code 

assigned to APC 5494 (Level 4 

Intraocular Procedures) (80 FR 70388). 

We note that, as stated in the CY 2017 

OPPS/ASC proposed rule (81 FR 45656), 

we proposed to reassign the procedure 

described by CPT code 0308T to APC 

5495 (Level 5 Intraocular Procedures) 

for CY 2017, but it would be the only 

procedure code assigned to APC 5495. 

The payment rates for a procedure 

described by CPT code 0308T 

(including the predecessor HCPCS code 

C9732) were $15,551 in CY 2014, 

$23,084 in CY 2015, and $17,551 in CY 

2016. The procedure described by CPT 

code 0308T is a high-cost deviceintensive surgical procedure that has a 

very low volume of claims (in part 

because most of the procedures 

described by CPT code 0308T are 

performed in ASCs), and we believe that 

the median cost is a more appropriate 

measure of the central tendency for 

purposes of calculating the cost and the 

payment rate for this procedure because 

the median cost is impacted to a lesser 

degree than the geometric mean cost by 

more extreme observations. We stated 

that, in future rulemaking, we would 

consider proposing a general policy for 

the payment rate calculation for very 

low-volume device-intensive APCs (80 

FR 70389). 

For CY 2017, we proposed and 

finalized a payment policy for lowvolume device-intensive procedures 

that is similar to the policy applied to 

the procedure described by CPT code 

0308T in CY 2016. In the CY 2017 

OPPS/ASC final rule with comment 

period (81 FR 79660 through 79661), we 

established our current policy that the 

payment rate for any device-intensive 

procedure that is assigned to a clinical 

APC with fewer than 100 total claims 

for all procedures in the APC be 

calculated using the median cost instead 

of the geometric mean cost, for the 

reasons described above for the policy 

applied to the procedure described by 

CPT code 0308T in CY 2016. The CY 

2017 final rule geometric mean cost for 

the procedure described by CPT code 

0308T (based on 19 claims containing 

the device HCPCS C-code in accordance 

with the device-intensive edit policy) 

was approximately $21,302, and the 

median cost was approximately 

$19,521. The final CY 2017 payment 

rate (calculated using the median cost) 

is approximately $18,984. 

For CY 2018, in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33620), we 

proposed to continue with our current 

policy of establishing the payment rate 

for any device-intensive procedure that 

is assigned to a clinical APC with fewer 

than 100 total claims for all procedures 

in the APC based on calculations using 

the median cost instead of the geometric 

mean cost. For CY 2018, this policy 

would continue to apply only to a 

procedure described by CPT code 0308T 

in APC 5495 because this APC is the 

only clinical APC containing a deviceintensive procedure with fewer than 100 

total claims in the APC. As we have 

stated before (81 FR 79660), we believe 

that this approach will help to mitigate 

significant year-to-year payment rate 

fluctuations while preserving accurate 

claims data-based payment rates for 

low-volume device-intensive 

procedures. The CY 2018 proposed rule 

median cost for the procedure described 

by CPT code 0308T was approximately 

$17,643.75. The proposed CY 2018 

payment rate (calculated using the 

median cost and the claims that 

reported the device consistent with our 

device edit policy for device intensive 

procedures) was approximately 

$16,963.69. 

Comment: Some commenters 

supported CMS’ proposal to base 

payment on the median cost instead of 

the geometric mean cost for any deviceintensive procedure that is assigned to 

an APC with fewer than 100 total 

claims. Other commenters requested 

that CMS limit the impact of geometric 

mean cost reductions on payment rates 

for low-volume procedures by a certain 

percentage to ensure payment stability 

for low-volume procedures. 

Response: We thank commenters for 

their support. With respect to the 

commenters’ request to limit the impact 

of the geometric mean cost reductions 

on payment rates for low volume 

procedures by a certain percentage, we 

disagree with commenters that such a 

percentage-based limitation is 

necessary. We continue to believe our 

current policy—establishing the 

payment rate for any device-intensive 

procedure that is assigned to a clinical 

APC with fewer than 100 total claims 

for all procedures in the APC based on 

calculations using the median cost 

instead of the geometric mean cost— 

will help to mitigate significant year-toyear payment rate fluctuations while 

preserving accurate claims data-based 

payment rates for low-volume deviceintensive procedures. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, that the payment rate for 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59337 

any device-intensive procedure that is 

assigned to a clinical APC with fewer 

than 100 total claims for all procedures 

in the APC be calculated using the 

median cost instead of the geometric 

mean cost. The CY 2018 final rule 

median cost for the procedure described 

by CPT code 0308T is $17,550.18. The 

final CY 2018 payment rate (calculated 

using updated median cost and the 

claims that reported the device 

consistent with our device edit policy 

for device-intensive procedures) is 

$17,560.07. 

V. OPPS Payment Changes for Drugs, 

Biologicals, and Radiopharmaceuticals 

A. OPPS Transitional Pass-Through 

Payment for Additional Costs of Drugs, 

Biologicals, and Radiopharmaceuticals 

1. Background 

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

for temporary additional payments or 

‘‘transitional pass-through payments’’ 

for certain drugs and biologicals. 

Throughout this final rule with 

comment period, the term ‘‘biological’’ 

is used because this is the term that 

appears in section 1861(t) of the Act. A 

‘‘biological’’ as used in this final rule 

with comment period includes (but is 

not necessarily limited to) a ‘‘biological 

product’’ or a ‘‘biologic’’ as defined in 

the Public Health Service Act. As 

enacted by the Medicare, Medicaid, and 

SCHIP Balanced Budget Refinement Act 

of 1999 (BBRA) (Pub. L. 106–113), this 

pass-through payment provision 

requires the Secretary to make 

additional payments to hospitals for: 

Current orphan drugs, as designated 

under section 526 of the Federal Food, 

Drug, and Cosmetic Act; current drugs 

and biologicals and brachytherapy 

sources used in cancer therapy; and 

current radiopharmaceutical drugs and 

biologicals. ‘‘Current’’ refers to those 

types of drugs or biologicals mentioned 

above that are hospital outpatient 

services under Medicare Part B for 

which transitional pass-through 

payment was made on the first date the 

hospital OPPS was implemented. 

Transitional pass-through payments 

also are provided for certain ‘‘new’’ 

drugs and biologicals that were not 

being paid for as an HOPD service as of 

December 31, 1996 and whose cost is 

‘‘not insignificant’’ in relation to the 

OPPS payments for the procedures or 

services associated with the new drug or 

biological. For pass-through payment 

purposes, radiopharmaceuticals are 

included as ‘‘drugs.’’ As required by 

statute, transitional pass-through 

payments for a drug or biological 

described in section 1833(t)(6)(C)(i)(II) 

of the Act can be made for a period of 

at least 2 years, but not more than 3 

years, after the payment was first made 

for the product as a hospital outpatient 

service under Medicare Part B. CY 2018 

pass-through drugs and biologicals and 

their designated APCs are assigned 

status indicator ‘‘G’’ in Addenda A and 

B to this final rule with comment period 

(which are available via the Internet on 

the CMS Web site). 

Section 1833(t)(6)(D)(i) of the Act 

specifies that the pass-through payment 

amount, in the case of a drug or 

biological, is the amount by which the 

amount determined under section 

1842(o) of the Act for the drug or 

biological exceeds the portion of the 

otherwise applicable Medicare OPD fee 

schedule that the Secretary determines 

is associated with the drug or biological. 

The methodology for determining the 

pass-through payment amount is set 

forth in regulations at 42 CFR 419.64. 

These regulations specify that the passthrough payment equals the amount 

determined under section 1842(o) of the 

Act minus the portion of the APC 

payment that CMS determines is 

associated with the drug or biological. 

Section 1847A of the Act establishes 

the average sales price (ASP) 

methodology, which is used for 

payment for drugs and biologicals 

described in section 1842(o)(1)(C) of the 

Act furnished on or after January 1, 

2005. The ASP methodology, as applied 

under the OPPS, uses several sources of 

data as a basis for payment, including 

the ASP, the wholesale acquisition cost 

(WAC), and the average wholesale price 

(AWP). In this final rule with comment 

period, the term ‘‘ASP methodology’’ 

and ‘‘ASP-based’’ are inclusive of all 

data sources and methodologies 

described therein. Additional 

information on the ASP methodology 

can be found on the CMS Web site at: 

http://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Part-B-Drugs/ 

McrPartBDrugAvgSalesPrice/ 

index.html. 

The pass-through application and 

review process for drugs and biologicals 

is described on the CMS Web site at: 

http://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

HospitalOutpatientPPS/passthrough_

payment.html. 

2. 3-Year Transitional Pass-Through 

Payment Period for All Pass-Through 

Drugs, Biologicals, and 

Radiopharmaceuticals and Quarterly 

Expiration of Pass-Through Status 

As required by statute, transitional 

pass-through payments for a drug or 

biological described in section 

1833(t)(6)(C)(i)(II) of the Act can be 

made for a period of at least 2 years, but 

not more than 3 years, after the payment 

was first made for the product as a 

hospital outpatient service under 

Medicare Part B. Our current policy is 

to accept pass-through applications on a 

quarterly basis and to begin passthrough payments for newly approved 

pass-through drugs and biologicals on a 

quarterly basis through the next 

available OPPS quarterly update after 

the approval of a product’s pass-through 

status. However, prior to CY 2017, we 

expired pass-through status for drugs 

and biologicals on an annual basis 

through notice-and-comment 

rulemaking (74 FR 60480). In the CY 

2017 OPPS/ASC final rule with 

comment period (81 FR 79662), we 

finalized a policy change, beginning 

with pass-through drugs and biologicals 

newly approved in CY 2017 and 

subsequent calendar years, to allow for 

a quarterly expiration of pass-through 

payment status for drugs and biologicals 

to afford a pass-through payment period 

that is as close to a full 3 years as 

possible for all pass-through drugs, 

biologicals, and radiopharmaceuticals. 

This change eliminated the variability 

of the pass-through payment eligibility 

period, which previously varied based 

on when a particular application was 

initially received. We adopted this 

change for pass-through approvals 

beginning on or after CY 2017, to allow, 

on a prospective basis, for the maximum 

pass-through payment period for each 

pass-through drug without exceeding 

the statutory limit of 3 years. 

3. Drugs and Biologicals With Expiring 

Pass-Through Payment Status in CY 

2017 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33621), we proposed that 

the pass-through payment status of 19 

drugs and biologicals would expire on 

December 31, 2017, as listed in Table 21 

of the proposed rule (82 FR 33622). All 

of these drugs and biologicals will have 

received OPPS pass-through payment 

for at least 2 years and no more than 3 

years by December 31, 2017. These 

drugs and biologicals were approved for 

pass-through payment status on or 

before January 1, 2016. In accordance 

with the policy finalized last year and 

described above, pass-through payment 

status for drugs and biologicals newly 

approved in CY 2017 and subsequent 

years will expire on a quarterly basis, 

with a pass-through payment period as 

close to 3 years as possible. With the 

exception of those groups of drugs and 

biologicals that are always packaged 

when they do not have pass-through 

payment status (specifically, anesthesia 

drugs; drugs, biologicals, and 

radiopharmaceuticals that function as 


sradovich on DSK3GMQ082PROD with RULES2
59338 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

supplies when used in a diagnostic test 

or procedure (including diagnostic 

radiopharmaceuticals, contrast agents, 

and stress agents); and drugs and 

biologicals that function as supplies 

when used in a surgical procedure), our 

standard methodology for providing 

payment for drugs and biologicals with 

expiring pass-through payment status in 

an upcoming calendar year is to 

determine the product’s estimated per 

day cost and compare it with the OPPS 

drug packaging threshold for that 

calendar year (which is $120 for CY 

2018), as discussed further in section 

V.B.2. of this final rule with comment 

period. In the CY 2018 OPPS/ASC 

proposed rule (82 FR 33622), we 

proposed that if the estimated per day 

cost for the drug or biological is less 

than or equal to the applicable OPPS 

drug packaging threshold, we would 

package payment for the drug or 

biological into the payment for the 

associated procedure in the upcoming 

calendar year. If the estimated per day 

cost of the drug or biological is greater 

than the OPPS drug packaging 

threshold, we proposed to provide 

separate payment at the applicable 

relative ASP-based payment amount 

(which was proposed at ASP+6 percent 

for CY 2018, and is finalized at ASP+6 

percent for CY 2018, as discussed 

further in section V.B.3. of this final rule 

with comment period). 

Comment: Several commenters 

responded to the proposed expiration of 

pass-through status for HCPCS code 

A9586 (Florbetapir f18) on December 

31, 2017. (We note that the brand name 

for the radiopharmaceutical described 

by HCPCS code A9586 is Amyvid®. 

Amyvid is a FDA-approved radioactive 

diagnostic agent for Positron Emission 

Tomography (PET) imaging of the brain 

to estimate beta-amyloid neuritic plaque 

density in adult patients with cognitive 

impairment who are being evaluated for 

Alzheimer’s Disease and other causes of 

cognitive decline. Amyvid was 

approved for drug pass-through 

payment status effective January 1, 

2015.) 

One commenter, the manufacturer of 

Amyvid, urged CMS to extend passthrough payment status for another year 

on the basis that CMS could not have 

paid a legitimately billed claim for 

Amyvid in CY 2015, given the 

manufacturer’s assertion regarding CED 

trial sites’ dates of approval and start 

dates for patient enrollment. In 

addition, while the commenter 

acknowledged that the period of drug 

and biological pass-through payment 

status starts on the first date on which 

payment is made for the drug or 

biological as an outpatient hospital 

service (42 CFR 419.64(c)(2)), the 

commenter believed that an erroneous 

payment by Medicare should not have 

triggered the start of pass-through 

payment for Amyvid in 2015. In 

addition, the commenter asserted that 

expiration of pass-through payment 

status for Amyvid prior to completion of 

the CED trial will adversely affect the 

trial results. The commenter requested 

that, if CMS finalized expiration of passthrough payment status as proposed, 

CMS create a new APC for PET 

procedures with Amyvid to avoid 

violating the 2 times rule—which 

provides that items and services within 

an APC group cannot be considered 

comparable with respect to the use of 

resources if the highest median cost (or 

mean cost, if elected by the Secretary) 

for an item or service in the APC group 

is more than 2 times greater than the 

lowest median cost (or mean cost, if 

elected by the Secretary) for an item or 

service within the same APC group. The 

commenter stated that the median cost 

of Amyvid is approximately $2,756, 

over two times the median cost of the 

PET scan procedure. 

One commenter, a manufacturer of 

another radiopharmaceutical, 

recommended that CMS allow for those 

products whose pass-through payment 

status will expire after a period of at 

least 2 years and no more than 3 years 

to expire as proposed, as a matter of 

applying policy consistently. 

Several commenters recommended 

that CMS allow products covered by 

Medicare in the context of coverage 

with evidence development (CED) 

clinical trial to retain their pass-through 

status for the duration of the CED trial. 

Response: CMS issued a Medicare 

National Coverage Determination (NCD) 

on September 27, 2013, which allows 

conditional coverage of amyloid PET 

under CED. Currently, there are three 

Medicare-approved amyloid PET CED 

trials. The first CED trial was approved 

on April 2, 2014. The second CED trial 

was approved on March 3, 2015. The 

third CED trial was approved January 5, 

2016. Information on these clinical trials 

is available on the CMS amyloid PET 

Web page available via the Internet at: 

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

Coverage/Coverage-with-EvidenceDevelopment/Amyloid-PET.html. The 

effective date of Medicare billing for 

CED trial sites is the CMS approval date. 

CMS has provided billing instructions 

for providers and practitioner that 

specify proper coding for clinical trial 

claims. For example, providers and 

practitioner must report certain 

diagnosis codes, procedure codes, 

modifiers, and a national clinical trial 

number. Therefore, providers enrolled 

in one of these trials could have begun 

appropriate billing Medicare for the 

amyloid PET procedures and associated 

Amyloid PET tracers beginning April 2, 

2014. 

Based on our claims analysis, we 

found that HCPCS code A9586 was 

billed by hospital providers 14 times in 

CY 2015, with 1 claim being paid. Based 

on our review of provider enrollment in 

the CED trials, it appears that this paid 

Medicare claim from CY 2015 was 

submitted from a CED clinical trial 

participant and not paid in error as the 

commenter suggests. According to 

section 1833(t)(6)(C)(i)(II) of the Act and 

the regulations at 42 CFR 419.66(g), the 

pass-through payment eligibility period 

begins on the first date on which passthrough payment is made. Because there 

is a paid claim from CY 2015, the passthrough payment period for HCPCS 

code A9586 began in CY 2015. 

Therefore, based on the CY 2015 paid 

claim for HCPCS code A9586 as a 

hospital outpatient service, which 

triggered the start of the pass-through 

payment period, we are expiring passthrough payment status on December 

31, 2017. From the start of the passthrough payment period through 

December 31, 2017, Medicare will have 

provided an OPPS pass-through 

payment for at least 2 years and no more 

than 3 years by December 31, 2017. 

Extending pass-through payment status 

into CY 2018 would cause pass-through 

payments for HCPCS code A9586 to 

extend into a fourth year, thereby 

exceeding the pass-through payment 

period authorized by section 

1833(t)(6)(C)(i)(II) of the Act. 

In addition, regarding the 

commenters’ concern that expiration of 

pass-through payment status for 

Amyvid, and subsequent packaging of it 

as a ‘‘policy-packaged’’ drug, will skew 

trial results (presumably because 

providers will not receive an ASP-based 

payment), we disagree, given that 

analysis of CY 2016 claims data across 

different sites of care shows that the vast 

majority of billings for HCPCS code 

A9586 is concentrated in the physician 

office and the independent diagnostic 

testing facility (IDTF) setting. Further, 

we note that hospitals are not precluded 

from billing for HCPCS code A9586 in 

the context of a CED trial once its passthrough payment status expires. We also 

note that the payment for HCPCS A9586 

would be reflected in the payment rate 

for the associated procedure. 

With respect to the request that we 

create a new APC for PET procedures 

with Amyvid, we do not believe it is 

appropriate, prudent, or practicable to 

create unique APCs for specific drugs or 

biologicals or other individual items 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59339 

that are furnished with a particular 

procedure or procedures. We disagree 

with the commenter’s assertion that 

packaging of Amyvid with the 

associated PET procedure described by 

CPT code 78814 (Pet image w/ct lmtd) 

creates a 2 times rule violation in APC 

5594 (Level 4 Nuclear Medicine) (we 

refer readers to section III.B. of this final 

rule with comment period for 

discussion of 2 times rule) and believe 

that the commenter may have 

misunderstood the application of the 2 

times rule. Specifically, we note that, in 

determining the APCs with a 2 times 

rule violation, we do not consider the 

cost of an individual packaged item that 

may be furnished with a procedure or 

service, but rather the geometric mean 

cost of the service (which includes 

aggregate cost of packaged items that 

may be furnished with a procedure). 

Moreover, we disagree with the 

commenter’s statement that the median 

cost of Amyvid is approximately $2,756. 

While it is correct that the CY 2017 

pass-through payment for Amyvid is 

$2,756, the pass-through payment rate 

of ASP+6 percent is not indicative of the 

cost incurred by hospitals to acquire, 

store, handle, and dispense Amyvid. 

Our analysis of the updated CY 2016 

claims data used for CY 2018 ratesetting 

for this CY 2018 OPPS/ASC final rule 

with comment period shows that the 

median cost of Amyvid is $1,275.75, 

which when combined with the 

aggregate cost of packaged items that 

may be furnished with CPT code 78814, 

would not create a 2 times rule 

violation. 

With respect to the commenters’ 

request that we allow drug or biological 

pass-through payment status for 

products covered by CED for the 

duration of the CED trial, we reiterate 

that the statute limits the period of passthrough payment eligibility to at least 2 

years, but no more than 3 years, after the 

product’s first payment as a hospital 

outpatient service under Medicare Part 

B. As such, we are unable to extend 

pass-through payment status beyond 3 

years. 

Finally, with respect to the 

commenter’s support of our proposal to 

finalize the expiration of pass-through 

payment status as proposed for 

consistent policy application, we agree 

with the commenter. 

In summary, we are finalizing our 

proposal to expire pass-through 

payment status for HCPCS code A9586 

on December 31, 2017. Because passthrough payment was effective in CY 

2015, HCPCS code A9586 will have had 

pass-through payment status for at least 

2 years but no more than 3 years in 

accordance with section 1833(t)(6) of 

the Act. 

Comment: Several commenters 

requested that CMS not package 

payment for Omidria® (described by 

HCPCS code C9447) upon expiration of 

pass-through payment status on 

December 31, 2017, and continue to pay 

separately for the drug at ASP+6 

percent. One commenter, the 

manufacturer of Omidria, reiterated 

many previous arguments (81 FR 79667) 

for why CMS should dispense with 

classifying Omidria as drug that 

functions as a surgical supply when 

used in a surgical procedure. Specially, 

the commenter made the following 

arguments: 

• The language used to construct the 

‘‘packaging as a surgical supply’’ policy 

is overly broad and not consistent with 

Congressional intent that requires 

clinically comparable APC groups. CMS 

has not defined surgery or provided a 

rationale for applying different 

packaging policies to surgery than 

would be applied to other drugs with 

therapeutic indications; 

• Mischaracterization of drugs used 

in surgery as ‘‘supplies’’, given 

regulatory requirements that apply to 

drugs. The FDA-approved label 

indicates its specific use in intraocular 

procedures; 

• Packaging Omidria and other drugs 

as surgical supplies creates barriers to 

access, especially in ASC settings, lowvolume HOPDs, and hospitals with low 

percentage of insured patients 

(presumably because providers may 

choose lower cost alternatives because 

separate payment would no longer be 

made); 

• Packaging Omidria and other drugs 

as surgical supplies may affect quality of 

care improvements and patient 

outcomes; and 

• Packaging drugs as ‘‘surgical 

supplies’’ interferes with physician 

discretion and is inconsistent with the 

principles that guide packaging under 

the OPPS. 

A few commenters requested that 

CMS consider a narrow exception to the 

‘‘drug as a supply’’ packaging policy to 

enable separate payment for Omidria. 

Response: We have addressed many 

of these comments in prior rulemaking. 

We refer readers to the CY 2017 OPPS/ 

ASC final rule with comment period for 

a detailed discussion on why we believe 

Omidria is a drug that functions as a 

surgical supply (81 FR 79668). We did 

not propose any policy changes to the 

criteria applied to a drug that functions 

as a surgical supply when used in a 

surgical procedure in the CY 2018 

OPPS/ASC proposed rule, nor do we 

believe the commenters provided any 

new information that would cause us to 

change our position that Omidria is a 

drug that functions as a surgical supply. 

Therefore, we are not addressing these 

comments in this final rule with 

comment period. However, in the 

proposed rule, we did solicit comments 

on packaging policies generally, 

including drugs that function as a 

surgical supply, and will take responses 

to the comment solicitation, along with 

these commenters’ recommendations 

and suggestions, into consideration in 

future rulemaking. 

Comment: Commenters urged CMS to 

apply quarterly expiration of drug passthrough payment to drugs and 

biologicals first added to the passthrough payment list in CYs 2015 and 

2016 that would otherwise transition off 

pass-through payment in less than 3 

years. Commenters suggested CMS 

could apply the quarterly expiration of 

pass-through payment policy to devices 

approved for pass-through payment 

status in CY 2015 or 2016 because it 

would not cause harm to providers or 

beneficiaries. As stated earlier in this 

section, one commenter suggested that 

CMS allow for those products whose 

pass-through payment status will expire 

after a period of at least 2 years and no 

more than 3 years to expire as proposed, 

as a matter of applying policy 

consistently. 

Response: As finalized in the CY 2017 

OPPS/ASC final rule with comment 

period (81 FR 79662), the quarterly 

expiration of pass-through payment 

policy applies to drugs and biologicals 

newly approved for pass-through 

payment in CY 2017. We note that, even 

prior to the policy change adopted in 

CY 2017 rulemaking, the Agency’s prior 

policy practice of making drug passthrough payments for a minimum of 2 

years, but not more than 3 years, was 

consistent with statutory authority. 

Further, once a drug’s pass-through 

payment status period expires, its costs 

are packaged into the associated 

procedure(s) with which it is billed, and 

accordingly, reversing past expirations 

of pass-through payment would 

potentially cause payment rates 

established for a prior year for certain 

services to be incorrect. 

We agree with the commenter who 

stated that we should expire the drugpass-through payment status for drugs 

and biologicals as proposed, to allow for 

consistent application of our policy. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to expire the pass-through 

payment status of the 19 drugs and 

biologicals listed in Table 69 below on 

December 31, 2017. 


sradovich on DSK3GMQ082PROD with RULES2
59340 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 69—DRUGS AND BIOLOGICALS FOR WHICH PASS-THROUGH PAYMENT STATUS EXPIRES DECEMBER 31, 2017 

CY 2018 

HCPCS code CY 2018 long descriptor 

Final 

CY 2018 

status 

indicator 

Final 

CY 2018 

APC 

Pass-through 

payment 

effective date 

A9586 ............. Florbetapir f18, diagnostic, per study dose, up to 10 millicuries .................... N N/A 01/01/2015 

C9447 ............ Injection, phenylephrine and ketorolac, 4 ml vial ............................................ N N/A 01/01/2015 

J0596 ............. Injection, c-1 esterase inhibitor (human), Ruconest, 10 units ........................ K 9445 04/01/2015 

J0695 ............. Injection, ceftolozane 50 mg and tazobactam 25 mg ..................................... K 9452 04/01/2015 

J0875 ............. Injection, dalbavancin, 5 mg ........................................................................... K 1823 01/01/2015 

J1833 ............. Injection, isavuconazonium sulfate, 1 mg ....................................................... K 9456 10/01/2015 

J2407 ............. Injection, oritavancin, 10 mg ........................................................................... K 1660 01/01/2015 

J2502 ............. Injection, pasireotide long acting, 1 mg .......................................................... K 9454 07/01/2015 

J2547 ............. Injection, peramivir, 1 mg ................................................................................ K 9451 04/01/2015 

J2860 ............. Injection, siltuximab, 10 mg ............................................................................. K 9455 07/01/2015 

J3090 ............. Injection, tedizolid phosphate, 1 mg ............................................................... K 1662 01/01/2015 

J7313 ............. Injection, fluocinolone acetonide intravitreal implant, 0.01 mg ....................... K 9450 04/01/2015 

J8655 ............. Netupitant (300 mg) and palonosetron (0.5 mg) ............................................ K 9448 04/01/2015 

J9032 ............. Injection, belinostat, 10 mg ............................................................................. K 1658 01/01/2015 

J9039 ............. Injection, blinatumomab, 1 mcg ...................................................................... K 9449 04/01/2015 

J9271 ............. Injection, pembrolizumab, 1 mg ...................................................................... K 1490 01/01/2015 

J9299 ............. Injection, nivolumab, 1 mg .............................................................................. K 9453 07/01/2015 

Q4172 ............ PuraPly, and PuraPly Antimicrobial, any type, per square centimeter ........... N N/A 01/01/2015 

Q9950 ............ Injection, sulfur hexafluoride lipid microsphere, per ml .................................. N N/A 10/01/2015 

The final packaged or separately 

payable status of each of these drugs or 

biologicals is listed in Addendum B to 

this final rule with comment period 

(which is available via the Internet on 

the CMS Web site). 

4. Drugs, Biologicals, and 

Radiopharmaceuticals With New or 

Continuing Pass-Through Payment 

Status in CY 2018 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33622), we proposed to 

continue pass-through payment status 

in CY 2018 for 38 drugs and biologicals. 

None of these drugs and biologicals will 

have received OPPS pass-through 

payment for at least 2 years and no more 

than 3 years by December 31, 2017. 

These drugs and biologicals, which 

were approved for pass-through 

payment status between January 1, 

2016, and July 1, 2017, were listed in 

Table 22 of the proposed rule (82 FR 

33623). The APCs and HCPCS codes for 

these drugs and biologicals approved for 

pass-through payment status through 

July 1, 2017 were assigned status 

indicator ‘‘G’’ in Addenda A and B to 

the proposed rule (which are available 

via the Internet on the CMS Web site). 

Section 1833(t)(6)(D)(i) of the Act sets 

the amount of pass-through payment for 

pass-through drugs and biologicals (the 

pass-through payment amount) as the 

difference between the amount 

authorized under section 1842(o) of the 

Act and the portion of the otherwise 

applicable OPD fee schedule that the 

Secretary determines is associated with 

the drug or biological. For CY 2018, we 

proposed to continue to pay for passthrough drugs and biologicals at ASP+6 

percent, equivalent to the payment rate 

these drugs and biologicals would 

receive in the physician’s office setting 

in CY 2018. We proposed that a $0 passthrough payment amount would be paid 

for pass-through drugs and biologicals 

under the CY 2018 OPPS because the 

difference between the amount 

authorized under section 1842(o) of the 

Act, which was proposed at ASP+6 

percent, and the portion of the 

otherwise applicable OPD fee schedule 

that the Secretary determines is 

appropriate, which was proposed at 

ASP+6 percent, is $0. 

In the case of policy-packaged drugs 

(which include the following: 

Anesthesia drugs; drugs, biologicals, 

and radiopharmaceuticals that function 

as supplies when used in a diagnostic 

test or procedure (including contrast 

agents, diagnostic radiopharmaceuticals, 

and stress agents); and drugs and 

biologicals that function as supplies 

when used in a surgical procedure), we 

proposed that their pass-through 

payment amount would be equal to 

ASP+6 percent for CY 2018 because, if 

not for their pass-through payment 

status, payment for these products 

would be packaged into the associated 

procedure. 

In addition, we proposed to continue 

to update pass-through payment rates 

on a quarterly basis on the CMS Web 

site during CY 2018 if later quarter ASP 

submissions (or more recent WAC or 

AWP information, as applicable) 

indicate that adjustments to the 

payment rates for these pass-through 

drugs or biologicals are necessary. For a 

full description of this policy, we refer 

readers to the CY 2006 OPPS/ASC final 

rule with comment period (70 FR 68632 

through 68635). 

For CY 2018, consistent with our CY 

2017 policy for diagnostic and 

therapeutic radiopharmaceuticals, we 

proposed to provide payment for both 

diagnostic and therapeutic 

radiopharmaceuticals that are granted 

pass-through payment status based on 

the ASP methodology. As stated earlier, 

for purposes of pass-through payment, 

we consider radiopharmaceuticals to be 

drugs under the OPPS. Therefore, if a 

diagnostic or therapeutic 

radiopharmaceutical receives passthrough payment status during CY 2018, 

we proposed to follow the standard ASP 

methodology to determine the passthrough payment rate that drugs receive 

under section 1842(o) of the Act, which 

was proposed at ASP+6 percent. If ASP 

data are not available for a 

radiopharmaceutical, we proposed to 

provide pass-through payment at 

WAC+6 percent, the equivalent 

payment provided to pass-through 

payment drugs and biologicals without 

ASP information. If WAC information 

also is not available, we proposed to 

provide payment for the pass-through 

radiopharmaceutical at 95 percent of its 

most recent AWP. 

Comment: Commenters supported 

CMS’ proposal to provide payment at 

ASP+6 percent for drugs, biologicals, 

contrast agents, and 

radiopharmaceuticals that are granted 

pass-through payment status. 

Response: We appreciate the 

commenters’ support. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to provide 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59341 

payment for drugs, biologicals, 

diagnostic and therapeutic 

radiopharmaceuticals, and contrast 

agents that are granted pass-through 

payment status based on the ASP 

methodology. If a diagnostic or 

therapeutic radiopharmaceutical 

receives pass-through payment status 

during CY 2018, we will follow the 

standard ASP methodology to determine 

the pass-through payment rate that 

drugs receive under section 1842(o) of 

the Act, which is ASP+6 percent. If ASP 

data are not available for a 

radiopharmaceutical, we will provide 

pass-through payment at WAC+6 

percent, the equivalent payment 

provided to pass-through payment drugs 

and biologicals without ASP 

information. If WAC information also is 

not available, we will provide payment 

for the pass-through payment 

radiopharmaceutical at 95 percent of its 

most recent AWP. 

The 50 drugs and biologicals that 

continue to have pass-through payment 

status for CY 2018 or have been granted 

pass-through payment status as of 

January 2018 are shown in Table 70 

below. 

TABLE 70—DRUGS AND BIOLOGICALS WITH PASS-THROUGH PAYMENT STATUS IN CY 2018 

CY 2017 

HCPCS code 

CY 2018 

HCPCS code CY 2018 long descriptor 

CY 2018 

status 

indicator 

CY 2018 

APC 

Pass-through 

payment 

effective 

date 

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

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

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

C9140 ............. J7210 ............. Injection, Factor VIII (antihemophilic factor, recombinant) 

(Afstyla), 1 I.U.

G 9043 01/01/2017 

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

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

C9483 ............. J9022 ............. Injection, atezolizumab, 10 mg ........................................... G 9483 10/01/2016 

C9484 ............. J1428 ............. Injection, eteplirsen, 10 mg ................................................ G 9484 04/01/2017 

C9485 ............. J9285 ............. Injection, olaratumab, 10 mg .............................................. G 9485 04/01/2017

C9486 ............. J1627 ............. Injection, granisetron extended release, 0.1 mg ................ G 9486 04/01/2017 

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

C9489 ............. J2326 ............. Injection, nusinersen, 0.1 mg ............................................. G 9489 07/01/2017

C9490 ............. J0565 ............. Injection, bezlotoxumab, 10 mg .......................................... G 9490 07/01/2017 

C9491 ............. J9023 ............. Injection, avelumab, 10 mg ................................................ G 9491 10/01/2017

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

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

C9494 ............. J2350 ............. Injection, ocrelizumab, 1 mg ............................................... G 9494 10/01/2017 

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

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

J2182 .............. J2182 ............. Injection, mepolizumab, 1 mg ............................................. G 9473 04/01/2016

J2786 .............. J2786 ............. Injection, reslizumab, 1 mg ................................................. G 9481 10/01/2016 

J2840 .............. J2840 ............. Injection, sebelipase alfa, 1 mg .......................................... G 9478 07/01/2016 

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

1 i.u. vwf:rco.

G 9059 01/01/2017 

J7202 .............. J7202 ............. Injection, Factor IX, albumin fusion protein (recombinant), 

Idelvion, 1 i.u.

G 9171 10/01/2016 

J7207 .............. J7207 ............. Injection, Factor VIII (antihemophilic factor, recombinant) 

PEGylated, 1 I.U.

G 1844 04/01/2016 

J7209 .............. J7209 ............. Injection, Factor VIII (antihemophilic factor, recombinant) 

(Nuwiq), per i.u.

G 1846 04/01/2016 

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

J7328 .............. J7328 ............. Hyaluronan or derivative, Gelsyn-3, for intra-articular injection, 0.1 mg.G 1862 04/01/2017 

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

J7503 .............. J7503 ............. Tacrolimus, extended release, (envarsus xr), oral, 0.25 

mg.

G 1845 04/01/2016 

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

J9145 .............. J9145 ............. Injection, daratumumab, 10 mg .......................................... G 9476 07/01/2016 

J9176 .............. J9176 ............. Injection, elotuzumab, 1 mg ............................................... G 9477 07/01/2016 

J9205 .............. J9205 ............. Injection, irinotecan liposome, 1 mg ................................... G 9474 04/01/2016 

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

J9325 .............. J9325 ............. Injection, talimogene laherparepvec, 1 million plaque 

forming units (PFU).

G 9472 04/01/2016 

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

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

Q5101 ............. Q5101 ............ Injection, Filgrastim (G–CSF), Biosimilar, 1 microgram ..... G 1822 01/01/2016 

Q5102 ............. Q5102 ............ Injection, Infliximab, Biosimilar, 10 mg ............................... G 1847 04/01/2017 

Q9982 ............. Q9982 ............ Flutemetamol F18, diagnostic, per study dose, up to 5 

millicuries.

G 9459 01/01/2016 

Q9983 ............. Q9983 ............ Florbetaben F18, diagnostic, per study dose, up to 8.1 

millicuries.

G 9458 01/01/2016 

Q9989 ............. J3358 ............. Ustekinumab, for Intravenous Injection, 1 mg .................... G 9487 04/01/2017 

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

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

units.

G 9015 01/01/2018 


sradovich on DSK3GMQ082PROD with RULES2
59342 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 70—DRUGS AND BIOLOGICALS WITH PASS-THROUGH PAYMENT STATUS IN CY 2018—Continued 

CY 2017 

HCPCS code 

CY 2018 

HCPCS code CY 2018 long descriptor 

CY 2018 

status 

indicator 

CY 2018 

APC 

Pass-through 

payment 

effective 

date 

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

N/A ................. C9024 ............ Injection, liposomal, 1 mg daunorubicin and 2.27 mg 

cytarabine.

G 9302 01/01/2018 

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

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

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

10 mg.

G 9301 01/01/2018 

5. Provisions for Reducing Transitional 

Pass-Through Payments for PolicyPackaged Drugs, Biologicals, and 

Radiopharmaceuticals To Offset Costs 

Packaged Into APC Groups 

Under the regulations at 42 CFR 

419.2(b), nonpass-through drugs, 

biologicals, and radiopharmaceuticals 

that function as supplies when used in 

a diagnostic test or procedure are 

packaged in the OPPS. This category 

includes diagnostic 

radiopharmaceuticals, contrast agents, 

stress agents, and other diagnostic 

drugs. Also under 42 CFR 419.2(b), 

nonpass-through drugs and biologicals 

that function as supplies in a surgical 

procedure are packaged in the OPPS. 

This category includes skin substitutes 

and other surgical-supply drugs and 

biologicals. As described earlier, section 

1833(t)(6)(D)(i) of the Act specifies that 

the transitional pass-through payment 

amount for pass-through drugs and 

biologicals is the difference between the 

amount paid under section 1842(o) of 

the Act and the otherwise applicable 

OPD fee schedule amount. Because a 

payment offset is necessary in order to 

provide an appropriate transitional 

pass-through payment, we deduct from 

the pass-through payment for policy 

packaged drugs, biologicals, and 

radiopharmaceuticals an amount 

reflecting the portion of the APC 

payment associated with predecessor 

products in order to ensure no duplicate 

payment is made. This amount 

reflecting the portion of the APC 

payment associated with predecessor 

products is called the payment offset. 

The payment offset policy applies to 

all policy packaged drugs, biologicals, 

and radiopharmaceuticals. For a full 

description of the payment offset policy 

as applied to diagnostic 

radiopharmaceuticals, contrast agents, 

stress agents, and skin substitutes, we 

refer readers to the discussion in the CY 

2016 OPPS/ASC final rule with 

comment period (80 FR 70430 through 

70432). In the CY 2018 OPPS/ASC 

proposed rule (82 FR 33624), for CY 

2018, as we did in CY 2017, we 

proposed to continue to apply the same 

policy packaged offset policy to 

payment for pass-through diagnostic 

radiopharmaceuticals, pass-through 

contrast agents, pass-through stress 

agents, and pass-through skin 

substitutes. The proposed APCs to 

which a payment offset may be 

applicable for pass-through diagnostic 

radiopharmaceuticals, pass-through 

contrast agents, pass-through stress 

agents, and pass-through skin 

substitutes were identified in Table 23 

of the proposed rule. 

Comment: A few commenters 

requested that CMS separate the costs of 

diagnostic radiopharmaceuticals and 

stress agents from the ‘‘packaged drug 

cost’’ in the APC offset file published 

with the yearly proposed and final 

rules. 

Response: We thank the commenter 

for this recommendation. However, we 

do not believe that the suggested change 

is necessary at this time. The offset 

amount is the portion of each APC 

payment rate that could reasonably be 

attributed to the cost of a predecessor 

contrast agent, diagnostic 

radiopharmaceutical, or stress agent 

when considering a new contrast agent, 

diagnostic radiopharmaceutical, or 

stress agent for pass-through payment 

and has no bearing on APC assignment. 

The exact data used to calculate all of 

the proposed and final payment rates, 

including the associated offset amounts, 

for this CY 2018 OPPS final rule with 

comment are available for purchase 

under a CMS data use agreement 

through the CMS Web site available via 

the Internet at: https://www.cms.gov/ 

Research-Statistics-Data-and-Systems/ 

Files-for-Order/IdentifiableDataFiles/ 

index.html. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, for CY 2018, to continue 

to apply the same policy-packaged offset 

policy to payment for pass-through 

diagnostic radiopharmaceuticals, passthrough contrast agents, pass-through 

stress agents, and pass-through skin 

substitutes as we did in CY 2017. 

TABLE 71—APCS TO WHICH A POLICY–PACKAGED DRUG OR RADIOPHARMACEUTICAL OFFSET ARE APPLICABLE IN CY 2018 

CY 2018 

APC 

CY 2018 

APC title 

Diagnostic Radiopharmaceutical 

5591 ....... Level 1 Nuclear Medicine and 

Related Services. 

5592 ....... Level 2 Nuclear Medicine and 

Related Services. 

5593 ....... Level 3 Nuclear Medicine and 

Related Services. 

5594 ....... Level 4 Nuclear Medicine and 

Related Services. 

Contrast Agent 

5571 ....... Level 1 Imaging with Contrast. 

5572 ....... Level 2 Imaging with Contrast. 

5573 ....... Level 3 Imaging with Contrast. 

Stress Agent 

5722 ....... Level 2 Diagnostic Tests and Related Services. 

5593 ....... Level 3 Nuclear Medicine and 

Related Services. 

Skin Substitute 

5054 ....... Level 4 Skin Procedures. 

5055 ....... Level 5 Skin Procedures. 

We also are finalizing our proposal to 

continue to post annually on the CMS 

Web site at: https://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/ 

Annual-Policy-Files.html a file that 

contains the APC offset amounts that 

will be used for that year for purposes 

of both evaluating cost significance for 

candidate pass-through payment device 

categories and drugs and biologicals and 

establishing any appropriate APC offset 

amounts. Specifically, the file will 

continue to provide the amounts and 

percentages of APC payment associated 

with packaged implantable devices, 

policy-packaged drugs, and threshold 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59343 

packaged drugs and biologicals for every 

OPPS clinical APC. 

B. OPPS Payment for Drugs, Biologicals, 

and Radiopharmaceuticals Without 

Pass-Through Payment Status 

1. Criteria for Packaging Payment for 

Drugs, Biologicals, and 

Radiopharmaceuticals 

a. Packaging Threshold 

In accordance with section 

1833(t)(16)(B) of the Act, the threshold 

for establishing separate APCs for 

payment of drugs and biologicals was 

set to $50 per administration during CYs 

2005 and 2006. In CY 2007, we used the 

four quarter moving average Producer 

Price Index (PPI) levels for 

Pharmaceutical Preparations 

(Prescription) to trend the $50 threshold 

forward from the third quarter of CY 

2005 (when the Pub. L. 108–173 

mandated threshold became effective) to 

the third quarter of CY 2007. We then 

rounded the resulting dollar amount to 

the nearest $5 increment in order to 

determine the CY 2007 threshold 

amount of $55. Using the same 

methodology as that used in CY 2007 

(which is discussed in more detail in 

the CY 2007 OPPS/ASC final rule with 

comment period (71 FR 68085 through 

68086)), we set the packaging threshold 

for establishing separate APCs for drugs 

and biologicals at $110 for CY 2017 (81 

FR 79665). 

Following the CY 2007 methodology, 

for this CY 2018 OPPS/ASC final rule 

with comment period, we used the most 

recently available four quarter moving 

average PPI levels to trend the $50 

threshold forward from the third quarter 

of CY 2005 to the third quarter of CY 

2018 and rounded the resulting dollar 

amount ($118.52) to the nearest $5 

increment, which yielded a figure of 

$120. In performing this calculation, we 

used the most recent forecast of the 

quarterly index levels for the PPI for 

Pharmaceuticals for Human Use 

(Prescription) (Bureau of Labor Statistics 

series code WPUSI07003) from CMS’ 

Office of the Actuary. 

Therefore, for this CY 2018 OPPS/ 

ASC final rule with comment period, 

using the CY 2007 OPPS methodology, 

we are finalizing a packaging threshold 

for CY 2018 of $120. 

b. Packaging of Payment for HCPCS 

Codes That Describe Certain Drugs, 

Certain Biologicals, and Therapeutic 

Radiopharmaceuticals Under the Cost 

Threshold (‘‘Threshold-Packaged 

Drugs’’) 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33625), to determine the 

proposed CY 2018 packaging status for 

all nonpass-through drugs and 

biologicals that are not policy packaged, 

we calculated, on a HCPCS codespecific basis, the per day cost of all 

drugs, biologicals, and therapeutic 

radiopharmaceuticals (collectively 

called ‘‘threshold-packaged’’ drugs) that 

had a HCPCS code in CY 2016 and were 

paid (via packaged or separate payment) 

under the OPPS. We used data from CY 

2016 claims processed before January 1, 

2017 for this calculation. However, we 

did not perform this calculation for 

those drugs and biologicals with 

multiple HCPCS codes that include 

different dosages, as described in 

section V.B.1.d. of the proposed rule, or 

for the following policy-packaged items 

that we proposed to continue to package 

in CY 2018: anesthesia drugs; drugs, 

biologicals, and radiopharmaceuticals 

that function as supplies when used in 

a diagnostic test or procedure; and drugs 

and biologicals that function as supplies 

when used in a surgical procedure. 

In order to calculate the per day costs 

for drugs, biologicals, and therapeutic 

radiopharmaceuticals to determine their 

proposed packaging status in CY 2018, 

we used the methodology that was 

described in detail in the CY 2006 OPPS 

proposed rule (70 FR 42723 through 

42724) and finalized in the CY 2006 

OPPS final rule with comment period 

(70 FR 68636 through 68638). For each 

drug and biological HCPCS code, we 

used an estimated payment rate of 

ASP+6 percent (which is the payment 

rate we proposed for separately payable 

drugs and biologicals for CY 2018, as 

discussed in more detail in section 

V.B.2.b. of the proposed rule) to 

calculate the CY 2018 proposed rule per 

day costs. We used the manufacturer 

submitted ASP data from the fourth 

quarter of CY 2016 (data that were used 

for payment purposes in the physician’s 

office setting, effective April 1, 2017) to 

determine the proposed rule per day 

cost. 

As is our standard methodology, for 

CY 2018, we proposed to use payment 

rates based on the ASP data from the 

first quarter of CY 2017 for budget 

neutrality estimates, packaging 

determinations, impact analyses, and 

completion of Addenda A and B to the 

proposed rule (which are available via 

the Internet on the CMS Web site) 

because these were the most recent data 

available for use at the time of 

development of the proposed rule. 

These data also were the basis for drug 

payments in the physician’s office 

setting, effective April 1, 2017. For 

items that did not have an ASP-based 

payment rate, such as some therapeutic 

radiopharmaceuticals, we used their 

mean unit cost derived from the CY 

2016 hospital claims data to determine 

their per day cost. 

We proposed to package items with a 

per day cost less than or equal to $120, 

and identify items with a per day cost 

greater than $120 as separately payable. 

Consistent with our past practice, we 

cross-walked historical OPPS claims 

data from the CY 2016 HCPCS codes 

that were reported to the CY 2017 

HCPCS codes that we displayed in 

Addendum B to the proposed rule 

(which is available via the Internet on 

the CMS Web site) for proposed 

payment in CY 2018. 

Comment: Many commenters 

requested that CMS eliminate the 

threshold packaging policy and pay 

separately for all drugs and biologicals 

described by a unique HCPCS code. 

Several commenters expressed concern 

with the annual increases in the drug 

packaging threshold, citing that yearly 

increases have outpaced conversion 

factor updates and place a financial 

burden on hospitals. A few commenters 

recommended that CMS delay the 

proposed increase in the packaging 

threshold for drugs or freeze the 

packaging threshold at the current level 

($110). 

Response: We have received and 

addressed similar comments in prior 

rules and most recently in CY 2017 

OPPS/ASC final rule with comment (81 

FR 79666). As we stated in the CY 2007 

OPPS/ASC final rule with comment 

period (71 FR 68086), we believe that 

packaging certain items is a 

fundamental component of a 

prospective payment system, that 

updating the packaging threshold of $50 

for the CY 2005 OPPS is consistent with 

industry and government practices, and 

that the PPI for Prescription Drugs is an 

appropriate mechanism to gauge Part B 

drug inflation. Therefore, because 

packaging is a fundamental component 

of a prospective payment system that 

continues to provide important 

flexibility and efficiency in the delivery 

of high quality hospital outpatient 

services, we are not adopting the 

commenters’ recommendations to pay 

separately for all drugs, biologicals, and 

radiopharmaceuticals for CY 2018, 

eliminate the packaging threshold, and 

delay updating the packaging threshold 

or freeze the packaging threshold at 

$110. 

After consideration of the public 

comments we received, and consistent 

with our methodology for establishing 

the packaging threshold using the most 

recent PPI forecast data, we are adopting 

a CY 2018 packaging threshold of $120. 

Our policy during previous cycles of 

the OPPS has been to use updated ASP 

and claims data to make final 


sradovich on DSK3GMQ082PROD with RULES2
59344 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

determinations of the packaging status 

of HCPCS codes for drugs, biologicals, 

and therapeutic radiopharmaceuticals 

for the OPPS/ASC final rule with 

comment period. We note that it is also 

our policy to make an annual packaging 

determination for a HCPCS code only 

when we develop the OPPS/ASC final 

rule with comment period for the 

update year. Only HCPCS codes that are 

identified as separately payable in the 

final rule with comment period are 

subject to quarterly updates. For our 

calculation of per day costs of HCPCS 

codes for drugs and biologicals in this 

CY 2018 OPPS/ASC final rule with 

comment period, we used ASP data 

from the first quarter of CY 2017, which 

is the basis for calculating payment rates 

for drugs and biologicals in the 

physician’s office setting using the ASP 

methodology, effective July 1, 2017, 

along with updated hospital claims data 

from CY 2016. We note that we also 

used these data for budget neutrality 

estimates and impact analyses for this 

CY 2018 OPPS/ASC final rule with 

comment period. 

Payment rates for HCPCS codes for 

separately payable drugs and biologicals 

included in Addenda A and B for this 

final rule with comment period are 

based on ASP data from the third 

quarter of CY 2017. These data are the 

basis for calculating payment rates for 

drugs and biologicals in the physician’s 

office setting using the ASP 

methodology, effective October 1, 2017. 

These payment rates will be updated in 

the January 2018 OPPS update, based on 

the most recent ASP data to be used for 

physician’s office and OPPS payment as 

of January 1, 2018. For items that do not 

currently have an ASP-based payment 

rate, we proposed to recalculate their 

mean unit cost from all of the CY 2016 

claims data and updated cost report 

information available for this CY 2018 

final rule with comment period to 

determine their final per day cost. 

Consequently, as stated in the CY 

2018 OPPS/ASC proposed rule (82 FR 

33625), the packaging status of some 

HCPCS codes for drugs, biologicals, and 

therapeutic radiopharmaceuticals in the 

proposed rule may be different from the 

same drug HCPCS code’s packaging 

status determined based on the data 

used for this final rule with comment 

period. Under such circumstances, in 

the CY 2018 OPPS/ASC proposed rule, 

we proposed to continue to follow the 

established policies initially adopted for 

the CY 2005 OPPS (69 FR 65780) in 

order to more equitably pay for those 

drugs whose cost fluctuates relative to 

the proposed CY 2018 OPPS drug 

packaging threshold and the drug’s 

payment status (packaged or separately 

payable) in CY 2017. These established 

policies have not changed for many 

years and are the same as described in 

the CY 2016 OPPS/ASC final rule with 

comment period (80 FR 70434). 

Specifically, for CY 2018, consistent 

with our historical practice, we 

proposed to apply the following policies 

to these HCPCS codes for drugs, 

biologicals, and therapeutic 

radiopharmaceuticals whose 

relationship to the drug packaging 

threshold changes based on the updated 

drug packaging threshold and on the 

final updated data: 

• HCPCS codes for drugs and 

biologicals that were paid separately in 

CY 2017 and that were proposed for 

separate payment in CY 2018, and that 

then have per day costs equal to or less 

than the CY 2018 final rule drug 

packaging threshold, based on the 

updated ASPs and hospital claims data 

used for this CY 2018 final rule, would 

continue to receive separate payment in 

CY 2018. 

• HCPCS codes for drugs and 

biologicals that were packaged in CY 

2017 and that were proposed for 

separate payment in CY 2018, and that 

then have per day costs equal to or less 

than the CY 2018 final rule drug 

packaging threshold, based on the 

updated ASPs and hospital claims data 

used for this CY 2018 final rule, would 

remain packaged in CY 2018. 

• HCPCS codes for drugs and 

biologicals for which we proposed 

packaged payment in CY 2018 but then 

have per day costs greater than the CY 

2018 final rule drug packaging 

threshold, based on the updated ASPs 

and hospital claims data used for this 

CY 2018 final rule, would receive 

separate payment in CY 2018. 

We did not receive any public 

comments on our proposal to 

recalculate the mean unit cost for items 

that do not currently have an ASP-based 

payment rate from all of the CY 2016 

claims data and updated cost report 

information available for this CY 2018 

final rule with comment period to 

determine their final per day cost. We 

also did not receive any public 

comments on our proposal to continue 

to follow the established policies 

initially adopted for the CY 2005 OPPS 

(69 FR 65780), when the packaging 

status of some HCPCS codes for drugs, 

biologicals, and therapeutic 

radiopharmaceuticals in the proposed 

rule may be different from the same 

drug HCPCS code’s packaging status 

determined based on the data used for 

the final rule with comment period. 

Therefore, for CY 2018, we are finalizing 

these two CY 2018 proposals without 

modification. 

c. Policy Packaged Drugs, Biologicals, 

and Radiopharmaceuticals 

As mentioned briefly earlier, in the 

OPPS, we package several categories of 

drugs, biologicals, and 

radiopharmaceuticals, regardless of the 

cost of the products. Because the 

products are packaged according to the 

policies in 42 CFR 419.2(b), we refer to 

these packaged drugs, biologicals, and 

radiopharmaceuticals as ‘‘policypackaged’’ drugs, biologicals, and 

radiopharmaceuticals. These policies 

are either longstanding or based on 

longstanding principles and inherent to 

the OPPS and are as follows: 

• Anesthesia, certain drugs, 

biologicals, and other pharmaceuticals; 

medical and surgical supplies and 

equipment; surgical dressings; and 

devices used for external reduction of 

fractures and dislocations 

(§ 419.2(b)(4)); 

• Intraoperative items and services 

(§ 419.2(b)(14)); 

• Drugs, biologicals, and 

radiopharmaceuticals that function as 

supplies when used in a diagnostic test 

or procedure (including but not limited 

to, diagnostic radiopharmaceuticals, 

contrast agents, and pharmacologic 

stress agents (§ 419.2(b)(15)); and 

• Drugs and biologicals that function 

as supplies when used in a surgical 

procedure (including, but not limited to, 

skin substitutes and similar products 

that aid wound healing and implantable 

biologicals) (§ 419.2(b)(16)). 

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

than that at § 419.2(b)(14). As we stated 

in the CY 2015 OPPS/ASC final rule 

with comment period: ‘‘We consider all 

items related to the surgical outcome 

and provided during the hospital stay in 

which the surgery is performed, 

including postsurgical pain 

management drugs, to be part of the 

surgery for purposes of our drug and 

biological surgical supply packaging 

policy’’ (79 FR 66875). The category 

described by § 419.2(b)(15) is large and 

includes diagnostic 

radiopharmaceuticals, contrast agents, 

stress agents, and some other products. 

The category described by § 419.2(b)(16) 

includes skin substitutes and some 

other products. We believe it is 

important to reiterate that cost 

consideration is not a factor when 

determining whether an item is a 

surgical supply (79 FR 66875). 

We did not make any proposals to 

revise our policy-packaged drug policy. 

We solicited public comment on the 

general OPPS packaging policies as 

discussed in section II.A.3.d. of this 

final rule with comment period. 

Comment: Several commenters 

requested that CMS revise its packaging 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59345 

policies to allow for separate payment 

for Cysview® (hexaminolevulinate HCl), 

which is described by HCPCS code 

C9275, according to the ASP 

methodology. The commenters also 

provided recommendations in response 

to the general comment solicitation on 

packaging under the OPPS. 

Response: We appreciate the 

comments in response to the packaging 

solicitation, including feedback on the 

‘‘packaging as a supply’’ policy and will 

consider these recommendations in 

future rulemaking. However, because 

we did not propose to modify our 

policy-packaged drug policy for drugs 

that function as a supply when used in 

a diagnostic test or procedure, or receive 

information from commenters that 

caused us to believe that Cysview® is 

not a drug that functions as a supply 

when used in a diagnostic test or 

procedure and, accordingly, should be 

paid separately, payment for HCPCS 

code C9275 will continue to be 

packaged with the primary procedure in 

CY 2018. 

Comment: Numerous commenters 

requested that CMS pay separately for 

Exparel®, an FDA approved postsurgical analgesia drug. Several 

commenters, including many 

commenters who received care from the 

same provider, shared their experience 

with receiving Exparel® after their knee 

replacement surgery and urged CMS to 

pay hospitals and/or physicians for the 

use of Exparel®. 

Response: We refer readers to the CY 

2015 OPPS/ASC final rule with 

comment (79 FR 66874 and 66875) for 

a detailed discussion on our decision to 

package Exparel® (bupivacaine 

liposome injectable suspension) 

described by HCPCS code C9290 

(Injection, bupivicaine liposome, 1 mg) 

as a drug that functions as a supply in 

a surgical procedure. Because we did 

not propose to modify our packaged 

drug policy for drugs that function as a 

surgical supply when used in a surgical 

procedure, and believe payment for 

HCPCS code C9290 is appropriately 

packaged with the primary surgical 

procedure, payment for HCPCS code 

C9290 will remain packaged in CY 

2018. 

Comment: A few commenters 

recommended that CMS continue to 

apply the nuclear medicine procedure 

to radiolabeled product edits to ensure 

that all packaged costs are included on 

nuclear medicine claims in order to 

establish appropriate payment rates in 

the future. 

Response: We do not agree with 

commenters that we should reinstate the 

nuclear medicine procedure to 

radiolabeled product edits, which 

required a diagnostic 

radiopharmaceutical to be present on 

the same claim as a nuclear medicine 

procedure for payment under the OPPS 

to be made. The edits were in place 

between CY 2008 and CY 2014 (78 FR 

75033). We believe the period of time in 

which the edits were in place was 

sufficient for hospitals to gain 

experience reporting procedures 

involving radiolabeled products and to 

grow accustomed to ensuring that they 

code and report charges so that their 

claims fully and appropriately reflect 

the costs of those radiolabeled products. 

As with all other items and services 

recognized under the OPPS, we expect 

hospitals to code and report their costs 

appropriately, regardless of whether 

there are claims processing edits in 

place. 

Comment: One commenter 

recommended that CMS use ASP 

information, when voluntarily reported 

by the manufacturer, as a better price 

input to account for the packaged costs 

of the diagnostic radiopharmaceuticals 

and more appropriately reflect 

hospitals’ actual acquisition costs. This 

commenter also requested that CMS 

provide an additional payment for 

radiopharmaceuticals that are granted 

pass-through payment status. 

Response: We disagree with 

commenter’s recommendation that we 

use voluntarily-reported ASP 

information for nonpass-through 

payment for radiopharmaceuticals as an 

approximation of their acquisition cost. 

Packaging hospital costs based on 

hospital claims data is how all the costs 

of all packaged items are factored into 

payment rates for associated procedures 

under the OPPS, and we do not believe 

it is appropriate to depart from that 

policy for radiopharmaceuticals. 

Radiopharmaceuticals for which we 

have not established a separate APC will 

receive packaged payment under the 

OPPS. We provide payment for 

diagnostic radiopharmaceuticals based 

on a proxy for average acquisition cost. 

We continue to believe that the lineitem estimated cost for a diagnostic 

radiopharmaceutical in our claims data 

is a reasonable approximation of average 

acquisition and preparation and 

handling costs for diagnostic 

radiopharmaceuticals. 

In addition, we note that not all 

manufacturers would be able to submit 

ASP data through the established ASP 

reporting methodology. Therefore, if we 

were to use ASP data to package the 

costs of some diagnostic 

radiopharmaceuticals, but use hospital 

claims data for others, our 

methodologies for packaging the costs of 

diagnostic radiopharmaceuticals into 

their associated nuclear medicine 

procedures would be inconsistent 

among nuclear medicine procedures. 

The foundation of a system of relative 

weights is the relativity of the costs of 

all services to one another, as derived 

from a standardized system that uses 

standardized inputs and a consistent 

methodology. Adoption of a ratesetting 

methodology for certain APCs 

containing nuclear medicine procedures 

that is different from the standard APC 

ratesetting methodology would 

undermine this relativity. For this 

reason, we do not believe it would be 

appropriate to use external pricing 

information in place of the costs derived 

from the claims and Medicare cost 

report data because to do so would 

distort the relativity that is fundamental 

to the integrity of the OPPS. 

With respect to the request to provide 

an additional payment for 

radiopharmaceuticals that are granted 

pass-through payment status, the 

commenter did not provide information 

on what expenses or costs incurred by 

providers would be covered by an 

additional payment. We continue to 

believe that a single payment is 

appropriate for radiopharmaceuticals 

with pass-through payment status in CY 

2018 and that the payment rate of 

ASP+6 percent is appropriate to provide 

payment for both the 

radiopharmaceutical’s acquisition cost 

and any associated nuclear medicine 

handling and compounding costs. 

d. High Cost/Low Cost Threshold for 

Packaged Skin Substitutes 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 74938), we 

unconditionally packaged skin 

substitute products into their associated 

surgical procedures as part of a broader 

policy to package all drugs and 

biologicals that function as supplies 

when used in a surgical procedure. As 

part of the policy to finalize the 

packaging of skin substitutes, we also 

finalized a methodology that divides the 

skin substitutes into a high cost group 

and a low cost group, in order to ensure 

adequate resource homogeneity among 

APC assignments for the skin substitute 

application procedures (78 FR 74933). 

Skin substitutes assigned to the high 

cost group are described by HCPCS 

codes 15271 through 15278. Skin 

substitutes assigned to the low cost 

group are described by HCPCS codes 

C5271 through C5278. Geometric mean 

costs for the various procedures are 

calculated using only claims for the skin 

substitutes that are assigned to each 

group. Specifically, claims billed with 

HCPCS code 15271, 15273, 15275, or 

15277 are used to calculate the 


sradovich on DSK3GMQ082PROD with RULES2
59346 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

geometric mean costs for procedures 

assigned to the high cost group, and 

claims billed with HCPCS code C5271, 

C5273, C5275, or C5277 are used to 

calculate the geometric mean costs for 

procedures assigned to the low cost 

group (78 FR 74935). 

Each of the HCPCS codes described 

above are assigned to one of the 

following three skin procedure APCs 

according to the geometric mean cost for 

the code: APC 5053 (Level 3 Skin 

Procedures) (HCPCS codes C5271, 

C5275, and C5277); APC 5054 (Level 4 

Skin Procedures) (HCPCS codes C5273, 

15271, 15275, and 15277); or APC 5055 

(Level 5 Skin Procedures) (HCPCS code 

15273). In CY 2017, the payment rate for 

APC 5053 (Level 3 Skin Procedures) was 

$466, the payment rate for APC 5054 

(Level 4 Skin Procedures) was $1,468, 

and the payment rate for APC 5055 

(Level 5 Skin Procedures) was $2,575. 

This information also is available in 

Addenda A and B of the CY 2017 OPPS/ 

ASC final rule with comment period 

(which is available via the Internet on 

the CMS Web site). 

We have continued the high cost/low 

cost categories policy since CY 2014, 

and in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33626 through 

33627), we proposed to continue it for 

CY 2018 with the modification 

discussed below. Under this current 

policy, skin substitutes in the high cost 

category are reported with the skin 

substitute application CPT codes, and 

skin substitutes in the low cost category 

are reported with the analogous skin 

substitute HCPCS C-codes. For a 

discussion of the CY 2014 and CY 2015 

methodologies for assigning skin 

substitutes to either the high cost group 

or the low cost group, we refer readers 

to the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 74932 

through 74935) and the CY 2015 OPPS/ 

ASC final rule with comment period (79 

FR 66882 through 66885). 

For a discussion of the high cost/low 

cost methodology that was adopted in 

CY 2016 and has been in effect since 

then, we refer readers to the CY 2016 

OPPS/ASC final rule with comment 

period (80 FR 70434 through 70435). 

For CY 2018, as in CY 2016 and CY 

2017, we proposed to continue to 

determine the high/low cost status for 

each skin substitute product based on 

either a product’s geometric mean unit 

cost (MUC) exceeding the geometric 

MUC threshold or the product’s per day 

cost (PDC) (the total units of a skin 

substitute multiplied by the mean unit 

cost and divided by the total number of 

days) exceeding the PDC threshold. For 

CY 2018, as for CY 2017, we proposed 

to assign each skin substitute that 

exceeds either the MUC threshold or the 

PDC threshold to the high cost group. In 

addition, as described in more detail 

later in this section, for CY 2018, as for 

CY 2017, we proposed to assign any 

skin substitute with an MUC or a PDC 

that does not exceed either the MUC 

threshold or the PDC threshold to the 

low cost group. For CY 2018, we 

proposed that any skin substitute 

product that was assigned to the high 

cost group in CY 2017 would be 

assigned to the high cost group for CY 

2018, regardless of whether it exceeds or 

falls below the CY 2018 MUC or PDC 

threshold. 

For this CY 2018 OPPS/ASC final rule 

with comment period, consistent with 

the methodology as established in the 

CY 2014 through CY 2017 final rules 

with comment period, we analyzed 

updated CY 2016 claims data to 

calculate the MUC threshold (a 

weighted average of all skin substitutes’ 

MUCs) and the PDC threshold (a 

weighted average of all skin substitutes’ 

PDCs). The final CY 2018 MUC 

threshold is $46 per cm2 (rounded to the 

nearest $1) (proposed at $47 per cm2) 

and the final CY 2018 PDC threshold is 

$861 (rounded to the nearest $1) 

(proposed at $755). 

For CY 2018, we proposed to continue 

to assign skin substitutes with passthrough payment status to the high cost 

category. However, there are no skin 

substitutes that are proposed to have 

pass-through payment status for CY 

2018. We proposed to assign skin 

substitutes with pricing information but 

without claims data to calculate a 

geometric MUC or PDC to either the 

high cost or low cost category based on 

the product’s ASP+6 percent payment 

rate as compared to the MUC threshold. 

If ASP is not available, we stated in the 

proposed rule that we would use 

WAC+6 percent or 95 percent of AWP 

to assign a product to either the high 

cost or low cost category. We also stated 

in the proposed rule that new skin 

substitutes without pricing information 

would be assigned to the low cost 

category until pricing information is 

available to compare to the CY 2018 

MUC threshold. For a discussion of our 

existing policy under which we assign 

skin substitutes without pricing 

information to the low cost category 

until pricing information is available, 

we refer readers to the CY 2016 OPPS/ 

ASC final rule with comment period (80 

FR 70436). 

Some skin substitute manufacturers 

have raised concerns about significant 

fluctuation in both the MUC threshold 

and the PDC threshold from year to 

year. The fluctuation in the thresholds 

may result in the reassignment of 

several skin substitutes from the high 

cost group to the low cost group which, 

under current payment rates, can be a 

difference of approximately $1,000 in 

the payment amount for the same 

procedure. In addition, these 

stakeholders were concerned that the 

inclusion of cost data from skin 

substitutes with pass-through payment 

status in the MUC and PDC calculations 

would artificially inflate the thresholds. 

Skin substitute stakeholders requested 

that CMS consider alternatives to the 

current methodology used to calculate 

the MUC and PDC thresholds and also 

requested that CMS consider whether it 

might be appropriate to establish a new 

cost group in between the low cost 

group and the high cost group to allow 

for assignment of moderately priced 

skin substitutes to a newly created 

middle group. 

We share the goal of promoting 

payment stability for skin substitute 

products and their related procedures as 

price stability allows hospitals using 

such products to more easily anticipate 

future payments associated with these 

products. We have attempted to limit 

year to year shifts for skin substitute 

products between the high cost and low 

cost groups through multiple initiatives 

implemented since CY 2014, including: 

establishing separate skin substitute 

application procedure codes for lowcost skin substitutes (78 FR 74935); 

using a skin substitute’s MUC calculated 

from outpatient hospital claims data 

instead of an average of ASP+6 percent 

as the primary methodology to assign 

products to the high cost or low cost 

group (79 FR 66883); and establishing 

the PDC threshold as an alternate 

methodology to assign a skin substitute 

to the high cost group (80 FR 70434 

through 70435). 

In order to allow additional time to 

evaluate concerns and suggestions from 

stakeholders about the volatility of the 

MUC and PDC thresholds, for CY 2018, 

we proposed that a skin substitute that 

was assigned to the high cost group for 

CY 2017 would be assigned to the high 

cost group for CY 2018, even if it does 

not exceed the CY 2018 MUC or PDC 

thresholds. Our analysis has found that 

seven skin substitute products that 

would have otherwise been assigned to 

the low cost group for CY 2018 would 

instead be assigned to the high cost 

group under this proposed policy. The 

skin substitute products affected by this 

proposed policy were identified with an 

‘‘*’’ in Table 24 of the proposed rule (82 

FR 33627 through 33628). For CY 2019 

and subsequent years, we requested 

public comments on how we should 

calculate data for products in 

determining the MUC and PDC 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59347 

thresholds that are included in the high 

cost group solely based on assignment 

to the high cost group in CY 2017. 

We stated in the proposed rule that 

the goal of our proposal to retain the 

same skin substitute cost group 

assignments in CY 2018 as in CY 2017 

is to maintain similar levels of payment 

for skin substitute products for CY 2018 

while we study our current skin 

substitute payment methodology to 

determine whether refinement to the 

existing policies is consistent with our 

policy goal of providing payment 

stability for skin substitutes. We 

requested public comments on the 

methodologies that are used to calculate 

pricing thresholds as well as the 

payment groupings that recognize a low 

cost group and a high cost group. We 

stated that we are especially interested 

in suggestions that are based on analysis 

of Medicare claims data from hospital 

outpatient departments that might better 

promote improved payment stability for 

skin substitute products under the 

OPPS. This proposal was intended to 

apply for CY 2018 to allow time for the 

public to submit other ideas that could 

be evaluated for the CY 2019 

rulemaking. 

In summary, we proposed to assign 

skin substitutes with a MUC or a PDC 

that does not exceed either the MUC 

threshold or the PDC threshold to the 

low cost group, unless the product was 

assigned to the high cost group in CY 

2017, in which case we proposed to 

assign the product to the high cost 

group for CY 2018, regardless of 

whether it exceeds the CY 2018 MUC or 

PDC threshold. We also proposed to 

assign to the high cost group skin 

substitute products that exceed the CY 

2018 MUC or PDC threshold and assign 

to the low cost group skin substitute 

products that did not exceed either the 

CY 2017 or CY 2018 MUC or PDC 

thresholds and were not assigned to the 

high cost group in CY 2017. We 

proposed to continue to use payment 

methodologies including ASP+6 

percent, WAC+6 percent, or 95 percent 

of AWP for skin substitute products that 

have pricing information but do not 

have claims data to determine if their 

costs exceed the CY 2018 MUC 

threshold. Finally, we proposed to 

continue to assign new skin substitute 

products without pricing information to 

the low cost group. 

Comment: Several commenters 

responded to CMS’ request for public 

comments on the methodologies that are 

used to calculate pricing thresholds as 

well as the payment groupings that 

recognize a low cost group and a high 

cost group with the goal of improving 

payment stability for skin substitute 

products in the OPPS. The commenters 

covered such issues as: Improving the 

quality of claims data CMS uses to 

determine the MUC and PDC 

thresholds; using ASP pricing data for 

the skin substitutes either in addition to 

or in place of claims data to determine 

the MUC and PDC thresholds; limiting 

annual changes to the MUC and PDC 

thresholds to the change in the 

consumer price index; adding more cost 

groups where skin substitutes may be 

assigned; ending the packaging of skin 

substitute products in general and 

ending packaging costs for add-on codes 

into the primary service codes for skin 

substitute procedures; establishing 

device offsets when the cost of a skin 

substitute used in a procedure is more 

than 40 percent of total cost of the 

procedure; and reducing incentives that 

favor the use of more expensive skin 

substitutes or products that require an 

excessive number of applications. 

Response: We appreciate the feedback 

we received from the commenters. We 

will continue to study issues related to 

the payment of skin substitutes and take 

these comments into consideration for 

future rulemaking. 

Comment: One commenter requested 

that PuraPly and PuraPly antimic 

reported with HCPCS code Q4172 retain 

its pass-through status in CY 2018. The 

commenter believed that giving PuraPly 

and PuraPly antimic an additional year 

of pass-through payment status would 

be consistent with CMS’ policy proposal 

to assign all skin substitute products 

that were in the high cost skin substitute 

group in CY 2017 to the high cost skin 

substitute group in CY 2018. The 

commenter believed that, consistent 

with the spirit of this proposal, PuraPly 

and PuraPly antimic should receive the 

same payment treatment in CY 2017 as 

it did in CY 2018; that is, continued 

pass-through payment status. 

Response: PuraPly and PuraPly 

antimic (HCPCS code Q4172) became 

eligible for drug and biological passthrough payments effective January 1, 

2015. Therefore, 2017 is the third year 

of pass-through payment status for these 

skin substitutes. Section 

1833(t)(6)(B)(iii) provides for temporary 

pass-through payments for devices for a 

period of at least 2 years but not more 

than 3 years. Extending PuraPly and 

PuraPly antimic for a fourth year of 

pass-through payment status would be 

contrary to the statute. Therefore, 

PuraPly and PuraPly antimic will be 

assigned to the high-cost skin substitute 

group for CY 2018 and the product will 

receive payment in the same manner as 

other skin substitute products assigned 

to the high cost group. 

Comment: One commenter opposed 

CMS’ proposal to assign all skin 

substitutes that qualified for the high 

cost group in CY 2017 to the high cost 

group in CY 2018, including those skin 

substitutes that would have not met 

either the MUC or PDC threshold in CY 

2018 and would have instead been 

assigned to the low-cost group. The 

commenter stated that the products 

included in the high cost group that 

otherwise would have been assigned to 

the low cost group have generated 

enough payment data for CMS to 

estimate their costs. The commenter 

believed the proposal would encourage 

excessive use of the skin substitute 

products that should have been assigned 

to the low cost group. 

Response: We appreciate the concerns 

of the commenter. However, as we 

stated in the proposed rule, we aim to 

encourage the goal of payment stability 

for all skin substitute products to help 

hospitals anticipate future costs related 

to skin substitute procedures. The MUC 

has nearly doubled since CY 2016, with 

an increase from $25 per cm2 to the 

proposed CY 2018 threshold of $47 per 

cm2. Likewise, the PDC has fluctuated 

over $300, between $715 and $1,050, 

since it was established in CY 2016. We 

requested suggestions from the public to 

help address these stability issues in 

future rulemaking. We believe allowing 

all skin substitute products assigned to 

the high cost group in CY 2017 to 

remain in the high cost group for CY 

2018 gives us time to consider revisions 

to the payment of skin substitute 

procedures and products while avoiding 

substantial payment reductions to 

hospitals during our review period. 

Comment: Several commenters 

supported the proposal to assign all skin 

substitutes that qualified for the high 

cost group in CY 2017 to the high cost 

group in CY 2018, including those skin 

substitutes that would have not met 

either the MUC or PDC threshold in CY 

2018 and would have instead been 

assigned to the low cost group. 

Response: We appreciate the 

commenters’ support. 

Comment: One commenter supported 

the proposed assignment of HCPCS code 

Q4150 (Allowrap DS or Dry 1 sq cm) to 

the high cost group. 

Response: We appreciate the 

commenter’s support. 

After consideration of the public 

comments we received, we are 

finalizing our proposals without 

modification for CY 2018. Table 72 

below displays the CY 2018 cost 

category assignment for each skin 

substitute product. 

For this final rule with comment 

period, we have identified 10 skin 


sradovich on DSK3GMQ082PROD with RULES2
59348 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

substitute products that would 

otherwise have been assigned to the low 

cost group for CY 2018, but will instead 

be assigned to the high cost group under 

our policy to include in the high cost 

group for CY 2018 any skin substitute 

that was in the high cost group for CY 

2017. The skin substitute products 

affected by this policy are identified 

with an asterisk ‘‘*’’ in Table 72 below. 

TABLE 72—SKIN SUBSTITUTE ASSIGNMENTS TO HIGH COST AND LOW COST GROUPS FOR CY 2018 

CY 2018 

HCPCS code CY 2018 short descriptor 

CY 2017 

high/low 

assignment 

CY 2018 

high/low 

assignment 

C9363 ............. Integra Meshed Bil Wound Mat .................................................................................................. High ............... High. 

Q4100 ............ Skin Substitute, NOS .................................................................................................................. Low ................ Low. 

Q4101 ............ Apligraf ........................................................................................................................................ High ............... High. 

Q4102 ............ Oasis Wound Matrix ................................................................................................................... Low ................ Low. 

Q4103 ............ Oasis Burn Matrix ....................................................................................................................... High ............... High.* 

Q4104 ............ Integra BMWD ............................................................................................................................ High ............... High. 

Q4105 ............ Integra DRT ................................................................................................................................ High ............... High.* 

Q4106 ............ Dermagraft .................................................................................................................................. High ............... High. 

Q4107 ............ GraftJacket ................................................................................................................................. High ............... High. 

Q4108 ............ Integra Matrix .............................................................................................................................. High ............... High.* 

Q4110 ............ Primatrix ...................................................................................................................................... High ............... High.* 

Q4111 ............ Gammagraft ................................................................................................................................ Low ................ Low. 

Q4115 ............ Alloskin ....................................................................................................................................... Low ................ Low. 

Q4116 ............ Alloderm ...................................................................................................................................... High ............... High. 

Q4117 ............ Hyalomatrix ................................................................................................................................. Low ................ Low. 

Q4121 ............ Theraskin .................................................................................................................................... High ............... High. 

Q4122 ............ Dermacell .................................................................................................................................... High ............... High. 

Q4123 ............ Alloskin ....................................................................................................................................... High ............... High.* 

Q4124 ............ Oasis Tri-layer Wound Matrix ..................................................................................................... Low ................ Low. 

Q4126 ............ Memoderm/derma/tranz/integup ................................................................................................. High ............... High. 

Q4127 ............ Talymed ...................................................................................................................................... High ............... High.* 

Q4128 ............ Flexhd/Allopatchhd/Matrixhd ...................................................................................................... High ............... High. 

Q4131 ............ Epifix ........................................................................................................................................... High. .............. High 

Q4132 ............ Grafix core and grafixpl core, per square centimeter ................................................................ High ............... High. 

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

Q4134 ............ hMatrix ........................................................................................................................................ Low ................ Low. 

Q4135 ............ Mediskin ...................................................................................................................................... Low ................ Low. 

Q4136 ............ Ezderm ....................................................................................................................................... Low ................ Low. 

Q4137 ............ Amnioexcel or Biodexcel, 1cm ................................................................................................... High ............... High. 

Q4138 ............ Biodfence DryFlex, 1cm ............................................................................................................. High ............... High. 

Q4140 ............ Biodfence 1cm ............................................................................................................................ High ............... High. 

Q4141 ............ Alloskin ac, 1cm ......................................................................................................................... High ............... High.* 

Q4143 ............ Repriza, 1cm .............................................................................................................................. High ............... High. 

Q4146 ............ Tensix, 1CM ............................................................................................................................... High ............... High. 

Q4147 ............ Architect ecm, 1cm ..................................................................................................................... High ............... High.* 

Q4148 ............ Neox cord 1k, neox cord rt, or clarix cord 1k, per square centimeter ....................................... High ............... High. 

Q4150 ............ Allowrap DS or Dry 1 sq cm ...................................................................................................... High ............... High. 

Q4151 ............ AmnioBand, Guardian 1 sq cm .................................................................................................. High ............... High. 

Q4152 ............ Dermapure 1 square cm ............................................................................................................ High ............... High. 

Q4153 ............ Dermavest 1 square cm ............................................................................................................. High ............... High. 

Q4154 ............ Biovance 1 square cm ................................................................................................................ High ............... High. 

Q4156 ............ Neox 100 or clarix 100, per square centimeter ......................................................................... High ............... High. 

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

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

Q4159 ............ Affinity 1 square cm .................................................................................................................... High ............... High. 

Q4160 ............ NuShield 1 square cm ................................................................................................................ High ............... High. 

Q4161 ............ Bio-Connekt per square cm ....................................................................................................... High ............... High.* 

Q4163 ............ Woundex, bioskin, per square centimeter .................................................................................. High ............... High. 

Q4164 ............ Helicoll, per square cm ............................................................................................................... High ............... High. 

Q4165 ............ Keramatrix, per square cm ......................................................................................................... Low ................ Low. 

Q4166 ............ Cytal, per square cm .................................................................................................................. Low ................ Low. 

Q4167 ............ Truskin, per square cm .............................................................................................................. Low ................ Low. 

Q4169 ............ Artacent wound, per square cm ................................................................................................. High ............... High. 

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

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

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

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

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

Q4178 ............ Floweramniopatch, per square centimeter ................................................................................. Low ................ Low. 

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

Q4180 ............ Revita, per square centimeter .................................................................................................... Low ................ Low. 

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

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

* These products do not exceed either the MUC or PDC threshold for CY 2018, but are assigned to the high cost group because they were assigned to the high cost group in CY 2017. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59349 

e. Packaging Determination for HCPCS 

Codes That Describe the Same Drug or 

Biological but Different Dosages 

In the CY 2010 OPPS/ASC final rule 

with comment period (74 FR 60490 

through 60491), we finalized a policy to 

make a single packaging determination 

for a drug, rather than an individual 

HCPCS code, when a drug has multiple 

HCPCS codes describing different 

dosages because we believed that 

adopting the standard HCPCS codespecific packaging determinations for 

these codes could lead to inappropriate 

payment incentives for hospitals to 

report certain HCPCS codes instead of 

others. We continue to believe that 

making packaging determinations on a 

drug-specific basis eliminates payment 

incentives for hospitals to report certain 

HCPCS codes for drugs and allows 

hospitals flexibility in choosing to 

report all HCPCS codes for different 

dosages of the same drug or only the 

lowest dosage HCPCS code. Therefore, 

in the CY 2018 OPPS/ASC proposed 

rule (82 FR 33628), we proposed to 

continue our policy to make packaging 

determinations on a drug-specific basis, 

rather than a HCPCS code-specific basis, 

for those HCPCS codes that describe the 

same drug or biological but different 

dosages in CY 2018. 

For CY 2018, in order to propose a 

packaging determination that is 

consistent across all HCPCS codes that 

describe different dosages of the same 

drug or biological, we aggregated both 

our CY 2016 claims data and our pricing 

information at ASP+6 percent across all 

of the HCPCS codes that describe each 

distinct drug or biological in order to 

determine the mean units per day of the 

drug or biological in terms of the HCPCS 

code with the lowest dosage descriptor. 

The following drugs did not have 

pricing information available for the 

ASP methodology for the CY 2018 

OPPS/ASC proposed rule, and as is our 

current policy for determining the 

packaging status of other drugs, we used 

the mean unit cost available from the 

CY 2016 claims data to make the 

proposed packaging determinations for 

these drugs: HCPCS code J7100 

(infusion, dextran 40,500 ml) and 

HCPCS code J7110 (infusion, dextran 

75,500 ml). 

For all other drugs and biologicals 

that have HCPCS codes describing 

different doses, we then multiplied the 

proposed weighted average ASP+6 

percent per unit payment amount across 

all dosage levels of a specific drug or 

biological by the estimated units per day 

for all HCPCS codes that describe each 

drug or biological from our claims data 

to determine the estimated per day cost 

of each drug or biological at less than or 

equal to the proposed CY 2018 drug 

packaging threshold of $120 (so that all 

HCPCS codes for the same drug or 

biological would be packaged) or greater 

than the proposed CY 2018 drug 

packaging threshold of $120 (so that all 

HCPCS codes for the same drug or 

biological would be separately payable). 

The proposed packaging status of each 

drug and biological HCPCS code to 

which this methodology would apply in 

CY 2018 was displayed in Table 25 of 

the CY 2018 OPPS/ASC proposed rule 

(82 FR 33629). 

We did not receive any public 

comments on this proposal. Therefore, 

for CY 2018, we are finalizing our CY 

2018 proposal, without modification, to 

continue our policy to make packaging 

determinations on a drug-specific basis, 

rather than a HCPCS code-specific basis, 

for those HCPCS codes that describe the 

same drug or biological but different 

dosages. Table 73 below displays the 

final packaging status of each drug and 

biological HCPCS code to which the 

finalized methodology applies for CY 

2018. 

TABLE 73—HCPCS CODES TO WHICH THE CY 2018 DRUG-SPECIFIC PACKAGING DETERMINATION METHODOLOGY

APPLIES

CY 2018 

HCPCS code CY 2018 long descriptor CY 2018 SI 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

J7515 ................. Cyclosporine, oral, 25 mg .................................................................................................................................... N 

J7502 ................. Cyclosporine, oral, 100 mg .................................................................................................................................. N 

J8520 ................. Capecitabine, oral, 150 mg ................................................................................................................................. N 

J8521 ................. Capecitabine, oral, 500 mg ................................................................................................................................. N 

J9250 ................. Methotrexate sodium, 5 mg ................................................................................................................................. N 

J9260 ................. Methotrexate sodium, 50 mg ............................................................................................................................... N 


sradovich on DSK3GMQ082PROD with RULES2
59350 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

17Medicare Payment Advisory Committee. June 

2005 Report to the Congress. Chapter 6: Payment for 

pharmacy handling costs in hospital outpatient 

departments. Available at: http://www.medpac.gov/ 

docs/default-source/reports/June05_

ch6.pdf?sfvrsn=0. 

2. Payment for Drugs and Biologicals 

Without Pass-Through Status That Are 

Not Packaged 

a. Payment for Specified Covered 

Outpatient Drugs (SCODs) and Other 

Separately Payable and Packaged Drugs 

and Biologicals 

Section 1833(t)(14) of the Act defines 

certain separately payable 

radiopharmaceuticals, drugs, and 

biologicals and mandates specific 

payments for these items. Under section 

1833(t)(14)(B)(i) of the Act, a ‘‘specified 

covered outpatient drug’’ (known as a 

SCOD) is defined as a covered 

outpatient drug, as defined in section 

1927(k)(2) of the Act, for which a 

separate APC has been established and 

that either is a radiopharmaceutical 

agent or is a drug or biological for which 

payment was made on a pass-through 

basis on or before December 31, 2002. 

Under section 1833(t)(14)(B)(ii) of the 

Act, certain drugs and biologicals are 

designated as exceptions and are not 

included in the definition of SCODs. 

These exceptions are— 

• A drug or biological for which 

payment is first made on or after 

January 1, 2003, under the transitional 

pass-through payment provision in 

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

• A drug or biological for which a 

temporary HCPCS code has not been 

assigned. 

• During CYs 2004 and 2005, an 

orphan drug (as designated by the 

Secretary). 

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

requires that payment for SCODs in CY 

2006 and subsequent years be equal to 

the average acquisition cost for the drug 

for that year as determined by the 

Secretary, subject to any adjustment for 

overhead costs and taking into account 

the hospital acquisition cost survey data 

collected by the Government 

Accountability Office (GAO) in CYs 

2004 and 2005, and later periodic 

surveys conducted by the Secretary as 

set forth in the statute. If hospital 

acquisition cost data are not available, 

the law requires that payment be equal 

to payment rates established under the 

methodology described in section 

1842(o), section 1847A, or section 

1847B of the Act, as calculated and 

adjusted by the Secretary as necessary. 

We refer to this alternative methodology 

as the ‘‘statutory default.’’ Most 

physician Part B drugs are paid at 

ASP+6 percent in accordance with 

section 1842(o) and section 1847A of 

the Act. 

Section 1833(t)(14)(E)(ii) of the Act 

provides for an adjustment in OPPS 

payment rates for SCODs to take into 

account overhead and related expenses, 

such as pharmacy services and handling 

costs. Section 1833(t)(14)(E)(i) of the Act 

required MedPAC to study pharmacy 

overhead and related expenses and to 

make recommendations to the Secretary 

regarding whether, and if so how, a 

payment adjustment should be made to 

compensate hospitals for overhead and 

related expenses. Section 

1833(t)(14)(E)(ii) of the Act authorizes 

the Secretary to adjust the weights for 

ambulatory procedure classifications for 

SCODs to take into account the findings 

of the MedPAC study.17

It has been our policy since CY 2006 

to apply the same treatment to all 

separately payable drugs and 

biologicals, which include SCODs, and 

drugs and biologicals that are not 

SCODs. Therefore, we apply the 

payment methodology in section 

1833(t)(14)(A)(iii) of the Act to SCODs, 

as required by statute, but we also apply 

it to separately payable drugs and 

biologicals that are not SCODs, which is 

a policy determination rather than a 

statutory requirement. In the CY 2018 

OPPS/ASC proposed rule (82 FR 33630), 

we proposed to apply section 

1833(t)(14)(A)(iii)(II) of the Act to all 

separately payable drugs and 

biologicals, including SCODs. Although 

we do not distinguish SCODs in this 

discussion, we note that we are required 

to apply section 1833(t)(14)(A)(iii)(II) of 

the Act to SCODs, but we also are 

applying this provision to other 

separately payable drugs and 

biologicals, consistent with our history 

of using the same payment methodology 

for all separately payable drugs and 

biologicals. 

For a detailed discussion of our OPPS 

drug payment policies from CY 2006 to 

CY 2012, we refer readers to the CY 

2013 OPPS/ASC final rule with 

comment period (77 FR 68383 through 

68385). In the CY 2013 OPPS/ASC final 

rule with comment period (77 FR 68386 

through 68389), we first adopted the 

statutory default policy to pay for 

separately payable drugs and biologicals 

at ASP+6 percent based on section 

1833(t)(14)(A)(iii)(II) of the Act. We 

continued this policy of paying for 

separately payable drugs and biologicals 

at the statutory default for CY 2014, CY 

2015, CY 2016, and CY 2017 (81 FR 

79673). 

b. CY 2018 Payment Policy 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33630), for CY 2018, we 

proposed to continue our payment 

policy that has been in effect from CY 

2013 to present and pay for separately 

payable drugs and biologicals at ASP+6 

percent in accordance with section 

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

statutory default). We proposed that the 

ASP+6 percent payment amount for 

separately payable drugs and biologicals 

requires no further adjustment and 

represents the combined acquisition and 

pharmacy overhead payment for drugs 

and biologicals. We also proposed that 

payments for separately payable drugs 

and biologicals are included in the 

budget neutrality adjustments, under 

the requirements in section 1833(t)(9)(B) 

of the Act, and that the budget neutral 

weight scalar is not applied in 

determining payments for these 

separately paid drugs and biologicals. 

We note that we proposed, as 

specified below, to pay for separately 

payable, nonpass-through drugs 

acquired with a 340B discount at a rate 

of ASP minus 22.5 percent. We refer 

readers to the full discussion of this 

proposal in section V.B.7. of the 

proposed rule and this final rule with 

comment period. 

Comment: Numerous commenters 

supported CMS’ proposal to continue to 

pay for separately payable drugs and 

biologicals based on the statutory 

default rate of ASP+6 percent. 

Response: We thank commenters for 

their support. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to pay for separately 

payable drugs and biologicals at ASP+6 

percent based on section 

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

statutory default). The ASP+6 percent 

payment amount for separately payable 

drugs and biologicals requires no further 

adjustment and represents the combined 

acquisition and pharmacy overhead 

payment for drugs and biologicals for 

CY 2018. In addition, we are finalizing 

our proposal that payment for separately 

payable drugs and biologicals be 

included in the budget neutrality 

adjustments, under the requirements of 

section 1833(t)(9)(B) of the Act, and that 

the budget neutral weight scalar is not 

applied in determining payment of 

these separately paid drugs and 

biologicals. We refer readers to section 

V.B.7. of the final rule with comment 

period for the final payment policy for 

drugs acquired with a 340B discount. 

We note that separately payable drug 

and biological payment rates listed in 

Addenda A and B to this final rule with 

comment period (available via the 

Internet on the CMS Web site), which 

illustrate the final CY 2018 payment of 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59351 

ASP+6 percent for separately payable 

nonpass-through drugs and biologicals 

and ASP+6 percent for pass-through 

drugs and biologicals, reflect either ASP 

information that is the basis for 

calculating payment rates for drugs and 

biologicals in the physician’s office 

setting effective October 1, 2017, or 

WAC, AWP, or mean unit cost from CY 

2016 claims data and updated cost 

report information available for this 

final rule with comment period. In 

general, these published payment rates 

are not the same as the actual January 

2018 payment rates. This is because 

payment rates for drugs and biologicals 

with ASP information for January 2018 

will be determined through the standard 

quarterly process where ASP data 

submitted by manufacturers for the 

third quarter of 2017 (July 1, 2017 

through September 30, 2017) will be 

used to set the payment rates that are 

released for the quarter beginning in 

January 2018 near the end of December 

2017. In addition, payment rates for 

drugs and biologicals in Addenda A and 

B to this final rule with comment period 

for which there was no ASP information 

available for October 2017 are based on 

mean unit cost in the available CY 2016 

claims data. If ASP information becomes 

available for payment for the quarter 

beginning in January 2018, we will price 

payment for these drugs and biologicals 

based on their newly available ASP 

information. Finally, there may be drugs 

and biologicals that have ASP 

information available for this final rule 

with comment period (reflecting 

October 2017 ASP data) that do not have 

ASP information available for the 

quarter beginning in January 2018. As 

stated in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33630), these 

drugs and biologicals will then be paid 

based on mean unit cost data derived 

from CY 2016 hospital claims. 

Therefore, the payment rates listed in 

Addenda A and B to this final rule with 

comment period are not for January 

2018 payment purposes and are only 

illustrative of the CY 2018 OPPS 

payment methodology using the most 

recently available information at the 

time of issuance of this final rule with 

comment period. 

c. Biosimilar Biological Products 

For CY 2016 and CY 2017, we 

finalized a policy to pay for biosimilar 

biological products based on the 

payment allowance of the product as 

determined under section 1847A of the 

Act and to subject nonpass-through 

biosimilar biological products to our 

annual threshold-packaged policy (for 

CY 2016, 80 FR 70445 through 70446; 

and for CY 2017, 81 FR 79674). In the 

CY 2018 OPPS/ASC proposed rule (82 

FR 33630), for CY 2018, we proposed to 

continue this same payment policy for 

biosimilar biological products. 

We noted in the proposed rule that 

public comments on the Medicare Part 

B biosimilar biological product payment 

policy should be submitted in response 

to the biosimilar biological product 

payment policy comment solicitation in 

the CY 2018 MPFS proposed rule. 

Comment: Several comments urged 

CMS to assign separate HCPCS codes for 

each biosimilar biological product 

rather than combining biosimilar 

biological products of the same 

reference product into one HCPCS code. 

Some commenters who addressed the 

biosimilar payment policy as it relates 

to the 340B proposal stated that current 

policy (adopted in the CY 2016 OPPS/ 

ASC final rule with comment period (80 

FR 70445)) for pass-through payment for 

biosimilar biological products is 

restricted to the first biosimilar 

biological product of a reference 

product. The commenters believed that, 

if the 340B proposal is finalized as 

proposed, the preclusion on passthrough payment eligibility for second 

and subsequent biosimilar biological 

products of the same reference product 

would be significantly disadvantaged by 

the reduced payment if purchased with 

a 340B discount. These commenters 

urged CMS to reevaluate pass-through 

payment eligibility for biosimilar 

biological products and their payment 

under the 340B payment proposal in the 

proposed rule. 

Response: Comments related to policy 

for coding for biosimilar biological 

products are outside of the scope of the 

CY 2018 OPPS/ASC proposed rule. As 

we indicated in the CY 2018 OPPS/ASC 

proposed rule, commenters should refer 

to the CY 2018 MPFS final rule for 

discussion of the biosimilar biological 

product coding policy. With respect to 

comments regarding OPPS payment for 

biosimilar biological products, in the CY 

2018 MPFS final rule, CMS finalized a 

policy to implement separate HCPCS 

codes for biosimilar biological products. 

Therefore, consistent with our 

established OPPS drug, biological, and 

radiopharmaceutical payment policy, 

HCPCS coding for biosimilar biological 

products will be based on policy 

established under the CY 2018 MPFS 

rule. 

Comments related to 340B and 

biosimilar biological products are 

discussed in section V.B.7. of this final 

rule with comment period. 

After consideration of the public 

comments we received, we are 

finalizing our proposed payment policy 

for biosimilar biological products, with 

the following technical correction: All 

biosimilar biological products will be 

eligible for pass-through payment and 

not just the first biosimilar biological 

product for a reference product. 

3. Payment Policy for Therapeutic 

Radiopharmaceuticals 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33630), for CY 2018, we 

proposed to continue the payment 

policy for therapeutic 

radiopharmaceuticals that began in CY 

2010. We pay for separately paid 

therapeutic radiopharmaceuticals under 

the ASP methodology adopted for 

separately payable drugs and 

biologicals. If ASP information is 

unavailable for a therapeutic 

radiopharmaceutical, we base 

therapeutic radiopharmaceutical 

payment on mean unit cost data derived 

from hospital claims. We believe that 

the rationale outlined in the CY 2010 

OPPS/ASC final rule with comment 

period (74 FR 60524 through 60525) for 

applying the principles of separately 

payable drug pricing to therapeutic 

radiopharmaceuticals continues to be 

appropriate for nonpass-through, 

separately payable therapeutic 

radiopharmaceuticals in CY 2018. 

Therefore, we proposed for CY 2018 to 

pay all nonpass-through, separately 

payable therapeutic 

radiopharmaceuticals at ASP+6 percent, 

based on the statutory default described 

in section 1833(t)(14)(A)(iii)(II) of the 

Act. For a full discussion of ASP-based 

payment for therapeutic 

radiopharmaceuticals, we refer readers 

to the CY 2010 OPPS/ASC final rule 

with comment period (74 FR 60520 

through 60521). We also proposed to 

rely on CY 2016 mean unit cost data 

derived from hospital claims data for 

payment rates for therapeutic 

radiopharmaceuticals for which ASP 

data are unavailable and to update the 

payment rates for separately payable 

therapeutic radiopharmaceuticals 

according to our usual process for 

updating the payment rates for 

separately payable drugs and biologicals 

on a quarterly basis if updated ASP 

information is unavailable. For a 

complete history of the OPPS payment 

policy for therapeutic 

radiopharmaceuticals, we refer readers 

to the CY 2005 OPPS final rule with 

comment period (69 FR 65811), the CY 

2006 OPPS final rule with comment 

period (70 FR 68655), and the CY 2010 

OPPS/ASC final rule with comment 

period (74 FR 60524). The proposed CY 

2018 payment rates for nonpassthrough, separately payable therapeutic 

radiopharmaceuticals were in Addenda 

A and B to the proposed rule (which are 


sradovich on DSK3GMQ082PROD with RULES2
59352 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

available via the Internet on the CMS 

Web site). 

Comment: Commenters supported 

continuation of the policy to pay ASP+6 

percent for therapeutic 

radiopharmaceuticals, if available, and 

to base payment on the mean unit cost 

derived from hospital claims data when 

not available. Commenters also 

requested that CMS examine ways to 

compensate hospitals for their 

documented higher overhead and 

handling costs associated with 

radiopharmaceuticals. 

Response: We appreciate the 

commenters’ support. However, as we 

stated earlier in section V.B.1.c. of this 

final rule with comment period in 

response to a similar request for 

additional radiopharmaceutical 

payment, we continue to believe that a 

single payment is appropriate for 

radiopharmaceuticals with pass-through 

payment status in CY 2018 and that the 

payment rate of ASP+6 percent is 

appropriate to provide payment for both 

the radiopharmaceutical’s acquisition 

cost and any associated nuclear 

medicine handling and compounding 

costs incurred by the hospital 

pharmacy. Payment for the 

radiopharmaceutical and 

radiopharmaceutical processing services 

is made through the single ASP-based 

payment. We refer readers to the CMS 

guidance document available via the 

Internet at https://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/ 

Archives.html for details on submission 

of ASP data for therapeutic 

radiopharmaceuticals. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to continue to pay all 

nonpass-through, separately payable 

therapeutic radiopharmaceuticals at 

ASP+6 percent. We also are finalizing 

our proposal to continue to rely on CY 

2016 mean unit cost data derived from 

hospital claims data for payment rates 

for therapeutic radiopharmaceuticals for 

which ASP data are unavailable. The CY 

2018 final rule payment rates for 

nonpass-through separately payable 

therapeutic radiopharmaceuticals are 

included in Addenda A and B to this 

final rule with comment period (which 

are available via the Internet on the 

CMS Web site). 

4. Payment Adjustment Policy for 

Radioisotopes Derived From NonHighly Enriched Uranium Sources 

Radioisotopes are widely used in 

modern medical imaging, particularly 

for cardiac imaging and predominantly 

for the Medicare population. Some of 

the Technetium-99 (Tc-99m), the 

radioisotope used in the majority of 

such diagnostic imaging services, is 

produced in legacy reactors outside of 

the United States using highly enriched 

uranium (HEU). 

The United States would like to 

eliminate domestic reliance on these 

reactors, and is promoting the 

conversion of all medical radioisotope 

production to non-HEU sources. 

Alternative methods for producing Tc99m without HEU are technologically 

and economically viable, and 

conversion to such production has 

begun. We expect that this change in the 

supply source for the radioisotope used 

for modern medical imaging will 

introduce new costs into the payment 

system that are not accounted for in the 

historical claims data. 

Therefore, beginning in CY 2013, we 

finalized a policy to provide an 

additional payment of $10 for the 

marginal cost for radioisotopes 

produced by non-HEU sources (77 FR 

68323). Under this policy, hospitals 

report HCPCS code Q9969 (Tc-99m from 

non-highly enriched uranium source, 

full cost recovery add-on per study 

dose) once per dose along with any 

diagnostic scan or scans furnished using 

Tc-99m as long as the Tc-99m doses 

used can be certified by the hospital to 

be at least 95 percent derived from nonHEU sources (77 FR 68321). 

We stated in the CY 2013 OPPS/ASC 

final rule with comment period (77 FR 

68321) that our expectation is that this 

additional payment will be needed for 

the duration of the industry’s 

conversion to alternative methods to 

producing Tc-99m without HEU. We 

also stated that we would reassess, and 

propose if necessary, on an annual basis 

whether such an adjustment continued 

to be necessary and whether any 

changes to the adjustment were 

warranted (77 FR 68316). We have 

reassessed this payment for CY 2018 

and did not identify any new 

information that would cause us to 

modify payment. Therefore, in the CY 

2018 OPPS/ASC proposed rule (82 FR 

33631), for CY 2018, we proposed to 

continue to provide an additional $10 

payment for radioisotopes produced by 

non-HEU sources. 

Comment: Commenters supported 

CMS’ proposal to provide an additional 

$10 payment for the marginal cost of 

radioisotopes produced by non-HEU 

sources and supported continuation of 

the policy. However, the commenters 

requested that CMS update the payment 

amount using the hospital market basket 

update or hospital cost data. The 

commenters also requested that CMS 

assess whether the collection of a 

beneficiary copayment could discourage 

hospital adoption. 

Response: We appreciate the 

commenters’ support. As discussed in 

the CY 2013 OPPS/ASC final rule with 

comment period, we did not finalize a 

policy to use the usual OPPS 

methodologies to update the non-HEU 

add-on payment (77 FR 68317). The 

purpose for the additional payment is 

limited to mitigating any adverse impact 

of transitioning to non-HEU sources and 

is based on the authority set forth at 

section 1833(t)(2)(E) of the Act. 

Accordingly, because we do not have 

authority to waive beneficiary 

copayment for this incentive payment, 

we believe it is unnecessary to assess 

whether a beneficiary copayment 

liability would deter a hospital from 

reporting HCPCS code Q9969. 

Furthermore, reporting of HCPCS code 

Q9969 is optional. Hospitals that are not 

experiencing high volumes of 

significantly increased costs are not 

obligated to request this additional 

payment (77 FR 68323). 

Comment: One commenter requested 

that CMS publish HCPCS code volume 

and cost data in the proposed and final 

rule ‘‘Drug Blood Brachy Cost Statistics’’ 

files yearly. 

Response: We appreciate the request 

and will consider revising the content of 

the ‘‘Drug Blood Brachy Cost statistics’’ 

file to include data on HCPCS code 

Q9969 for future rulemaking. In the 

interim, claims data on HCPCS code 

Q9969 are available for purchase in the 

claims data sets released with 

publication of this final rule with 

comment period. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to continue the policy of 

providing an additional $10 payment for 

radioisotopes produced by non-HEU 

sources for CY 2018, which will be the 

sixth year in which this policy is in 

effect in the OPPS. We will continue to 

reassess this policy annually, consistent 

with the original policy in the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68319). 

5. Payment for Blood Clotting Factors 

For CY 2017, we provided payment 

for blood clotting factors under the same 

methodology as other nonpass-through 

separately payable drugs and biologicals 

under the OPPS and continued paying 

an updated furnishing fee (81 FR 

79676). That is, for CY 2017, we 

provided payment for blood clotting 

factors under the OPPS at ASP+6 

percent, plus an additional payment for 

the furnishing fee. We note that when 

blood clotting factors are provided in 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59353 

18The House report that accompanied the 

authorizing legislation for the 340B Program stated: 

‘‘In giving these ‘covered entities’ access to price 

reductions the Committee intends to enable these 

entities to stretch scarce Federal resources as far as 

possible, reaching more eligible patients and 

providing more comprehensive services.’’ (H.R. 

Rept. No. 102–384(II), at 12 (1992)). 

physicians’ offices under Medicare Part 

B and in other Medicare settings, a 

furnishing fee is also applied to the 

payment. The CY 2017 updated 

furnishing fee was $0.209 per unit. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33631), for CY 2018, we 

proposed to pay for blood clotting 

factors at ASP+6 percent, consistent 

with our proposed payment policy for 

other nonpass-through, separately 

payable drugs and biologicals, and to 

continue our policy for payment of the 

furnishing fee using an updated amount. 

Our policy to pay for a furnishing fee for 

blood clotting factors under the OPPS is 

consistent with the methodology 

applied in the physician’s office and in 

the inpatient hospital setting. These 

methodologies were first articulated in 

the CY 2006 OPPS final rule with 

comment period (70 FR 68661) and later 

discussed in the CY 2008 OPPS/ASC 

final rule with comment period (72 FR 

66765). The proposed furnishing fee 

update was based on the percentage 

increase in the Consumer Price Index 

(CPI) for medical care for the 12-month 

period ending with June of the previous 

year. Because the Bureau of Labor 

Statistics releases the applicable CPI 

data after the MPFS and OPPS/ASC 

proposed rules are published, we were 

not able to include the actual updated 

furnishing fee in the proposed rules. 

Therefore, in accordance with our 

policy, as finalized in the CY 2008 

OPPS/ASC final rule with comment 

period (72 FR 66765), we proposed to 

announce the actual figure for the 

percent change in the applicable CPI 

and the updated furnishing fee 

calculated based on that figure through 

applicable program instructions and 

posting on the CMS Web site at: http:// 

www.cms.gov/Medicare/Medicare-Feefor-Service-Part-B-Drugs/McrPartB

DrugAvgSalesPrice/index.html. 

Comment: Commenters’ supported 

CMS’ proposal to continue to pay for a 

blood clotting factor furnishing fee in 

the hospital outpatient department. 

Response: We appreciate the 

commenters’ support. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to provide payment for 

blood clotting factors under the same 

methodology as other separately payable 

drugs and biologicals under the OPPS 

and to continue payment of an updated 

furnishing fee. We will announce the 

actual figure of the percent change in 

the applicable CPI and the updated 

furnishing fee calculation based on that 

figure through the applicable program 

instructions and posting on the CMS 

Web site. 

6. Payment for Nonpass-Through Drugs, 

Biologicals, and Radiopharmaceuticals 

With HCPCS Codes but Without OPPS 

Hospital Claims Data 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33631), for CY 2018, we 

proposed to continue to use the same 

payment policy as in CY 2017 for 

nonpass-through drugs, biologicals, and 

radiopharmaceuticals with HCPCS 

codes but without OPPS hospital claims 

data, which describes how we 

determine the payment rate for drugs, 

biologicals, or radiopharmaceuticals 

without an ASP. For a detailed 

discussion of the payment policy and 

methodology, we refer readers to the CY 

2016 OPPS/ASC final rule with 

comment period (80 FR 70442 through 

70443). The proposed CY 2018 payment 

status of each of the nonpass-through 

drugs, biologicals, and 

radiopharmaceuticals with HCPCS 

codes but without OPPS hospital claims 

data was listed in Addendum B to the 

proposed rule, which is available via the 

Internet on the CMS Web site. 

Comment: One commenter, the 

manufacturer of Mylotarg®, requested 

that CMS change the dose descriptor for 

HCPCS code J9300 from ‘‘Injection, 

gemtuzumab ozogamicin, 5 mg’’ to 

‘‘Injection, gemtuzumab ozogamicin, 0.1 

mg,’’ to accommodate the new 4.5 mg 

vial size for Mylotarg®. The commenter 

noted that HCPCS code J9300 was 

inactive for a period of time because the 

prior version of gemtuzumab 

ozogamicin was removed from the 

market. As such, HCPCS code J9300 is 

assigned status indicator ‘‘E2 (items and 

services for which pricing information 

and claims data are not available).’’ The 

commenter also requested that CMS 

change the status indicator from ‘‘E2’’ to 

a payable status indicator. 

Response: This comment is outside of 

the scope of the proposed rule. Requests 

for changes to Level II Alphanumeric 

HCPCS codes should be submitted to 

the CMS HCPCS Workgroup using CMS’ 

standard procedures. Information on the 

Level II HCPCS code process is available 

via the Internet on the CMS Web site, 

which is publicly available at: https://

www.cms.gov/Medicare/Coding/ 

MedHCPCSGenInfo/HCPCSCODING

PROCESS.html. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2018 proposal without 

modification, including our proposal to 

assign drug or biological products status 

indicator ‘‘K’’ and pay for them 

separately for the remainder of CY 2018 

if pricing information becomes 

available. The CY 2018 payment status 

of each of the nonpass-through drugs, 

biologicals, and radiopharmaceuticals 

with HCPCS codes but without OPPS 

hospital claims data is listed in 

Addendum B to this final rule with 

comment period, which is available via 

the Internet on the CMS Web site. 

7. Alternative Payment Methodology for 

Drugs Purchased Under the 340B 

Program 

a. Background 

The 340B Program, which was 

established by section 340B of the 

Public Health Service Act by the 

Veterans Health Care Act of 1992, is 

administered by the Health Resources 

and Services Administration (HRSA) 

within HHS. The 340B Program allows 

participating hospitals and other health 

care providers to purchase certain 

‘‘covered outpatient drugs’’ (as defined 

under section 1927(k) of the Act and 

interpreted by HRSA through various 

guidance documents) at discounted 

prices from drug manufacturers. The 

statutory intent of the 340B Program is 

to maximize scarce Federal resources as 

much as possible, reaching more eligible 

patients, and providing care that is more 

comprehensive.18

The 340B statute defines which health 

care providers are eligible to participate 

in the program (‘‘covered entities’’). In 

addition to Federal health care grant 

recipients, covered entities include 

hospitals with a Medicare 

disproportionate share hospital (DSH) 

percentage above 11.75 percent. 

However, under Public Law 111–148, 

section 7101 expanded eligibility to 

critical access hospitals (CAHs), 

children’s hospitals with a DSH 

adjustment greater than 11.75 percent, 

sole community hospitals (SCHs) with a 

DSH adjustment percentage of 8.0 

percent or higher, rural referral centers 

(RRCs) with a DSH adjustment 

percentage of 8.0 percent or higher, and 

freestanding cancer hospitals with a 

DSH adjustment percentage above 11.75 

percent. In accordance with section 

340B(a)(4)(L)(i) of the Public Health 

Service Act, all participating hospital 

types must also meet other criteria. 

HRSA calculates the ceiling price for 

each covered outpatient drug. The 

ceiling price is the drug’s average 

manufacturer price (AMP) minus the 

unit rebate amount (URA), which is a 

statutory formula that varies depending 

on whether the drug is an innovator 


sradovich on DSK3GMQ082PROD with RULES2
59354 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

19 42 U.S.C. 256b(a)(1–2). Occasionally, a drug’s 

URA is equal to its AMP, resulting in a 340B ceiling 

price of $0. In these instances, HRSA has advised 

manufacturers to charge covered entities $0.01 per 

unit. 20 Department of Health and Human Services. 

2017. Fiscal Year 2018 Health Resources and 

Services Administration justification of estimates 

for appropriations committees. Washington, DC: 

HHS. Available at: https://www.hrsa.gov/sites/ 

default/files/hrsa/about/budget/budgetjustification-2018.pdf. 

21Office of Inspector General. ‘‘Part B Payment 

for 340B Purchased Drugs. OEI–12–14–00030’’. 

November 2015. Available at: https://oig.hhs.gov/ 

oei/reports/oei-12-14-00030.pdf. 

22Medicare Payment Advisory Commission. 

Report to the Congress: Overview of the 340B Drug 

Pricing Program. May 2015. Available at: http://

www.medpac.gov/docs/default-source/reports/may2015-report-to-the-congress-overview-of-the-340bdrug-pricing-program.pdf?sfvrsn=0. 

23 Government Accountability Office. ‘‘Medicare 

Part B Drugs: Action Needed to Reduce Financial 

Incentives to Prescribe 340B Drugs at Participating 

Hospitals GAO–15–442’’. June 2015. Available at: 

https://www.gao.gov/assets/680/670676.pdf. 

single source drug (no generic 

available), an innovator multiple source 

drug (a brand drug with available 

generic(s)), or a non-innovator multiple 

source (generic) drug.19 The ceiling 

price represents the maximum price a 

participating drug manufacturer can 

charge a covered entity for the drug. 

However, covered entities also have the 

option to participate in HRSA’s Prime 

Vendor Program (PVP), under which the 

prime vendor can negotiate even deeper 

discounts (known as ‘‘subceiling 

prices’’) on some covered outpatient 

drugs. By the end of FY 2015, the PVP 

had nearly 7,600 products available to 

participating entities below the 340B 

ceiling price, including 3,557 covered 

outpatient drugs with an estimated 

average savings of 10 percent below the 

340B ceiling price.20

As we discussed in the CY 2018 

OPPS/ASC proposed rule (82 FR 33632 

and 33633), several recent studies and 

reports on Medicare Part B payments for 

340B purchased drugs highlight a 

difference in Medicare Part B drug 

spending between 340B hospitals and 

non-340B hospitals as well as varying 

differences in the amount by which the 

Part B payment exceeds the drug 

acquisition cost.21 22 23 Links to the full 

reports referenced in this section can be 

found in the cited footnotes. 

In its May 2015 Report to Congress, 

MedPAC analyzed Medicare hospital 

outpatient claims (excluding CAHs) 

along with information from HRSA on 

which hospitals participate in the 340B 

Program. MedPAC included data on all 

separately payable drugs under the 

OPPS except for vaccines and orphan 

drugs provided by freestanding cancer 

hospitals, RRCs, and SCHs. To estimate 

costs that 340B hospitals incur to 

acquire drugs covered under the OPPS, 

MedPAC generally used the formula for 

calculating the 340B ceiling price: 

(AMP)—unit rebate amount (URA) × 

drug package size. The URA is 

determined by law and depends upon 

whether a drug is classified as single 

source, innovator multiple source, noninnovator multiple source, a clotting 

factor drug, or an exclusively pediatric 

drug. CMS provides this URA 

information to States as a courtesy. 

However, drug manufacturers remain 

responsible for correctly calculating the 

URA for their covered outpatient drugs. 

More information on the URA 

calculation and the Medicaid Drug 

Rebate Program may be found on the 

Web site at: https://www.medicaid.gov/ 

medicaid/prescription-drugs/medicaiddrug-rebate-program/index.html. 

Because MedPAC did not have access 

to AMP data, it used each drug’s ASP as 

a proxy for AMP. MedPAC noted that 

ASP is typically slightly lower than 

AMP. The AMP is defined under section 

1927(k)(1) of the Act as the average 

price paid to the manufacturer by 

wholesalers in the United States for 

drugs distributed to the retail pharmacy 

class of trade, minus customary prompt 

pay discounts. Manufacturers 

participating in Medicaid are required 

to report AMP data quarterly to the 

Secretary, and these prices are 

confidential. As described under section 

1847A of the Act, the ASP is a 

manufacturer’s unit sales of a drug to all 

purchasers in the United States in a 

calendar quarter divided by the total 

number of units of the drug sold by the 

manufacturer in that same quarter. The 

ASP is net of any price concessions 

such as volume, prompt pay, and cash 

discounts. Certain sales are exempt from 

the calculation of ASP, including sales 

at a nominal charge and 340B discounts. 

In addition, MedPAC noted that, due 

to data limitations, its estimates of 

ceiling prices are conservative and 

likely higher (possibly much higher) 

than actual ceiling prices. Further 

details on the methodology used to 

calculate the average minimum discount 

for separately payable drugs can be 

found in Appendix A of MedPAC’s May 

2015 Report to Congress. In this report, 

MedPAC estimated that, on average, 

hospitals in the 340B Program ‘‘receive 

a minimum discount of 22.5 percent of 

the [ASP] for drugs paid under the 

[OPPS].’’ 

In its March 2016 Report to Congress 

(page 79), MedPAC noted that another 

report, which MedPAC attributed to the 

Office of the Inspector General (OIG), 

recently estimated that discounts across 

all 340B providers (hospitals and certain 

clinics) average 33.6 percent of ASP, 

allowing these providers to generate 

significant profits when they administer 

Part B drugs. According to the U.S. 

Government Accountability Office 

(GAO) report, the amount of the 340B 

discount ranges from an estimated 20 to 

50 percent discount, compared to what 

the entity would have otherwise paid to 

purchase the drug. In addition, 

participation in the PVP often results in 

a covered entity paying a subceiling 

price on some covered outpatient drugs 

(estimated to be approximately 10 

percent below the ceiling price) (U.S. 

Department of Health and Human 

Services, HRSA FY 2018 Budget 

Justification). Participation in the PVP is 

voluntary and free. 

As noted in the CY 2018 OPPS/ASC 

proposed rule, with respect to 

chemotherapy drugs and drug 

administration services, MedPAC 

examined Medicare Part B spending for 

340B and non-340B hospitals for a 5- 

year period from 2008 to 2012 and 

found that ‘‘Medicare spending grew 

faster among hospitals that participated 

in the 340B Program for all five years 

than among hospitals that did not 

participate in the 340B Program at any 

time during [the study] period’’ 

(MedPAC May 2015 Report to Congress, 

page 14). This is just one example of 

drug spending increases that are 

correlated with participation in the 

340B Program and calls into question 

whether Medicare’s current policy to 

pay for separately payable drugs at 

ASP+6 percent is appropriate in light of 

the discounted rates at which 340B 

hospitals acquire such drugs. 

Further, GAO found that ‘‘in both 

2008 and 2012, per beneficiary 

Medicare Part B drug spending, 

including oncology drug spending, was 

substantially higher at 340B DSH 

hospitals than at non-340B hospitals.’’ 

According to the GAO report, this 

indicates that, on average, beneficiaries 

at 340B DSH hospitals were either 

prescribed more drugs or more 

expensive drugs than beneficiaries at 

the other non-340B hospitals in GAO’s 

analysis. For example, in 2012, average 

per beneficiary spending at 340B DSH 

hospitals was $144, compared to 

approximately $60 at non-340B 

hospitals. The differences did not 

appear to be explained by the hospital 

characteristics GAO examined or 

patients’ health status (GAO Report 15– 

442, page 20). 

Under the OPPS, all hospitals (other 

than CAHs, which are paid based on 

101 percent of reasonable costs as 

required by section 1834(g) of the Act) 

are currently paid the same rate for 

separately payable drugs (ASP+6 

percent), regardless of whether the 

hospital purchased the drug at a 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59355 

24U.S. Department of Health and Human 

Services, HRSA FY 2015 Budget Justification, p. 

342. 

25Medicare Payment Advisory Commission. 

March 2016 Report to the Congress: Medicare 

Payment Policy. March 2016. Available at: http:// 

www.medpac.gov/docs/default-source/reports/ 

chapter-3-hospital-inpatient-and-outpatientservices-march-2016-report-.pdf?sfvrsn=0. 

26 Department of Health and Human Services. 

Office of the Assistant Secretary for Planning and 

Evaluation. Issue Brief: Medicare Part B Drugs: 

Pricing and Incentives. 2016. Available at: https:// 

aspe.hhs.gov/system/files/pdf/187581/ 

PartBDrug.pdf. 

27 Department of Health and Human Services: 

Office of the Assistant Secretary for Planning and 

Evaluation. Issue Brief: Observations on Trends in 

Prescription Drug Spending. March 8, 2016. 

Available at: https://aspe.hhs.gov/system/files/pdf/ 

187586/Drugspending.pdf. 

discount through the 340B Program. 

Medicare beneficiaries are liable for a 

copayment that is equal to 20 percent of 

the OPPS payment rate, which is 

currently ASP+6 percent (regardless of 

the 340B purchase price for the drug). 

Based on an analysis of almost 500 

drugs billed in the hospital outpatient 

setting in 2013, the OIG found that, for 

35 drugs, the ‘‘difference between the 

Part B [payment] amount and the 340B 

ceiling price was so large that, in at least 

one quarter of 2013, the beneficiary’s 

coinsurance alone . . . was greater than 

the amount a covered entity spent to 

acquire the drug’’ (OIG November 2015, 

Report OEI–12–14–00030, page 9). 

In the CY 2009 OPPS/ASC final rule 

with comment period (73 FR 68655), we 

requested comments regarding the drug 

costs of hospitals that participate in the 

340B Program and whether we should 

consider an alternative drug payment 

methodology for participating 340B 

hospitals. As noted above, in the time 

since that comment solicitation, access 

to the 340B Program was expanded 

under section 7101 of Public Law 111– 

148, which amended section 340B(a)(4) 

of the Public Health Service Act to 

expand the types of covered entities 

eligible to participate in the 340B 

Program. It is estimated that covered 

entities saved $3.8 billion on outpatient 

drugs purchased through the 340B 

Program in 2013.24 In addition, the 

number of hospitals participating in the 

program has grown from 583 in 2005 to 

1,365 in 2010 and 2,140 in 2014 

(MedPAC May 2015 Report to 

Congress). In its November 2015 report 

entitled ‘‘Part B Payments for 340BPurchased Drugs,’’ the OIG found that 

Part B payments were 58 percent more 

than 340B ceiling prices, which allowed 

covered entities to retain approximately 

$1.3 billion in 2013 (OEI–12–14–00030, 

page 8). Given the growth in the number 

of providers participating in the 340B 

Program and recent trends in high and 

growing prices of several separately 

payable drugs administered under 

Medicare Part B to hospital outpatients, 

we stated in the CY 2018 OPPS/ASC 

proposed rule that we believe it is 

timely to reexamine the appropriateness 

of continuing to apply the current OPPS 

methodology of ASP+6 percent to 

hospitals that have acquired those drugs 

under the 340B Program at significantly 

discounted rates. 

MedPAC and OIG have recommended 

alternative drug payment methodologies 

for hospitals that participate in the 340B 

Program. In its March 2016 Report to 

Congress, MedPAC recommended a 

legislative proposal related to payment 

for Part B drugs furnished by 340B 

hospitals under which Medicare would 

reduce payment rates for 340B 

hospitals’ separately payable 340B drugs 

by 10 percent of the ASP and direct the 

program savings from reducing Part B 

drug payment rates to the Medicare 

funded uncompensated care pool.25 In 

its November 2015 report, the OIG 

described three options under which 

both the Medicare program and 

Medicare beneficiaries would be able to 

share in the program savings realized by 

hospitals and other covered entities that 

participate in the 340B Program (OEI– 

12–14–00030, pages 11–12). These 

options included: (1) Paying ASP with 

no additional add-on percentage; (2) 

paying ASP minus 14.4 percent; and (3) 

making payment based on the 340B 

ceiling price plus 6 percent of ASP for 

each 340B purchased drug (OEI–12–14– 

00030, page 11). Analysis in several of 

these reports notes limitations in 

estimating 340B-purchased drugs’ 

acquisition costs; the inability to 

identify which drugs were purchased 

through the 340B Program within 

Medicare claims data was one of those 

limitations. 

b. OPPS Payment Rate for 340B 

Purchased Drugs 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33633 through 33634), we 

proposed changes to our current 

Medicare Part B drug payment 

methodology for 340B hospitals that we 

believe would better, and more 

appropriately, reflect the resources and 

acquisition costs that these hospitals 

incur. Such changes would allow the 

Medicare program and Medicare 

beneficiaries to pay less for drugs when 

hospitals participating in the 340B 

Program furnish drugs to Medicare 

beneficiaries that are purchased under 

the 340B Program. 

Our goal is to make Medicare 

payment for separately payable drugs 

more aligned with the resources 

expended by hospitals to acquire such 

drugs while recognizing the intent of the 

340B Program to allow covered entities, 

including eligible hospitals, to stretch 

scarce resources in ways that enable 

hospitals to continue providing access 

to care for Medicare beneficiaries and 

other patients. Medicare expenditures 

on Part B drugs have been rising and are 

projected to continue to rise faster than 

overall health spending, thereby 

increasing this sector’s share of health 

care spending due to a number of 

underlying factors such as new higher 

price drugs and price increases for 

existing drugs.26 27 While we recognize 

the intent of the 340B Program, we 

believe it is inappropriate for Medicare 

to subsidize other activities through 

Medicare payments for separately 

payable drugs. We believe that any 

payment changes we adopt should be 

limited to separately payable drugs 

under the OPPS, with some additional 

exclusions. As a point of further clarity, 

CAHs are not included in this 340B 

policy change because they are paid 

under section 1834(g) of the Act. As 

stated in the CY 2018 OPPS/ASC 

proposed rule, these exclusions are for: 

(1) Drugs on pass-through payment 

status, which are required to be paid 

based on the ASP methodology, and (2) 

vaccines, which are excluded from the 

340B Program. In addition, we solicited 

public comments on whether other 

types of drugs, such as blood clotting 

factors, should also be excluded from 

the reduced payment. 

Data limitations inhibit our ability to 

identify which drugs were acquired 

under the 340B Program in the Medicare 

OPPS claims data. This lack of 

information within the claims data has 

limited researchers’ and our ability to 

precisely analyze differences in 

acquisition cost of 340B and non-340B 

acquired drugs with Medicare claims 

data. Accordingly, in the CY 2018 

OPPS/ASC proposed rule (82 FR 33633), 

we stated our intent to establish a 

modifier, to be effective January 1, 2018, 

for hospitals to report with separately 

payable drugs that were not acquired 

under the 340B Program. Because a 

significant portion of hospitals paid 

under the OPPS participate in the 340B 

Program, we stated our belief that it is 

appropriate to presume that a separately 

payable drug reported on an OPPS claim 

was purchased under the 340B Program, 

unless the hospital identifies that the 

drug was not purchased under the 340B 

Program. We stated in the proposed rule 

that we intended to provide further 

details about this modifier in this CY 

2018 OPPS/ASC final rule with 

comment period and/or through 


sradovich on DSK3GMQ082PROD with RULES2
59356 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

subregulatory guidance, including 

guidance related to billing for dually 

eligible beneficiaries (that is, 

beneficiaries covered under Medicare 

and Medicaid) for whom covered 

entities do not receive a discount under 

the 340B Program. 

A summary of public comments 

received and our responses pertaining to 

the modifier are included later in this 

section. As described in detail later in 

this section, we are implementing the 

modifier such that it is required for 

drugs that were acquired under the 

340B Program instead of requiring its 

use on drugs that were not acquired 

under the 340B Program. In addition, 

we are establishing an informational 

modifier for use by certain providers 

who will be excepted from the 340B 

payment reduction. 

Further, we note that the 

confidentiality of ceiling and subceiling 

prices limits our ability to precisely 

calculate the price paid by 340B 

hospitals for a particular covered 

outpatient drug. We recognize that each 

separately payable OPPS drug will have 

a different ceiling price (or subceiling 

price when applicable). Accordingly, we 

stated in the proposed rule that we 

believe using an average discounted 

price was appropriate for our proposal. 

Therefore, for CY 2018, we proposed to 

apply an average discounted price of 

22.5 percent of the ASP for nonpassthrough separately payable drugs 

purchased under the 340B Program, as 

estimated by MedPAC (MedPAC’s May 

2015 Report to Congress, page 7). 

In the near-term, we believe that the 

estimated average minimum discount 

MedPAC calculated—22.5 percent of the 

ASP—adequately represents the average 

minimum discount that a 340B 

participating hospital receives for 

separately payable drugs under the 

OPPS. Given the limitations in 

calculating a precise discount for each 

OPPS separately payable drug, we did 

not attempt to do so for the proposed 

rule. Instead, we stated that we believed 

that using the analysis from the 

MedPAC report is appropriate and 

noted that the analysis is spelled out in 

detail and can be replicated by 

interested parties. As MedPAC noted, its 

estimate was conservative and the 

actual average discount experienced by 

340B hospitals is likely much higher 

than 22.5 percent of the ASP. As GAO 

mentioned, discounts under the 340B 

Program range from 20 to 50 percent of 

the ASP (GAO–11–836, page 2). We 

believe that such reduced payment 

would meet the requirements under 

section 1833(t)(14)(A)(iii)(II) of the Act, 

which states that if hospital acquisition 

cost data are not available, the payment 

for an applicable drug shall be the 

average price for the drug in the year 

established under section 1842(o), 

section 1847A, or section 1847B of the 

Act, as the case may be, as calculated 

and adjusted by the Secretary as 

necessary. We do not have hospital 

acquisition cost data for 340B drugs 

and, therefore, proposed to continue to 

pay for these drugs under our authority 

at section 1833(t)(14)(A)(iii)(II) of the 

Act at ASP, and then to adjust that 

amount by applying a reduction of 22.5 

percent, which, as explained throughout 

this section, is the adjustment we 

believe is necessary for drugs acquired 

under the 340B Program. 

Specifically, in the CY 2018 OPPS/ 

ASC proposed rule, we proposed to 

apply section 1833(t)(14)(A)(iii)(II) of 

the Act to all separately payable drugs 

and biologicals, including SCODs. 

However, we proposed to exercise the 

Secretary’s authority to adjust the 

applicable payment rate as necessary 

and, for separately payable drugs and 

biologicals (other than drugs with passthrough payment status and vaccines) 

acquired under the 340B Program, we 

proposed to adjust the rate to ASP 

minus 22.5 percent, which we believe 

better represents the average acquisition 

cost for these drugs and biologicals. 

As indicated earlier, because ceiling 

prices are confidential, we are unable to 

publicly disclose those prices or set 

payment rates in a way that would 

allow the public to determine the 

ceiling price for a particular drug. We 

believe that the MedPAC analysis that 

found the average minimum discount of 

22.5 percent of ASP adequately reflects 

the average minimum discount that 

340B hospitals paid under the OPPS 

receive. In addition, we believe that 

using an average discount to set 

payment rates for OPPS separately 

payable drugs would achieve the dual 

goals of (1) adjusting payments to better 

reflect resources expended to acquire 

such drugs, and (2) protecting the 

confidential nature of discounts applied 

to a specific drug. Moreover, we do not 

believe that Medicare beneficiaries 

should be liable for a copayment rate 

that is tied to the current methodology 

of ASP+6 percent when the actual cost 

to the hospital to purchase the drug 

under the 340B Program is much lower 

than the ASP for the drug. 

We note that MedPAC excluded 

vaccines from its analysis because 

vaccines are not covered under the 340B 

Program, but it did not exclude drugs 

with pass-through payment status. 

Further, because data used to calculate 

ceiling prices are not publicly available, 

MedPAC instead estimated ‘‘the lower 

bound of the average discount received 

by 340B hospitals for drugs paid under 

the [OPPS]’’ (MedPAC May 2015 Report 

to Congress, page 6). Accordingly, it is 

likely that the average discount is 

higher, potentially significantly higher, 

than the average minimum of 22.5 

percent that MedPAC found through its 

analysis. In the proposed rule, we 

encouraged the public to analyze the 

analysis presented in Appendix A of 

MedPAC’s May 2015 Report to 

Congress. 

As noted earlier, we believe that the 

discount amount of 22.5 percent below 

the ASP reflects the average minimum 

discount that 340B participating 

hospitals receive for drugs acquired 

under the 340B Program, and in many 

cases, the average discount may be 

higher for some covered outpatient 

drugs due to hospital participation in 

the PVP, substitution of ASP (which 

includes additional rebates) for AMP, 

and that drugs with pass-through 

payment status were included rather 

than excluded from the MedPAC 

analysis. We believe that a payment rate 

of ASP+6 percent does not sufficiently 

recognize the significantly lower 

acquisition costs of such drugs incurred 

by a 340B-participating hospital. 

Accordingly, as noted earlier, we 

proposed to reduce payment for 

separately payable drugs, excluding 

drugs on pass-through payment status 

and vaccines, that were acquired under 

the 340B Program by 22.5 percent of 

ASP for all drugs for which a hospital 

does not append on the claim the 

modifier mentioned in the proposed 

rule and discussed further in this final 

rule with comment period. (As detailed 

later in this section, we are instead 

requiring hospitals to append the 

applicable modifier on the claim line 

with any drugs that were acquired 

under the 340B Program.) 

Finally, as detailed in the impact 

analysis section (section XIX.A.5.a.2) of 

the proposed rule, we also proposed 

that the reduced payments for 

separately payable drugs and biologicals 

purchased under the 340B Program are 

included in the budget neutrality 

adjustments, under the requirements in 

section 1833(t)(9)(B) of the Act, and that 

the budget neutral weight scalar is not 

applied in determining payments for 

these separately paid drugs and 

biologicals purchased under the 340B 

Program. In that section, we also 

solicited public comments on whether 

we should apply all or part of the 

savings generated by this payment 

reduction to increase payments for 

specific services paid under the OPPS, 

or under Part B generally, in CY 2018, 

rather than simply increasing the 

conversion factor. In particular, we 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59357 

28Community Oncology Alliance. Report: ‘‘How 

Abuse of the 340B Program is Hurting Patients’’ 

September 2017. Available at: https://

www.communityoncology.org/wp-content/uploads/ 

2017/09/COA_340B-PatientStories_FINAL.pdf. 

requested public comments on whether 

and how the offsetting increase could be 

targeted to hospitals that treat a large 

share of indigent patients, especially 

those patients who are uninsured. In 

addition, we requested public 

comments on whether savings 

associated with this proposal would 

result in unnecessary increases in the 

volume of covered services paid under 

the OPPS that should be adjusted in 

accordance with section 1833(t)(2)(F) of 

the Act. More information on the impact 

estimate associated with this proposal 

was included in section XIX.A.5.a.2. of 

the proposed rule. A summary of the 

public comments received on the 

impact estimate, along with our 

responses to those comments and our 

estimate of this provision for this final 

rule with comment period, are included 

in section XVIII.A.5. of this final rule 

with comment period. 

c. Summaries of Public Comments 

Received and Our Responses 

(1) Overall Comments 

Comment: Several commenters, 

including organizations representing 

physician oncology practices, 

pharmaceutical research and 

manufacturing companies, a large 

network of community-based oncology 

practices, and several individual 

Medicare beneficiaries, supported the 

proposal. Some of these commenters 

commended CMS for its proposal, 

which they believed would help address 

the growth of the 340B Program, stem 

physician practice consolidation with 

hospitals, and preserve patient access to 

community-based care. 

One of these commenters stated that 

the proposals would reduce drug costs 

for seniors by an estimated $180 million 

a year; help to stop hospital ‘‘abuses’’ of 

the 340B program; and help reverse the 

‘‘perverse incentives’’ that have driven 

the closure and consolidation of the 

nation’s community cancer care system. 

Another commenter, representing a 

large network of community-based 

oncology practices, noted that since 

2008, 609 community cancer practices 

have been acquired or become affiliated 

with hospitals, with 75 percent of those 

community cancer practices acquired by 

340B-participating hospitals. The 

commenter stated that the consolidation 

in oncology care has resulted in a 30 

percent shift in the site of service for 

chemotherapy administration from the 

physician office setting to the more 

costly hospital outpatient setting. 

One commenter, an organization 

representing community oncology 

practices, cited several issues that the 

proposal would help address, including 

that only a small minority of 340B 

participating hospitals are using the 

program to benefit patients in need; 

cancer patients in need are being denied 

care at 340B participating hospitals or 

placed on wait lists; and hospitals are 

making extreme profits on expensive 

cancer drugs and are consolidating the 

nation’s cancer care system, reducing 

patient choice and access and shifting 

care away from the private, physicianowned community oncology clinics into 

the more expensive 340B hospital 

setting, which is increasing costs for 

Medicare and its beneficiaries. In 

addition, this commenter stated that the 

increasing scope and magnitude of 

required 340B discounts are increasing 

drug prices to record-breaking levels as 

manufacturers factor these discounts 

into pricing decisions. The commenter 

also cited a report that it recently 

released that suggests, and provides 

anecdotal evidence supporting, that 

some 340B hospitals offered little 

charity care and turned away some 

patients in need because those patients 

were uninsured.28

With respect to the magnitude of the 

proposed payment reduction of ASP 

minus 22.5 percent, one commenter 

noted that although the proposed 

decrease in payment may seem 

‘‘severe,’’ ASP minus 22.5 percent is the 

minimum discount that hospitals in the 

340B Program receive. The commenter 

further noted that, with 340B discounts 

on brand drugs approaching, and even 

exceeding, 50 percent, there is still 

substantial savings—on the order of 50 

percent drug margins—for hospitals to 

use to provide direct and indirect 

patient benefits. The commenter also 

noted that this proposal would result in 

cost-sharing savings to Medicare 

beneficiaries, for whom drug cost is an 

important component of overall 

outpatient cancer care costs. 

Some commenters urged HHS, 

specifically CMS and HRSA, to work 

with Congress to reform the 340B 

Program. One commenter requested 

greater transparency and accountability 

on how 340B savings are being used, as 

well as a specific definition of the 

‘‘340B patient,’’ which the commenter 

noted would require a legislative 

change. 

Response: We thank the commenters 

for their support. As mentioned in the 

proposed rule, we share the 

commenters’ concern that current 

Medicare payments for drugs acquired 

under the 340B Program are well in 

excess of the overhead and acquisition 

costs for drugs purchased under the 

340B Program. We continue to believe 

that our proposal would better align 

Medicare payment for separately 

payable drugs acquired under the 340B 

Program with the actual resources 

expended to acquire such drugs. 

Importantly, we continue to believe that 

Medicare beneficiaries should be able to 

share in the savings on drugs acquired 

through the 340B Program at a 

significant discount. We also appreciate 

the comments supporting the proposed 

payment amount for drugs acquired 

under the 340B Program of ASP minus 

22.5 percent, which we believe, like 

several commenters, is an amount that 

allows hospitals to retain a profit on 

these drugs for use in the care of lowincome and uninsured patients. As 

detailed later in this section, we are 

finalizing our proposal, with 

modifications, in response to public 

comments. 

As previously stated, CMS does not 

administer the 340B Program. 

Accordingly, feedback related to 

eligibility for the 340B Program as well 

as 340B Program policies are outside the 

scope of the proposed rule and are not 

addressed in this final rule with 

comment period. 

Comment: Several commenters 

expressed concern with the rising cost 

of drugs and the impact on beneficiaries 

and taxpayers. These commenters 

offered varied opinions on whether the 

proposal would achieve CMS’ goal of 

lowering drug prices and reducing 

beneficiary out-of-pocket costs. Some 

commenters stated that the proposal has 

the potential to alleviate the financial 

burden that high-cost drugs place on 

patients. Other commenters stated that, 

because the proposal does not address 

the issue of expansion of 340B entities, 

the volume of 340B discounted drugs, 

and the affordability of drugs, especially 

oncology drugs, CMS should not 

finalize the proposal. 

One commenter, an individual who 

supported the proposal, stated that 

although the majority of patients with 

Medicare Part B coverage have 

supplemental coverage to pay their 

coinsurance, significant numbers do not 

have this additional protection. The 

commenter noted that, for a drug that is 

paid at $10,000 per month, the price 

reduction would save a beneficiary 

approximately $500 a month, which 

may be the difference between getting 

treatment and foregoing treatment due 

to financial reasons. 

Another commenter, a large 

organization with many members who 

are Medicare beneficiaries, stated that 

the proposal would provide a measure 


sradovich on DSK3GMQ082PROD with RULES2
59358 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

of price relief to the 16 percent of 

Medicare beneficiaries without 

supplemental coverage. The commenter 

also expressed concern that the proposal 

would have serious health implications 

for beneficiaries in safety-net hospitals. 

The commenter urged HHS to develop 

proposals that will lower underlying 

drug prices, but did not provide any 

specific examples of such proposals. 

Another commenter stated that the cost 

of drugs is becoming unsustainable and 

applying the proposed policy is a decent 

‘‘baby step’’ in controlling a situation 

that is ‘‘grossly’’ unfair to American 

taxpayers, especially when the 

development of new drugs is frequently 

funded to a large extent by taxpayers 

through Federal grants. 

In addition, one commenter, a large 

organization representing its physician 

and medical student members, 

commented that it shares the 

Administration’s interest in addressing 

the rising costs of drugs and biologicals. 

The commenter appreciated that the 

proposal would address a longstanding 

concern: That the current payment 

policy for Part B drugs creates strong 

incentives to move Medicare beneficiary 

care from lower cost sites of care (such 

as physician offices) to higher cost sites 

of care (such as hospital outpatient 

departments). The commenter noted 

that many smaller physician practices 

have had to refer cancer and other 

patients who need chemotherapy and 

other expensive drugs to the hospital 

outpatient setting because the ASP+6 

percent payment does not always cover 

a physician’s acquisition cost, thereby 

undermining continuity of care and 

creating burdens for frail and medically 

compromised patients. 

This commenter also stated that, 

given the 340B Program’s focus on lowincome patients, it is imperative to 

ensure that an across-the-board 

reduction actually reflects the size of the 

340B discount to avoid creating barriers 

to access, should both physician 

practices and the hospital outpatient 

departments be unable to cover actual 

acquisition costs. Further, the 

commenter noted that it is essential that 

‘‘a bright line policy does not 

inadvertently deleteriously impact 

patient access in all sites of care.’’ 

Finally, the commenter stated that, 

while the proposed policy alters the 

relative disparity between payments for 

some hospital outpatient departments 

and physician practices, it still does not 

address the persistent challenges 

physician practices face in obtaining 

payment that covers acquisition costs. 

Response: We thank the commenters’ 

for their feedback and share their 

concern about the high cost of drugs and 

their effect on Medicare beneficiaries. 

As discussed in detail later in this 

section, we are finalizing a change to the 

payment rate for certain Medicare Part 

B drugs purchased by hospitals through 

the 340B Program in order to lower the 

cost of drugs for seniors and ensure that 

they benefit from the discounts 

provided through the program. We look 

forward to working with Congress to 

provide HHS additional 340B 

programmatic flexibility, which could 

include tools to provide additional 

considerations for safety net hospitals, 

which play a critical role in serving our 

most vulnerable populations. 

As a general matter, we note that, 

even though many beneficiaries have 

supplemental coverage, beneficiaries 

often pay a premium for such 

supplemental coverage and those plans 

make coinsurance payments for the 

beneficiary. Thus, to the extent 

Medicare would be lessening the 

coinsurance amount such supplemental 

plans would have to make, we would 

expect the price of such plans to 

decrease or otherwise reflect these lower 

costs in the future, thereby lowering the 

amount that beneficiaries pay for 

supplemental plan coverage. Further, 

for those Medicare beneficiaries who do 

not have supplemental coverage at all or 

who have a supplemental plan that does 

not cover all of a beneficiary’s costsharing obligation, the proposed policy 

would directly lower out-of-pocket 

spending for 340B-acquired drugs for 

those beneficiaries. 

In addition, we note that in the 

hospital setting, not only are 

beneficiaries liable for cost-sharing for 

drugs they receive, but they also incur 

a ‘‘facility fee’’ solely because the drug 

was furnished in the hospital setting. As 

described in section II.A.3.b. of this 

final rule with comment period, for CY 

2018, we are adopting a policy to 

conditionally package Level 1 and Level 

2 Drug Administration services and 

believe that these steps, taken together, 

may help encourage site-neutral care in 

that beneficiaries may receive the same 

drugs and drug administration services 

at the physician office setting without a 

significant difference in their financial 

liability between settings. 

As previously stated, we believe that 

ASP minus 22.5 percent is a lower 

bound estimate of the average discount 

given to hospitals participating in the 

340B Program. Accordingly, we disagree 

that this proposal represents a ‘‘brightline’’ policy that would hinder safetynet hospitals’ ability to treat patients. 

While the commenter’s request that 

HHS develop proposals to lower 

underlying drug prices is outside the 

scope of the proposals made in the 

proposed rule, we note that lowering the 

price of pharmaceuticals is a top 

priority, and we are committed to 

finding ways for Medicare payment 

policy not to incentivize use of 

overpriced drugs. With respect to 

Medicare Part B drug payment under 

the OPPS, we believe that reducing 

payments on 340B purchased drugs to 

better align with hospital acquisition 

costs directly lowers drug costs for those 

beneficiaries who receive a covered 

outpatient drug from a 340B 

participating hospital by reducing their 

copayments. Further, to the extent that 

studies have found that 340B 

participating hospitals tend to use more 

high cost drugs, we believe that this 

proposal helps address the incentive for 

hospitals to utilize these drugs in this 

manner solely for financial reasons. 

The expansion of 340B entities, the 

volume of 340B discounted drugs, and 

the affordability of drugs are outside the 

authority conferred by section 1833(t) of 

the Act (and, thus, are outside the scope 

of the proposed rule), and we see no 

reason to withdraw the proposal solely 

on account of these issues not being 

addressed by the proposal. Likewise, we 

note that the public comments on 

Medicare Part B drug payment in the 

physician office setting are also outside 

the scope of the proposed rule, and, 

therefore, are not addressed in this final 

rule with comment period. 

Comment: Several commenters, 

including organizations representing 

340B-eligible safety-net hospitals in 

urban and rural areas and teaching 

hospitals, were generally opposed to the 

proposed changes and urged CMS to 

withdraw the proposal from 

consideration. As detailed further 

below, these commenters believed that 

the Secretary lacks statutory authority to 

impose such a large reduction in the 

payment rate for 340B drugs, and 

contended that such change would 

effectively eviscerate the 340B Program. 

The commenters further noted that 

Medicare payment cuts of this 

magnitude would greatly ‘‘undermine 

340B hospitals’ ability to continue 

programs designed to improve access to 

services—the very goal of the 340B 

Program.’’ 

These commenters urged that, rather 

than ‘‘punitively targeting’’ 340B safetynet hospitals serving vulnerable 

patients, including those in rural areas, 

CMS instead redirect its efforts to halt 

the ‘‘unchecked, unsustainable 

increases’’ in the price of drugs. 

Response: We do not believe that our 

proposed policy ‘‘punitively’’ targets 

safety-net hospitals. The current OPPS 

payment rate of ASP+6 percent 

significantly exceeds the discounts 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59359 

received for covered outpatient drugs by 

hospitals enrolled in the 340B Program, 

which can be as much as 50 percent 

below ASP (or higher through the PVP). 

As stated throughout this section, ASP 

minus 22.5 percent represents the 

average minimum discount that 340B 

enrolled hospitals paid under the OPPS 

receive. We also have noted that 340B 

participation does not appear to be wellaligned with the provision of 

uncompensated care, as some 

commenters suggested. As stated earlier 

in this section, while the commenter’s 

request that HHS develop proposals to 

lower underlying drug prices is outside 

the scope of the proposals made in the 

proposed rule, we note that lowering the 

price of pharmaceuticals is a top 

priority. 

(2) Comments on the Statutory 

Authority for the 340B Payment 

Proposal 

Many commenters challenged the 

statutory authority of various aspects of 

the proposal. These comments are 

summarized into the broad categories 

below. For the reasons stated below, we 

disagree with these comments and 

believe that our proposal is within our 

statutory authority to promulgate. 

• Secretary’s Authority to Calculate and 

Adjust 340B-Acquired Drug Payment 

Rates 

Comment: Commenters asserted that 

section 1833(t)(14)(A)(iii)(II) of the Act 

does not authorize CMS to ‘‘calculate 

and adjust’’ the payment rate in a 

manner that would ‘‘eviscerate’’ the 

340B Program as it applies to 340B 

hospitals. Some commenters asserted 

that the plain and ordinary meaning of 

the terms ‘‘calculate’’ and ‘‘adjust’’ 

express a limited and circumscribed 

authority to set the payment rate. The 

commenters noted that the Oxford 

Dictionaries define ‘‘calculate’’ as 

‘‘determine (the amount or number of 

something) mathematically;’’ likewise, 

to ‘‘adjust’’ is to ‘‘alter or move 

(something) slightly in order to achieve 

the desired fit, appearance, or result.’’ 

Consequently, the commenters asserted 

that section 1833(t)(14)(A)(iii)(II) of the 

Act restricts the agency to 

mathematically determining ‘‘an 

appropriate, slight alteration.’’ Further, 

they posited that the law does not 

convey the power to adopt what they 

referred to as a novel, sweeping change 

to the payment rate that is a significant 

numerical departure from the previous 

rate and that would result in a reduction 

in payment to 340B hospitals of at least 

$900 million, according to the agency’s 

own estimates, or $1.65 billion, 

according to the commenter’s estimates. 

Another commenter stated that the 

Secretary’s limited adjustment authority 

under section 1833(t)(14)(A)(iii)(II) of 

the Act does not ‘‘extend so far as to 

gut’’ what it referred to as an ‘‘explicit 

statutory directive’’. For example, the 

commenter referred the agency to 

Pettibone Corp. v. United States, 34 F.3d 

536, 541 (7th Cir. 1994) (an agency’s 

authority to interpret a statute ‘‘must not 

be confused with a power to rewrite’’). 

Some commenters, including an 

organization representing over 1,300 

providers enrolled in the 340B Program, 

argued that the proposal would take 

away almost the entire 340B discount 

for many 340B drugs, especially brand 

name drugs (which they asserted were 

many of the drugs affected by the 

proposal). These commenters asserted 

that the Secretary does not have the 

authority to calculate and adjust 340Bacquired drug rates in this manner and 

noted that the standard 340B ceiling 

price for a brand name drug is AMP 

minus 23.1 percent, although the price 

can be lower if the drug’s best price is 

lower or if the manufacturer increases 

the price of the drug more quickly than 

the rate of inflation. In addition, the 

commenters asserted that if a brand 

name drug’s 340B ceiling price was 

based on the standard formula, the 

proposal would strip the hospital of 

nearly all its 340B savings because 

‘‘AMP has been found to be close to 

ASP.’’ Thus, the commenters asserted, 

the proposed payment rate of ASP 

minus 22.5 percent is nearly identical to 

AMP minus 23.1 percent, leaving the 

hospital with ‘‘virtually no 340B 

savings.’’ 

Some commenters stated that the 

proposal mistakenly assumes that 340B 

hospitals purchase most 340B drugs at 

subceiling prices negotiated by the PVP. 

These commenters noted that some 

hospitals estimate that less than 10 

percent of the drugs affected by the 

proposal are available at a subceiling 

price. 

In addition, some commenters 

contended that subclause (I) of section 

1833(t)(14)((A)(iii) establishes that the 

payment rate for subsequent years be set 

to the average acquisition cost of the 

drug taking into account hospital 

acquisition costs survey data collected 

through surveys meeting precise 

statutory requirements, and that such 

subclause does not provide adjustment 

authority for the agency. They stated 

that subclause (II) of section 

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

CMS, where acquisition cost data are 

not available, to set payment rates by 

reference to ASP provisions. Considered 

in context, the commenters stated that 

the statute reflects Congress’s intent to 

limit CMS’ authority to set payment 

rates and, consequently, is consistent 

with adjustment authority under 

subclause (II)—to convey only limited 

authority for any agency to adjust the 

payment rate. The commenters referred 

to Roberts v. Sea-Land Servs., Inc., 566 

U.S. 93, 101 (2012) (Statutory provisions 

‘‘. . . cannot be construed in a vacuum. 

It is a fundamental canon of statutory 

construction that the words of a statute 

must be read in their context and with 

a view to their place in the overall 

statutory scheme’’) to support their 

conclusions, although the commenters 

did not elaborate on the particular 

relevance of this case. 

Finally, some commenters raised 

concern over the Secretary’s use of the 

May 2015 MedPAC estimate as support 

for the 340B payment proposal. These 

commenters stated that the Secretary 

did not conduct his own independent 

analysis to support the payment 

proposal nor did he provide justification 

for use of MedPAC’s analysis. One 

commenter stated that the Secretary 

cannot implement a payment cut of the 

magnitude proposed without providing 

a sufficient and replicable methodology 

that supports the proposal and that 

relying on a MedPAC analysis does not 

suffice for this ‘‘important fiduciary, 

and legal, requirement.’’ 

Response: We believe our authority 

under section 1833(t)(14)(A)(iii)(II) of 

the Act to ‘‘calculate and adjust’’ drug 

payments ‘‘as necessary for purposes of 

this paragraph’’ gives the Secretary 

broad discretion to adjust payments for 

drugs, which we believe includes an 

ability to adjust Medicare payment rates 

according to whether or not certain 

drugs are acquired at a significant 

discount. We disagree that this 

Medicare payment policy would 

effectively eviscerate the 340B Program 

and note that this proposal solely 

applies to applicable drug payments 

under the Medicare program; it does not 

change a hospital’s eligibility for the 

340B program. Further, under our 

proposal, we anticipate that the 

Medicare payment rate would continue 

to exceed the discounted 340B price the 

hospital received under the 340B 

program. 

As previously stated, MedPAC’s 

estimate of ASP minus 22.5 percent 

represents a lower bound estimate of the 

average minimum discount and the 

actual discount is likely much higher— 

up to 50 percent higher, according to 

some estimates, for certain drugs. In 

some cases, beneficiary coinsurance 

alone exceeds the amount the hospital 

paid to acquire the drug under the 340B 

Program (OIG November 2015, Report 

OEI–12–14–00030, page 9). We did not 


sradovich on DSK3GMQ082PROD with RULES2
59360 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

receive public comments suggesting an 

alternative minimum discount off the 

ASP that would better reflect the 

hospital acquisition costs for 340Bacquired drugs. We believe this is 

notable because hospitals have their 

own data regarding their own 

acquisition costs, as well as data 

regarding OPPS payment rates for drugs. 

The fact that hospitals did not submit 

comments suggesting an alternative 

minimum discount that would be a 

better, more accurate reflection of the 

discount at issue is instructive for two 

reasons. One, it gives us confidence that 

our suggested payment of ASP minus 

22.5 percent is, in fact, the low bound 

of the estimate and keeps Medicare 

payment within the range where 

hospitals will not be underpaid for their 

acquisition costs of such drugs. Two, it 

gives us confidence that the affected 

hospital community does not believe 

there is some other number, such as 

ASP minus 24 percent or ASP minus 17 

percent, that would be a better, more 

accurate measure of what Medicare Part 

B should pay for drugs acquired at a 

discount through the 340B Program. 

Given the limitations in calculating a 

precise discount for each OPPS 

separately payable drug, we did not 

attempt to do so for the proposed rule. 

Instead, we stated that we believed that 

using the analysis from the MedPAC 

report is appropriate because MedPAC’s 

estimate is based on all drugs separately 

paid under the OPPS except for 

vaccines, which are not eligible for 340B 

prices. Furthermore, the analysis is 

publicly available and can be replicated 

by interested parties. 

With respect to the comments about 

the PVP, as previously stated, by the 

end of FY 2015, the PVP had nearly 

7,600 products available to participating 

entities below the 340B ceiling price, 

including 3,557 covered outpatient 

drugs with an estimated average savings 

of 10 percent below the 340B ceiling 

price. Participation in the PVP is 

voluntary and free, and we are aware of 

no reason that an eligible entity would 

not participate. 

Furthermore, we disagree that the 

Secretary’s authority under section 

1834(t)(14)(A)(iii)(II) of the Act to 

calculate and adjust drugs rates as 

necessary is limited to what some might 

consider minor changes and find no 

evidence in the statute to support that 

position. As previously stated, we 

believe that ASP minus 22.5 percent 

represents the average minimum 

discount that hospitals paid under the 

OPPS received for drugs acquired under 

the 340B Program and reiterate that, in 

many instances, the discount is much 

higher. Thus, we are using this authority 

to apply a downward adjustment that is 

necessary to better reflect acquisition 

costs of those drugs. 

• Authority To Vary Payment by 

Hospital Group 

Comment: Some commenters asserted 

that only subparagraph (I), and not 

subparagraph (II), of section 

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

CMS to vary payment ‘‘by hospital 

group.’’ These commenters suggested 

that, by including ‘‘by hospital group’’ 

in subparagraph (I) and omitting it in 

subparagraph (II), Congress expressed 

its intent that CMS may not vary prices 

by hospital group under subparagraph 

(II). They further commented that the 

subparagraph (II) methodology must 

apply to ‘‘the drug,’’ and CMS may not 

vary payment for the same drug based 

upon the type of hospital. 

Response: We disagree with the 

commenters who argue that the 

proposed policy would exceed the 

Secretary’s authority under the statute 

by inappropriately varying payments for 

drugs by ‘‘hospital group’’ because we 

rely on section 1833(t)(14)(A)(iii)(II) of 

the Act, even though the explicit 

authority to vary payment rates by 

hospital group is in subclause (I) of 

section 1833(t)(14)(A)(iii) of the Act, not 

subclause (II). As noted above, we 

believe our authority under section 

1833(t)(14)(A)(iii)(II) of the Act to 

‘‘calculate and adjust’’ drug payments 

‘‘as necessary for purposes of this 

paragraph’’ gives the Secretary broad 

discretion to adjust payments for drugs, 

which we believe includes an ability to 

adjust payment rates according to 

whether or not certain drugs are 

acquired at a significant discount for 

Medicare beneficiaries. Although we 

acknowledge that hospitals are eligible 

to receive drugs at discounted rates 

under the 340B Program if they qualify 

as a ‘‘covered entity’’ for purposes of the 

340B Program, not all drugs for which 

a covered entity submits a claim for 

payment under the OPPS are necessarily 

acquired under the 340B Program. The 

OPPS payment for those drugs not 

acquired under the 340B Program would 

continue to be paid at ASP+6 percent. 

We also note generally that the OPPS 

statute authorized the Secretary to 

establish appropriate Medicare OPPS 

payment rates for covered outpatient 

drugs. After specifically setting forth the 

payment methodology for 2004 and 

2005, Congress provided that the 

Secretary could set OPPS drug prices in 

one of two ways: Using the average 

acquisition cost for the drug for that 

year, or using the average price for that 

drug in the year. However, in either 

case, prices set using either benchmark 

may be adjusted by the Secretary. Such 

adjustments may occur under section 

1833(t)(14)(A)(iii)(II) of the Act if the 

Secretary determines they are 

‘‘necessary for purposes of’’ section 

1833(t)(14) of the Act, and this 

paragraph of the Medicare OPPS statute 

repeatedly discusses terms like 

‘‘hospital acquisition cost’’ and 

‘‘variation in hospital acquisition costs’’, 

and specifically notes in one section 

that it is within the Secretary’s authority 

to determine that the payment rate for 

one drug ‘‘may vary by hospital group.’’ 

It would be odd for Congress to have a 

significant delegation of authority to the 

Secretary, use these specific terms and 

considerations throughout section 

1833(t)(14) of the Act, and then assume 

the Secretary is foreclosed from taking 

into account those considerations in 

adjusting ASP ‘‘as necessary for 

purposes’’ of section 1833(t)(14) of the 

Act. The Secretary is generally 

empowered to adjust drug prices ‘‘as 

necessary’’ for the overall purposes of 

section 1833(t)(14) of the Act, and there 

is nothing in section 1833(t)(14) of the 

Act to indicate the Secretary is 

foreclosed from varying Medicare OPPS 

payment for a drug, depending on 

whether a 340B hospital acquired that 

drug at such a substantially lower 

acquisition cost. 

• Authority To Establish Payment Rates 

in the Absence of Acquisition Cost 

Survey Data and Authority to Base 

Payment on an Average Discount 

Comment: Some commenters, 

including a commenter representing 

teaching hospitals, stated that the 

Secretary ignored the statutory directive 

in section 1833(t)(14) of the Act to set 

payment rates at the average acquisition 

cost for specific drugs and not to use 

averages for all drugs. In addition, the 

commenters stated that section 

1833(t)(14) of the Act requires the 

Secretary to rely on an average of 

acquisition cost data and sales prices for 

a given drug, not an average discount 

that is applied to all drugs acquired 

under the 340B Program. 

One commenter stated that the 

Secretary impermissibly conflates the 

two alternative methods for setting 

payment rates, ‘‘essentially discarding 

Congress’ requirement that any survey 

data used in setting payment rates must 

be derived from statistically rigorous 

surveys.’’ This commenter asserted that 

the Secretary is using MedPAC’s 

estimate of average discounts as a proxy 

or replacement for the surveys required 

under subsection (iii)(I). 

Response: We disagree that section 

1833(t)(14)(A)(iii)(II) of the Act requires 

use of survey data and note that, unlike 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59361 

subclause (I) of this section, subclause 

(II) does not require taking survey data 

into account for determining average 

price for the drug in the year. We 

continue to believe that section 

1833(t)(14)(A)(iii)(II) of the Act grants 

the Secretary the authority to calculate 

and adjust rates as necessary in the 

absence of acquisition cost. Moreover, 

under section 1833(t)(14)(A) of the Act, 

there still will be one starting, baseline 

price for an applicable drug, that is, the 

rate that applies under 1842(o), 1847A, 

or section 1847B, as the case may be, as 

calculated and adjusted by the 

Secretary. For drugs not acquired under 

the 340B Program, we will continue to 

utilize that price (ASP+6 percent), 

which as we have explained ‘‘requires 

no further adjustment’’ because it 

‘‘represents the combined acquisition 

and pharmacy overhead payment for 

drugs and biologicals.’’ However, for 

drugs acquired through the 340B 

Program, we are adjusting that price 

downward (ASP minus 22.5 percent) to 

more closely align with the hospital 

acquisition cost for a drug when 

purchased at a discounted price under 

the 340B Program. In the absence of 

acquisition costs from hospitals that 

purchase drugs through the 340B 

Program, we believe it is appropriate to 

exercise our authority to adjust the 

average price for 340B-acquired drugs, 

which are estimated to be acquired at an 

average minimum discount of ASP 

minus 22.5 percent. Importantly, 

because we are not using authority 

under section 1833(t)(14)(A)(iii)(I) of the 

Act (as the commenter suggested), we 

disagree with the commenter’s 

suggestion that the Secretary is using 

the MedPAC analysis to stand in the 

place of the survey requirement under 

subclause (I). 

• Current Agency View Contrasts With 

Longstanding Practice 

Comment: Some commenters 

contended that the proposal contrasts 

sharply with the agency’s previous view 

and longstanding practice of applying 

the statutory scheme of section 

1833(t)(14) of the Act. These 

commenters noted that since CMS began 

relying on subclause (II) in 2012 to set 

the payment rate, the agency has never 

invoked the discretionary authority. The 

commenters stated that, instead, CMS 

stated that the statutory default of 

ASP+6 percent ‘‘requires no further 

adjustment’’ because it ‘‘represents the 

combined acquisition and pharmacy 

overhead payment for drugs and 

biologicals.’’ Moreover, the commenters 

added, CMS has applied the statutory 

default rate without further adjustment 

in each subsequent year. They asserted 

that the CY 2018 proposal, in contrast, 

departs dramatically from longstanding 

prior practice and adopts a substantially 

reduced payment rate of ASP minus 

22.5 percent for drugs acquired under a 

340B Program. 

Response: As discussed in the earlier 

background section, section 

1833(t)(14)(A)(iii)(II) of the Act grants 

the Secretary authority to adjust, as 

necessary for purposes of paragraph (14) 

of section 1833(t) of the Act, the 

applicable payment rate for separately 

payable covered outpatient drugs under 

the OPPS. Specifically, we believe that 

the proposed reduced payment for 

340B-acquired drugs would meet the 

requirements under section 

1833(t)(14)(A)(iii)(II) of the Act, which 

states that if hospital acquisition cost 

data are not available, the payment for 

an applicable drug shall be the average 

price for the drug in the year established 

under section 1842(o), section 1847A, or 

section 1847B of the Act, as the case 

may be, as calculated and adjusted by 

the Secretary as necessary for purposes 

of this paragraph (paragraph (14) of 

section 1833(t) of the Act) (emphasis 

added). We do not have hospital 

acquisition cost data for 340B drugs 

and, therefore, we proposed to continue 

to pay for these drugs under the 

methodology in our authority at section 

1833(t)(14)(A)(iii)(II) of the Act which 

we determined to be ASP, and then to 

adjust that amount by applying a 

reduction of 22.5 percent to that 

payment methodology, which, as 

explained throughout this section, is the 

adjustment we believe is necessary to 

more closely align with the acquisition 

costs for drugs acquired under the 340B 

Program. 

As previously stated, we believe that 

using an average discount to set 

payment rates for separately payable 

340B-acquired drugs will achieve the 

dual goals of (1) adjusting payments to 

better reflect resources expended to 

acquire such drugs and (2) protecting 

the confidential nature of discounts 

applied to a specific drug. Furthermore, 

our proposed and finalized policy will 

lower OPPS payment rates for Medicare 

beneficiaries who receive drugs at 

hospitals subject to the 340B payment 

reduction. 

In addition, we do not believe that the 

fact that we have not historically 

utilized our adjustment authority under 

section 1833(t)(14)(A)(iii)(II) of the Act 

to adjust payment amounts for 

separately payable 340B-acquired drugs 

means we are permanently barred from 

adjusting these payments where, as 

here, we have provided a reasoned 

explanation for doing so. We continue 

to believe, as the commenter noted, that 

ASP+6 percent requires no further 

adjustment for drugs that are not 

acquired under the 340B Program 

because, at this time, we have not found 

similar evidence of the difference 

between the statutory benchmark 

(ASP+6 percent) and average hospital 

acquisition costs for such drugs. 

However, that is not the case for 340Bacquired drugs. As explained in detail 

throughout this section, we believe that 

a payment amount of ASP minus 22.5 

percent for drugs acquired under the 

340B Program is better aligned to 

hospitals’ acquisition costs and thus this 

adjustment, for drugs acquired under 

the 340B Program, is necessary for 

Medicare OPPS payment policy. 

• Violation of Section 340B of the 

Public Health Service Act 

Comment: Some commenters stated 

that the proposed payment reduction 

would violate the 340B statute, which 

expressly defines the types of hospitals 

that may receive the benefits of 340B 

discounts. One commenter asserted that 

the payment proposal would ‘‘hijack 

Congress’ carefully crafted statutory 

scheme by seizing 340B discounts from 

hospitals and transferring the funds to 

providers that Congress excluded from 

the 340B Program,’’ thereby violating 

section 340B of the Public Health 

Service Act. The commenter further 

noted that discounts under the 340B 

Program are only available to ‘‘covered 

entities’’ that are defined by law and 

that Congress thus intended the benefits 

of the program to accrue to these 

providers only. The commenter 

contended that Congress’ reference to 

Medicare definitions when describing 

covered entities demonstrates that it 

considered the Medicare program when 

it adopted the 340B Program and 

decided not to grant discounts to all 

Medicare hospitals. Rather, the 

commenter believed that Congress made 

a deliberate decision to limit the 

benefits of the 340B Program only to 

Medicare hospitals that serve large 

numbers of low-income or other 

underprivileged patients. In addition, 

the commenter stated that when 

Congress has intended Federal health 

care programs to intrude upon the 340B 

Program, it has been crystal clear. 

In contrast, commenters asserted that 

Congress has been wholly silent on the 

relationship between 340B and 

Medicare Part B, which indicates 

Congress’s intent that Medicare should 

not ‘‘encroach’’ upon the 340B Program 

by ‘‘redistributing [340B] discounts to 

non-340B providers.’’ The commenters 

noted that the 340B statute and 

Medicare have coexisted for several 

years and that Congress has had ample 


sradovich on DSK3GMQ082PROD with RULES2
59362 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

29 Dobson Davanzo & Associates, Update to a 

2012 Analysis of 340B Disproportionate Share 

Hospital Services Delivered to Vulnerable Patient 

Populations Eligibility Criteria for 340B DSH 

Hospitals Continue to Appropriately Target Safety 

Net Hospitals (Nov. 15, 2016). Available at: http:// 

www.340bhealth.org/files/Update_Report_FINAL_

11.15.16.pdf. 

30 Dobson DaVanzo, Analysis of the Proportion of 

340B DSH Hospital Services Delivered to LowIncome Oncology Drug Recipients Compared to 

Non-340B Provider (2017). Available at: http://

www.340bhealth.org/files/LowIncomeOncology.pdf; 

opportunity to amend the Medicare 

statute governing Part B payments and/ 

or the 340B statute to expressly permit 

CMS to reduce Medicare payments to 

340B hospitals, but has not done so. As 

an example, the commenters cited 

legislation enacted in 2010, in which 

Congress amended both the 340B and 

the Medicare statutes, but did not 

authorize CMS to redistribute 340B 

savings to non-340B hospitals or to Part 

B generally. 

Commenters further asserted that the 

proposed cut to 340B hospitals is also 

contrary to Congress’s intent for the 

340B Program to enable safety-net 

providers to reach more patients and 

furnish more comprehensive services 

and would undermine this purpose by 

preventing the operation of the 340B 

statute. These commenters suggested 

that, although manufacturers would still 

have to give 340B discounts, 340B 

participating hospitals would receive no 

benefit from those discounts; thus, the 

statutory purpose of 340B would be 

fatally undermined. 

Response: We do not believe that this 

proposal under section 1833(t) of the 

Act is in conflict with section 340B of 

the Public Health Service Act. Section 

1833(t) of the Act governs Medicare 

payment policies for covered hospital 

outpatient department services paid 

under the OPPS, while section 340B of 

the Public Health Service Act governs 

eligibility and program rules for 

participation in the 340B Program. 

There are no references in either section 

of law to each other. In fact, the failure 

of either statute to reference the other 

proves the opposite—that each statute 

stands on its own and neither is 

hindered or rendered null and void by 

the other. There is no requirement in the 

Public Health Service Act that the 340B 

Program ‘‘guarantee’’ or provide a 

certain profit from the Medicare 

program. Likewise, there is no 

requirement in section 1833(t) of the Act 

to pay a particular rate for a hospital 

enrolled in the 340B Program. We agree 

with the commenters that Congress was 

aware of both the 340B Program and the 

OPPS and of the programs’ relationships 

to one another. However, we believe 

that the silence of each statute with 

respect to the other should not be 

viewed as a constraint on the broad 

authority conferred to the Secretary 

under section 1833(t) of the Act to 

establish payment rates under the OPPS. 

Furthermore, we are unaware of 

legislative history or other evidence to 

corroborate the commenters’ belief that 

Congress’ silence on the relationship 

between 340B and Medicare Part B 

OPPS payments should be viewed as 

constraining the Secretary’s ability 

under section 1833(t)(14) of the Act as 

to how to calculate payment rates for 

drugs acquired under the 340B Program 

under the OPPS. While legislative 

silence can be difficult to interpret, we 

note that Congress’ silence regarding the 

340B Program in enacting Medicare 

OPPS payment for certain drugs would 

create the opposite inference. The 340B 

Program existed well before Congress 

enacted the Medicare OPPS and 

payment for certain drugs. If Congress 

wanted to exempt 340B drugs or entities 

with a 340B agreement from Medicare 

OPPS payment for drugs generally, it 

easily could have done so. Instead, 

Congress provided for Medicare OPPS 

drug payments ‘‘as calculated and 

adjusted by the Secretary as necessary,’’ 

without any mention of, or restriction 

regarding, the already existent 340B 

Program. 

We also disagree with commenters 

who believe that implementing the 

OPPS payment methodology for 340Bacquired drugs as proposed will 

‘‘eviscerate’’ or ‘‘gut’’ the 340B Program. 

As discussed earlier in the background 

section, the findings from several 340B 

studies conducted by the GAO, OIG, 

and MedPAC show a wide range of 

discounts that are afforded to 340B 

hospitals, with some reports finding 

discounts of up to 50 percent. As stated 

in the proposed rule, we believe ASP 

minus 22.5 percent is a conservative 

estimate of the discount for 340Bacquired drugs and that even with the 

reduced payment, hospitals will 

continue to receive savings that can be 

directed at programs and services to 

carry out the intent of the 340B 

Program. 

With respect to the comment that the 

proposal would frustrate the intent of 

the 340B Program and redirect Medicare 

payments to other hospitals that do not 

participate in the 340B Program, we 

reiterate that we proposed to 

redistribute the savings in an equal and 

offsetting manner to all hospitals paid 

under the OPPS, including those in the 

340B Program, in accordance with the 

budget neutrality requirements under 

section 1833(t)(9)(B) of the Act. 

However, we remain interested in 

exploring ways to better target the 

offsetting amount to those hospitals that 

serve low-income and uninsured 

patients, as measured by 

uncompensated care. Details on the 

redistribution of funds are included in 

section XVIII. of this final rule with 

comment period. 

• Proposal is Procedurally Defective 

and Inconsistent With Advisory Panel 

Recommendations 

Comment: Some commenters 

contended that the proposal is 

procedurally defective under the OPPS 

statute. The commenters asserted that 

the Secretary’s justification for the 

proposed reduced rate rests, in part, on 

intertwined issues related to clinical use 

and hospital cost of drugs. The 

commenters objected to CMS’ reference 

to studies suggesting that 340B hospitals 

may be unnecessarily prescribing more 

drugs and/or more expensive drugs 

relative to non-340B hospitals as 

support for proposing a payment rate 

that eliminates the differential between 

acquisition cost and Medicare payment. 

These commenters cited other studies in 

an effort to refute the evidence 

presented in the proposed rule.29 30 The 

commenters believed that CMS should 

have asked the HOP Panel to consider 

the intertwined issues of drug cost and 

clinical use prior to making a proposal 

to reduce payment for 340B-acquired 

drugs, and the Secretary should have 

consulted with the HOP Panel in 

accordance with section 1833(t)(9)(A) of 

the Act, as part of the process of review 

and revision of the payment groups for 

covered outpatient department services 

and the relative payment weights for the 

groups. The commenters argued that, 

because the Secretary did not consult 

with the HOP Panel before publishing 

its 340B payment proposal, the 

Secretary acted contrary to the statute. 

The commenters noted that at the 

August 21, 2017 meeting of the HOP 

Panel that occurred after publication of 

the proposed rule, the Panel urged that 

CMS not finalize the proposed payment 

reduction. 

At the August 21, 2017 meeting of the 

HOP Panel, the Panel made the 

following recommendations with 

respect to the proposed policy for OPPS 

payment for drugs acquired under the 

340B Program: 

The Panel recommended that CMS: 

• Not finalize its proposal to revise 

the payment rate for drugs purchased 

under the 340B Program; 

• Collect data from public comments 

and other sources, such as State 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59363 

31 ‘‘No rule, requirement, or other statement of 

policy (other than a national coverage 

determination) that establishes or changes a 

substantive legal standard governing the scope of 

benefits, the payment for services, or the eligibility 

of individuals, entities, or organizations to furnish 

or receive services or benefits under this subchapter 

shall take effect unless it is promulgated by the 

Secretary by regulation. . . .’’ Section 1871 of the 

Social Security Act (42 U.S.C. 1395hh). 

Medicaid programs in Texas and New 

York, on the potential impact of revising 

the payment rate, implementing a 

modifier code, and the effects of 

possible mechanisms for redistributing 

the savings that result from changing the 

payment rate; and 

• Assess the regulatory burden of 

changing the payment rate and the 

potential impact on 340B hospitals of 

redistributing dollars saved. 

In addition, one commenter suggested 

that the proposal was ‘‘procedurally 

defective’’ because the proposal was 

solely articulated through preamble and 

did not propose to amend the Code of 

Federal Regulations (CFR). The 

commenter asserted that the proposal 

cannot be implemented without a 

change to the Medicare regulations and 

stated that the Medicare statute requires 

CMS to issue regulations when altering 

the substantive standards for payment.31

The commenter stated that the proposal 

falls squarely within this requirement 

because it would change the substantive 

legal standard governing payments to 

340B hospitals for separately payable 

drugs. 

Another commenter stated that CMS’ 

proposal also violates section 

1833(t)(2)(E) of the Act because the 

agency is not authorized and did not 

offer a reasoned basis for applying 

savings achieved as a result of its 

proposal to reduce significantly 

payments to 340B hospitals to Part B 

services generally. Likewise, a few 

commenters stated that the 

Administrative Procedure Act (APA) 

requires the Secretary to offer a 

‘‘reasoned basis’’ for proposing to take 

an unprecedented action. The 

commenters suggested that, as a matter 

of longstanding policy and practice, the 

Secretary has never applied such a 

sweeping change to drug rates nor has 

it ever applied savings from OPPS 

outside of the OPPS. 

Response: We remind the commenters 

that our proposal was based on findings 

that ASP minus 22.5 percent reflects the 

minimum average discount that 

hospitals in the 340B Program receive. 

We are familiar with the reports the 

commenters referenced in their 

comments. However, we continue to 

believe, based on numerous studies and 

reports, that 340B participation is not 

well correlated to the provision of 

uncompensated care and is associated 

with differences in prescribing patterns 

and drug costs. For example, as noted 

earlier in this section, GAO found that 

‘‘in both 2008 and 2012, per beneficiary 

Medicare Part B drug spending, 

including oncology drug spending, was 

substantially higher at 340B DSH 

hospitals than at non-340B hospitals,’’ 

thus indicating that, on average, 

beneficiaries at 340B DSH hospitals 

were either prescribed more drugs or 

more expensive drugs than beneficiaries 

at the other non-340B hospitals in 

GAO’s analysis. 

With respect to the HOP Panel, we 

believe that this comment reflects a 

misunderstanding of the Panel’s role in 

advising the Secretary. Section 

1833(t)(9)(A) of the Act provides that 

the Secretary shall consult with an 

expert outside advisory panel composed 

of an appropriate selection of 

representatives of providers to review 

(and advise the Secretary concerning) 

the clinical integrity of the groups and 

weights. Such panel may use data 

collected or developed by entities and 

organizations (other than the 

Department of Health and Human 

Services) in conducting such review. 

The provisions described under 

section 1833(t)(9)(A) of the Act do not 

impose an obligation on the Secretary to 

consult with the HOP Panel prior to 

issuing a notice of proposed rulemaking 

nor do they require the Secretary to 

adopt the Panel’s recommendation(s). 

Rather, the statute provides that the 

Secretary shall consult with the Panel 

on policies affecting the clinical 

integrity of the ambulatory payment 

classifications and their associated 

weights under the OPPS. The Secretary 

met the requirement of section 

1833(t)(9)(A) of the Act at the HOP 

Panel August 21, 2017 meeting in which 

the Panel made recommendations on 

this very proposed policy. The HOP 

Panel’s recommendations, along with 

public comments to the proposed rule, 

have all been taken into consideration 

in the development of this final rule 

with comment period. 

While we are not accepting the HOP 

Panel’s recommendation not to finalize 

the payment reduction for drugs 

purchased under the 340B Program, as 

discussed later in this section, we are 

modifying our position on the modifier 

in an effort to ease administrative 

burden on providers, taking into 

account the way in which the modifier 

is used in several State Medicaid 

programs, as the Panel recommended. In 

addition, we have collected data from 

public comments on the potential 

impact of revising the payment rate, 

implementing a modifier, and the effects 

of possible mechanisms for 

redistributing the ‘‘savings’’ (or the 

dollars that result) from changing the 

payment rate and have assessed the 

regulatory burden of changing the 

payment rate and the potential impact 

on 340B hospitals of redistributing 

dollars saved, all of which were steps 

the HOP Panel recommended we take. 

Regarding the comments asserting 

that the Secretary is out of compliance 

with procedures used to promulgate 

regulations as described under section 

1871 of the Act (42 U.S.C. 1395hh), we 

note that we have received public 

comments on our interpretation of the 

Medicare statute, and we respond to 

those comments above. We further note 

that we did not establish in the Code of 

Federal Regulations the rates for 

separately payable, nonpass-through 

drugs and biologicals in past 

rulemakings. Because we have not 

adopted regulation text that prescribes 

the specific payment amounts for 

separately payable, nonpass-through 

drugs and biologicals, there was no 

regulation text to amend to include our 

proposed payment methodology for 

drugs acquired under the 340B Program. 

However, this does not mean that 

payment rates for separately payable 

drugs were not available to the public. 

That information is available in 

Addendum B to this final rule with 

comment period, which lists the 

national payment rates for services paid 

under the OPPS, including the payment 

rates for separately payable drugs and 

biologicals based on ASP+6 percent. We 

note that we have not provided the 

reduced payment rates for separately 

payable drugs and biologicals acquired 

under the 340B Program in Addendum 

B, but hospitals can arrive at those rates 

using the ASP+6 percent rate that is 

included in Addendum B. Finally, with 

respect to comments on redistribution of 

the dollars that result from the 340B 

payment policy, we are finalizing our 

proposal to achieve budget neutrality for 

the payment reduction for 340Bacquired drugs through an increase in 

the conversion factor. We disagree that 

our proposal to apply budget neutrality 

in accordance with section 1833(t)(9)(B) 

of the Act violates the APA or statutory 

authority. Further, we note that if we 

decide to take a different approach with 

respect to the redistribution of funds for 

budget neutrality in the future, we will 

consider such approach in future 

rulemaking. 

• Impact on Medicare Beneficiary CostSharing 

Comment: Some commenters noted 

that Medicare beneficiaries, including 

dual-eligible Medicare beneficiaries, 


sradovich on DSK3GMQ082PROD with RULES2
59364 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

would not directly benefit from a 

lowered drug copayment amount. The 

commenters noted that many 

beneficiaries have supplemental 

insurance that covers their out-of-pocket 

drug costs, in whole or in part. These 

commenters asserted that the proposal 

would actually increase their out-ofpocket costs for other Part B benefits. 

Response: The cost-sharing obligation 

for Medicare beneficiaries is generally 

20 percent of the Medicare payment 

rate. While many Medicare beneficiaries 

may have supplemental coverage that 

covers some or all of their out-of-pocket 

expenses, not all beneficiaries have such 

coverage. This policy will lower both 

the amount that a beneficiary is 

responsible to pay as well as the amount 

that any supplemental insurance, 

including the Medicaid program, will 

pay on behalf of the beneficiary. While 

we are implementing this policy in a 

budget neutral manner equally across 

the OPPS for CY 2018 for non-drug 

items and services, we may revisit how 

any savings from the lowered drug 

payment rate for 340B drugs may be 

allocated in the future and continue to 

be interested in ways to better target the 

savings to hospitals that serve the 

uninsured and low-income populations 

or that provide a disproportionate share 

of uncompensated care. 

In addition, as noted earlier in this 

section, in the hospital setting, not only 

are beneficiaries liable for cost-sharing 

for drugs they receive, but they also 

incur a ‘‘facility fee’’ solely because the 

drug was furnished in the hospital 

setting. As described in section II.A.3.b. 

of this final rule with comment period, 

for CY 2018, we are adopting a policy 

to conditionally package Level 1 and 

Level 2 drug administration services 

and believe that these steps taken 

together may help encourage siteneutral care in that beneficiaries may 

receive the same drugs and drug 

administration services at the physician 

office setting without a significant 

difference in their financial liability 

between settings. 

• Calculation of Savings 

Comment: Commenters disagreed 

with CMS’ impact estimate and a few 

commenters provided their own 

analysis of the 340B drug payment 

proposal. One commenter believed that 

even if CMS implements the policy as 

proposed, in a budget neutral manner 

within the OPPS through an offsetting 

increase in the conversion factor, 

payments for non-drug APCs would 

increase across hospitals by 

approximately 3.7 percent (in contrast 

to CMS’ estimate of 1.4 percent). 

According to the commenter, this 

redistribution would result in a net 

decrease in payments to 340B hospitals 

of approximately 2.6 percent, or 

approximately $800 million. The 

commenter asserted that CMS’ proposal 

would remove $800 million intended to 

support what it referred to as the 

congressionally mandated mission of 

340B hospitals from these already 

vulnerable facilities and redistribute 

these dollars to other hospitals that do 

not participate in the 340B Program. 

Likewise, the commenter challenged 

CMS’ suggested alternative approaches 

to achieving budget neutrality, such as 

applying offsetting savings to specific 

services within the OPPS or outside of 

the OPPS to Part B generally (such as to 

physician services under the Medicare 

Physician Fee Schedule), which the 

commenter believed would similarly 

penalize these most vulnerable hospitals 

and inhibit their efforts to carry out the 

purpose of the 340B Program. Finally, 

other commenters noted that 

implementing the proposed policy in a 

non-budget neutral manner would 

effectively ‘‘gut’’ the 340B Program. 

Response: With respect to comments 

on the proposed distribution of savings, 

we refer readers to section XVIII. of this 

2018 OPPS/ASC final rule with 

comment for discussion on the 

redistribution of savings that result from 

the estimated impact of the 340B policy 

as well as calculation of budget 

neutrality. Briefly, for CY 2018, we are 

implementing the alternative payment 

methodology for drugs purchased under 

the 340B Program in a budget neutral 

manner within the OPPS through an 

offsetting increase in the conversion 

factor for nondrug services. Therefore, 

the resulting savings from the 340B 

payment policy will be redistributed pro 

rata through an increase in rates for nondrug items and services under the 

OPPS. We have already addressed 

comments relating to the assertion that 

our proposal would ‘‘gut’’ or 

‘‘eviscerate’’ the 340B Program. 

Likewise, we have addressed the 

interaction between our authority under 

section 1833(t)(14)(A) of the Act relative 

to section 340B of the Public Health 

Service Act in our responses above. 

(3) Other Areas 

Comment: MedPAC commented 

reiterating its recommendations to 

Congress in its March 2016 Report to the 

Congress. Specifically, MedPAC 

commented that it recommended that 

payment rates for all separately payable 

drugs provided in a 340B hospital 

should be reduced to 10 percent of the 

ASP rate (resulting in ASP minus 5.3 

percent after taking application of the 

sequester into account). MedPAC noted 

that its March 2016 report also included 

a recommendation to the Congress that 

savings from the reduced payment rates 

be directed to the Medicare-funded 

uncompensated care pool, which would 

target hospitals providing the most care 

to the uninsured, and in that way 

benefit indigent patients, and that 

payments be distributed in proportion 

to the amount of uncompensated care 

that hospitals provide. MedPAC 

believed that legislation would be 

needed to direct drug payment savings 

to the uncompensated care pool and 

noted that current law requires the 

savings to be retained with the OPPS to 

make the payment system budget 

neutral. MedPAC encouraged the 

Secretary to work with Congress to 

enact legislation necessary to allow 

MedPAC’s recommendation to be 

implemented, if such recommendation 

could not be implemented 

administratively. MedPAC further noted 

that legislation would also allow 

Medicare to apply the policy to all 

OPPS separately payable drugs, 

including those on pass-through 

payment status. 

Response: We thank MedPAC for its 

comments and for its clarification that 

its recommendation that ‘‘[t]he Congress 

should direct the Secretary of the 

Department of Health and Human 

Services to reduce Medicare payment 

rates for 340B hospitals’ separately 

payable 340B drugs by 10 percent of the 

average sales price (ASP)’’ was intended 

to be 10 percent lower than the current 

Medicare rate of ASP+6 percent and 

would result in a final OPPS payment 

of ASP minus 5.3 percent when taking 

the sequester into account. However, we 

do not believe that reducing the 

Medicare payment rate by only 10 

percentage points below the current 

payment rate of ASP+6 percent (that is, 

ASP minus 4 percent) would better 

reflect the acquisition costs incurred by 

340B participating hospitals. In its May 

2015 Report to the Congress, MedPAC 

estimated that the average minimum 

discount for a 340B hospital paid under 

the OPPS was ASP minus 22.5 percent, 

which it noted was a conservative, 

‘‘lower bound’’ estimate. Further, in its 

March 2016 Report to the Congress, 

MedPAC stated that, ‘‘[i]n aggregate, the 

Office of Inspector General (OIG) 

estimates that discounts across all 340B 

providers (hospitals and certain clinics) 

average 34 percent of ASP, allowing 

these providers to generate significant 

profits when they administer Part B 

drugs (MedPAC March 2016 Report to 

Congress, page 76). MedPAC further 

noted the estimate of the aggregate 

discount was based on all covered 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59365 

entities (hospitals and certain clinics). 

Because 340B hospitals accounted for 

91 percent of Part B drug spending for 

all covered entities in 2013, it is 

reasonable to assume that 340B 

hospitals received a discount similar to 

33.6 percent of ASP (MedPAC March 

2016 Report to Congress, page 79). 

Further, as we stated in the proposed 

rule, the GAO reported that the amount 

of the 340B discount ranges from an 

estimated 20 to 50 percent discount, 

compared to what the entity would have 

otherwise paid to purchase the drug. In 

addition, voluntary participation in the 

PVP results in a covered entity paying 

a subceiling price on certain covered 

outpatient drugs (estimated to be 

approximately 10 percent below the 

ceiling price). (U.S. Department of 

Health and Human Services, HRSA FY 

2018 Budget Justification) 

Accordingly, we continue to believe 

that ASP minus 22.5 percent represents 

a conservative estimate of the average 

minimum discount that 340B-enrolled 

hospitals paid under the OPPS receive 

for drugs purchased with a 340B 

Program discount and that hospitals 

likely receive an even steeper discount 

on many drugs, especially brand name 

drugs. We also continue to believe that 

section 1833(t)(14)(A)(iii)(II) of the Act 

allows the Secretary to make 

adjustments, if hospital acquisition cost 

data is not available, as necessary, so 

that the Medicare payment rate better 

represents the acquisition cost for drugs 

and biologicals that have been acquired 

with a 340B discount. 

With respect to MedPAC’s comment 

regarding targeting the savings to 

uncompensated care, we refer readers to 

section XVIII.A.5. of this final rule with 

comment period. 

• Comments Regarding Rural Hospitals 

Comment: Commenters representing 

rural hospitals, particularly RRCs and 

SCHs, expressed opposition to the 

proposal, noting that it could be 

especially harmful to rural hospitals in 

light of the ‘‘hospital closure crisis.’’ 

One commenter cited a report from a 

health analytics company and noted 

that since 2010, 80 rural hospitals have 

closed and that one-third of remaining 

rural hospitals are vulnerable to closure, 

with 41 percent of rural hospitals 

operating at a financial loss. 

Commenters noted that rural hospitals 

enrolled in the 340B Program depend on 

the drug discounts to provide access to 

expensive, necessary care such as labor 

and delivery and oncology infusions. 

The commenters stated that rural 

Americans are more likely to be older, 

sicker, and poorer than their urban 

counterparts. The commenter gave 

examples of rural hospitals that have 

used profit margins on 340B-acquired 

drugs to offset uncompensated care and 

staff emergency departments. In 

addition, the commenters stated that a 

portion of rural hospitals are excluded 

from purchasing orphan drugs through 

the 340B Program. Therefore, the 

commenters stated, these hospitals often 

use their 340B savings to offset the 

expense of purchasing orphan drugs, 

which they note comprise a growing 

number of new drug approvals. 

In addition, a commenter representing 

several 340B-enrolled hospitals stated 

that multiple hospitals report that the 

340B Program is the reason the hospital 

can provide oncology infusions in their 

local community and that the 

chemotherapy infusion centers tend to 

be small with variation in patients 

served based on the needs of the 

community. The commenter stated that, 

without the 340B Program, many rural 

hospitals would likely need to stop 

providing many of the outpatient 

infusions, thereby forcing patients to 

either travel 35 miles (in the case of 

SCHs which must generally be located 

at least 35 miles from the nearest like 

hospital) to another facility or receive 

care in a hospital inpatient setting, 

which is a more costly care setting. 

Another commenter, a member of 

Congress representing a district in the 

State of Ohio, commented that while the 

340B Program is in need of reform, the 

program remains an important safety net 

for rural hospitals in Ohio and around 

the country. The commenter stated that 

340B hospitals offer safety-net programs 

to their communities, including opioid 

treatment programs, behavioral health 

science programs, and others. The 

commenter further stated that the 340B 

drug payment proposal did not address 

broader structural issues with the 340B 

Program itself, including lack of 

oversight and clear guidance and 

definitions, and that the proposal could 

harm the hospitals that the 340B 

Program was intended to help. In 

addition, the commenter noted that 

‘‘arbitrary cuts’’ to the 340B Program for 

safety-net hospitals could have 

detrimental impacts on the economic 

growth and opportunities in the 

communities those hospitals serve and 

that the proposal does not advance the 

larger goals of 340B Program reform. 

One commenter noted that SCHs face 

47.5 percent higher levels of bad debt 

and 55 percent lower profit margins. 

Thus, even with 340B discounts, the 

commenter argued that rural hospitals 

like rural SCHs are financially 

threatened. Commenters also noted that 

rural hospitals are typically located in 

lower income economic areas and are 

not able to absorb the proposed 

reduction in drug payment for 340B 

purchased drugs. Moreover, 

commenters suggested that the proposal 

disproportionately impacts rural 

hospitals compared to its effect on 

urban hospitals. 

Finally, commenters requested that, if 

CMS finalizes the policy as proposed, 

CMS exempt hospitals with a RRC or 

SCH designation from the alternative 

340B drug payment policy. The 

commenters asserted that RRCs and 

SCHs are rural safety-net hospitals that 

provide localized care for Medicare 

beneficiaries and also serve as 

‘‘economic engines’’ for many rural 

communities. 

Response: We share commenters’ 

concerns about access to care, especially 

in rural areas where access issues may 

be even more pronounced than in other 

areas of the country. We note our 

proposal would not alter covered 

entities’ access to the 340B Program. 

The alternative 340B drug payment 

methodology solely changes Medicare 

payment for 340B-acquired drugs. 

Medicare has long recognized the 

particularly unique needs of rural 

communities and the financial 

challenges rural hospital providers face. 

Across the various Medicare payment 

systems, CMS has established a number 

of special payment provisions for rural 

providers to maintain access to care and 

to deliver high quality care to 

beneficiaries in rural areas. With respect 

to the OPPS, section 1833(t)(13) of the 

Act provided the Secretary the authority 

to make an adjustment to OPPS 

payments for rural hospitals, effective 

January 1, 2006, if justified by a study 

of the difference in costs by APC 

between hospitals in rural areas and 

hospitals in urban areas. Our analysis 

showed a difference in costs for rural 

SCHs. Therefore, for the CY 2006 OPPS, 

we finalized a payment adjustment for 

rural SCHs of 7.1 percent for all services 

and procedures paid under the OPPS, 

excluding separately payable drugs and 

biologicals, brachytherapy sources, and 

devices paid under the pass-through 

payment policy, in accordance with 

section 1833(t)(13)(B) of the Act. We 

have continued this 7.1 percent 

payment adjustment since 2006. 

In the CY 2018 OPPS/ASC proposed 

rule, we sought public comment for 

future policy refinements on whether, 

due to access to care issues, exceptions 

should be granted to certain groups of 

hospitals, such as those with special 

adjustments under the OPPS (for 

example, rural SCHs or PPS-exempt 

cancer hospitals) if a policy were 

adopted to adjust OPPS payments for 

drugs acquired under the 340B program. 


sradovich on DSK3GMQ082PROD with RULES2
59366 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

Taking into consideration the comments 

regarding rural hospitals, we believe 

further study on the effect of the 340B 

drug payment policy is warranted for 

classes of hospitals that receive 

statutory payment adjustments under 

the OPPS. In particular, given 

challenges such as low patient volume, 

it is important that we take a closer look 

at the effect of an ASP minus 22.5 

percent payment on rural SCHs. 

With respect to RRCs, we note that 

there is no special payment designation 

for RRCs under the OPPS. By definition, 

RRCs must have at least 275 beds and 

therefore are larger relative to rural 

SCHs. In addition, RRCs are not subject 

to a distance requirement from other 

hospitals. Accordingly, at this time, we 

are not exempting RRCs from the 340B 

payment adjustment. 

For CY 2018, we are excluding rural 

SCHs (as described under the 

regulations at 42 CFR 412.92 and 

designated as rural for Medicare 

purposes) from this policy. We may 

revisit our policy to exempt rural SCHs, 

as well as other hospital designations 

for exemption from the 340B drug 

payment reduction, in the CY 2019 

OPPS rulemaking. 

• Children’s and PPS-Exempt Cancer 

Hospitals 

Comment: Commenters representing 

children’s hospitals (‘‘children’s’’) 

raised objections to the proposal 

because of the potential impact on the 

approximate 8,000 children with endstage renal disease (ESRD) who are 

eligible for Medicare. One commenter 

cited that currently 48 children’s 

hospitals participate in the 340B 

Program and rely on the savings the 

program provides to enhance care for 

vulnerable children. According to the 

commenter, pediatric ESRD patients 

require high levels of care and rely on 

life-saving pharmaceuticals that often 

come at a high cost. Therefore, the 

commenters posited that it is because 

children’s patients are more expensive 

to treat and not because of inappropriate 

drug use that 340B hospitals incur 

higher drug expenditures. In addition, 

the commenters expressed concern with 

the effect the 340B drug payment policy 

may have on State Medicaid programs, 

considering Medicaid is the 

predominant payer type for children’s 

hospitals. The commenters requested 

that, unless CMS is able to examine the 

impact on pediatric Medicare 

beneficiaries, CMS should exempt 

children’s hospitals from the alternative 

340B drug payment methodology. 

An organization representing PPSexempt cancer hospitals commented 

that CMS’ proposal would severely 

harm the hospitals that treat the most 

vulnerable and underserved patients 

and communities, undermining these 

hospitals’ ability to continue providing 

programs designed to improve access to 

services. The commenter believed that 

assumptions alluded to in the CY 2018 

OPPS/ASC proposed rule, which 

suggested that providers are abusing the 

savings generated from the 340B 

Program or potentially creating 

incentives to over utilize drugs, are 

inaccurate and that clinicians provide 

the care that is necessary to treat a 

patient’s disease. The commenter 

suggested that CMS work with, or defer 

to, HRSA to first conduct a complete 

analysis of how the 340B Program is 

utilized for the benefit of patients prior 

to proposing any changes to Medicare 

payment for drugs purchased through 

the program. 

Response: We share the commenters’ 

views on protecting access to high 

quality care for all Medicare 

beneficiaries, including those treated in 

children’s or PPS-exempt cancer 

hospitals. Further, because of how these 

classes of hospitals are paid under the 

OPPS, we recognize that the 340B drug 

payment proposal may not result in 

reduced payments for these hospitals in 

the aggregate. 

Specifically, in accordance with 

section 1833(t)(7)(D)(ii) of the Act, we 

make transitional outpatient payments 

(TOPs) to both children’s and PPSexempt cancer hospitals. That is, these 

hospitals are permanently held harmless 

to their ‘‘pre-BBA amount,’’ and they 

receive hold harmless payments to 

ensure that they do not receive a 

payment that is lower in amount under 

the OPPS than the payment amount 

they would have received before 

implementation of the OPPS. 

Accordingly, if we were to reduce drug 

payments to these hospitals on a per 

claim basis, it is very likely that the 

reduction in payment would be paid 

back to these hospitals at cost report 

settlement, given the TOPs structure. 

Accordingly, we believe it is 

appropriate to exempt children’s and 

PPS-exempt cancer hospitals from the 

alternative 340B drug payment 

methodology for CY 2018. Therefore, for 

CY 2018, we are excluding children’s 

and PPS-exempt cancer hospitals from 

the alternative 340B drug payment 

policy. As discussed in a later section in 

this final rule with comment period, 

because we are redistributing the dollars 

in a budget neutral manner within the 

OPPS through an offsetting increase to 

the conversion factor, children’s 

hospitals and PPS-exempt cancer 

hospitals will receive a higher payment 

when providing a non-drug service. 

In summary, we are adopting for CY 

2018 an exemption for rural SCHs, 

children’s hospitals, and PPS-exempt 

cancer hospitals from the alternative 

340B drug payment methodology. These 

three types of hospitals will not be 

subject to a reduced drug payment for 

drugs that are purchased under the 340B 

Program in CY 2018. We may revisit the 

specific types of hospitals excluded, if 

any, from the 340B payment policy in 

CY 2019 rulemaking. However, as 

discussed in more detail below, it 

remains important to collect 

information on which drugs being billed 

to Medicare were acquired under the 

340B Program. Accordingly, these three 

types of hospitals will still be required 

to report an informational modifier 

‘‘TB’’ for tracking and monitoring 

purposes. We may revisit this 340B drug 

payment policy, including whether 

these types of hospitals should continue 

to be excepted from the reduced 

Medicare payment rate, in future 

rulemaking. 

• Biosimilar Biological Products 

Comment: Some commenters 

expressed opposing views about 

applying the proposed 340B payment 

methodology to biosimilar biological 

products. One pharmaceutical 

manufacturer recommended that the 

Secretary use his equitable adjustment 

authority at section 1833(t)(2)(E) of the 

Act to apply a narrow equitable 

adjustment to biosimilar biological 

products with pass-through payment 

status to pay for these drugs at ASP 

minus 22.5 percent of the reference 

product rather than ASP+6 percent of 

the reference product. The commenter 

asserted that excluding biosimilar 

biological products from the alternative 

340B payment methodology would 

result in a significant payment 

differential between biosimilar 

biological products and reference 

products which may cause providers to 

switch patients to different products for 

financial reasons, rather than clinical 

factors. The commenter stated that, if 

the policy is implemented as proposed, 

the competitive biosimilar marketplace 

would significantly change because 

Medicare would pay more for the 

biosimilar biological product with passthrough payment status and weaken 

market forces. The commenter estimated 

that if the 340B drug policy is 

implemented as proposed, up to $50 

million of any savings could be lost due 

to hospitals switching to the biosimilar 

biological product on pass-through 

payment status (that will be paid at 

ASP+6 percent of the reference 

product). Moreover, the commenter 

pointed out that CMS’ policy to only 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59367 

provide pass-through payments for the 

first eligible biosimilar biological 

product of any reference biological 

would also create a similar payment 

disadvantage for any subsequent 

biosimilar biological product, which 

would be ineligible for pass-through 

payment under CMS’ policy. 

Another commenter, a different 

pharmaceutical manufacturer, requested 

that CMS exclude biosimilar biological 

products from the proposed payment 

adjustment until such time as the 

biosimilar biological product market is 

better established. The commenter 

indicated that while a biosimilar 

biological product is less expensive to 

the Medicare program, hospitals are 

incented by the 340B Program to 

purchase the originator product because 

of ‘‘the spread’’ or payment differential 

with respect to the originator product. 

Moreover, the commenter stated that 

applying the proposed adjustment to 

payment for biosimilar biological 

products in certain hospitals will retain 

market share for the more expensive 

reference product that is further 

compounded by market practices of 

volume-based rebates and exclusionary 

contracts for the reference product. 

Response: We understand the 

commenters’ concerns. As discussed in 

section V.B.2. of this CY 2018 OPPS/ 

ASC final rule with comment period, we 

are adopting the biosimilar biological 

products HCPCS coding established 

under the CY 2018 MPFS final rule. 

Briefly, we adopted a final policy to 

establish separate HCPCS codes for each 

biosimilar biological product for a 

particular reference product beginning 

January 1, 2018. In addition, we also 

stated in section V.B.2. of this CY 2018 

OPPS/ASC final rule with comment 

period that we are making a conforming 

amendment to our pass-through 

payment policy for biosimilar biological 

products such that each FDA-approved 

biosimilar biological product will be 

eligible for transitional pass-through 

payment instead of only the first 

biosimilar for a particular reference 

product. 

Therefore, given the policy changes 

affecting coding and payment for 

biosimilar biological products that we 

are adopting in the CY 2018 MPFS final 

rule and this CY 2018 OPPS/ASC final 

rule with comment period, we disagree 

with the commenters that we should 

exclude biosimilar biological products 

from the 340B payment policy or use 

our equitable adjustment authority 

under section 1833(t)(2)(E) of the Act to 

adjust payment to ASP minus 22.5 

percent of the reference product for 

biosimilar biological products with 

pass-through payment status. We 

believe the statutory provision on 

transitional drug pass-through payment 

under section 1833(t)(6)(D)(i) of the Act 

provides for an explicit payment for 

drugs eligible for pass-through payment. 

Therefore, we are unable to accept the 

commenter’s request to pay a biosimilar 

biological product on pass-through 

payment status the reduced 340B 

payment rate. We are adopting a policy 

that any biosimilar biological product 

with pass-through payment status will 

be exempt from the alternative payment 

methodology for 340B drugs and will 

continue to be paid at ASP+6 percent of 

the reference product. Biosimilar 

biological products that are not on passthrough payment status will be paid 

ASP minus 22.5 percent of the reference 

product. We believe it is appropriate to 

pay this amount for biosimilar 

biological products as it is consistent 

with the amount paid for non-340Bacquired biosimilar biological products, 

which is ASP+6 percent of the reference 

product. Currently, there are two 

biosimilar biological products available 

on the market and both are on passthrough payment status for the entirety 

of CY 2018. Therefore, no biosimilar 

biological products currently available 

will be affected by the alternative 

payment methodology for 340Bacquired drugs for CY 2018. We 

recognize the concerns about paying 

different rates for similar drugs and 

biologicals and continue to assess the 

feasibility and practicality of an 

alternative 340B payment adjustment 

for biosimilar biological products in the 

future. 

• Nonexcepted Off-Campus Hospital 

Outpatient Departments 

Comment: A few commenters noted 

that CMS’ proposed alternative payment 

methodology for 340B purchased drugs 

would not apply to nonexcepted offcampus provider-based departments 

(PBDs) of a hospital and could result in 

behavioral changes that may undermine 

CMS’ policy goals of reducing 

beneficiary cost-sharing liability and 

undercut the goals of section 603 of the 

Bipartisan Budget Act of 2015. 

Commenters recommended that, if CMS 

adopts a final policy to establish an 

alternative payment methodology for 

340B drugs in CY 2018, CMS also apply 

the same adjustment to payment rates 

for drugs furnished in nonexcepted offcampus PBDs of a hospital if such drugs 

are acquired under the 340B Program. In 

addition, the commenters believed that 

because CMS did not propose to limit 

the expansion of services or volume 

increases at excepted off-campus PBDs, 

CMS will create financial incentives for 

hospitals to shift or reallocate services 

to the site of care that pays the highest 

rate for an item or service. 

Response: We appreciate the 

commenter’s concerns about potential 

unintended consequences of our 

proposal. We will continue to monitor 

the billing patterns of claims submitted 

by nonexcepted off-campus outpatient 

PBDs as we continue to explore whether 

to pursue future rulemaking on the 

issues of clinical service line expansion 

or volume increases, and other related 

section 603 implementation policies. 

In the CY 2017 OPPS/ASC final rule 

with comment period, we discussed the 

provision of section 603 of the 

Bipartisan Budget Act of 2015 (Pub. L. 

144–74), enacted on November 2, 2015, 

which amended section 1833(t) of the 

Act. Specifically, this provision 

amended the OPPS statute at section 

1833(t) by amending paragraph (1)(B) 

and adding a new paragraph (21). As a 

general matter, under sections 

1833(t)(1)(B)(v) and (t)(21) of the Act, 

applicable items and services furnished 

by certain off-campus outpatient 

departments of a provider on or after 

January 1, 2017, are not considered 

covered outpatient department services 

as defined under section 1833(t)(1)(B) of 

the Act for purposes of payment under 

the OPPS and are instead paid ‘‘under 

the applicable payment system’’ under 

Medicare Part B if the requirements for 

such payment are otherwise met (81 FR 

79699). We issued an interim final rule 

with comment period along with the CY 

2017 OPPS/ASC final rule with 

comment period to establish the MPFS 

as the ‘‘applicable payment system,’’ 

which will apply in most cases, and 

payment rates under the MPFS for nonexcepted items and services furnished 

by nonexcepted off-campus outpatient 

provider based departments (PBDs) (81 

FR 79720). (Other payment systems, 

such as the Clinical Laboratory Fee 

Schedule, continue to apply in 

appropriate cases.) That is, items and 

services furnished by nonexcepted offcampus outpatient PBDs, are 

nonexcepted items and services that are 

not covered outpatient services, and 

thus, are not payable under the OPPS. 

Rather, these nonexcepted items and 

services are paid ‘‘under the applicable 

payment system,’’ which, in this case, is 

generally the MPFS. 

As we discussed in the CY 2017 

OPPS/ASC interim final with comment 

period (81 FR 79718) and reiterated in 

the CY 2018 MPFS final rule, payment 

for Part B drugs that would be 

separately payable under the OPPS 

(assigned status indicator ‘‘K’’) but are 

not payable under the OPPS because 

they are furnished by nonexcepted offcampus outpatient PBDs will be paid in 


sradovich on DSK3GMQ082PROD with RULES2
59368 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

accordance with section 1847A of the 

Act (generally, ASP+6 percent), 

consistent with Part B drug payment 

policy in the physician office. We did 

not propose to adjust payment for 340Bacquired drugs in nonexcepted offcampus PBDs in CY 2018 but may 

consider adopting such a policy in CY 

2019 notice-and-comment rulemaking. 

• Data Collection and Modifier 

Comment: The vast majority of 

commenters objected to CMS’ intention 

to require hospitals that do not purchase 

a drug or biological through the 340B 

program to apply a modifier to avoid a 

reduced drug payment. A few 

commenters supported the modifier 

proposal. The commenters who 

disagreed with proposal stated that it 

would place an unnecessary 

administrative and financial burden on 

hospitals that do not participate or are 

not eligible to participate in the 340B 

Program. Similarly, the commenters 

stated that the modifier requirement as 

described in the proposed rule would 

put a financial and administrative strain 

on hospitals with fewer resources. In 

addition, the commenters contended 

that a requirement for hospitals to report 

a modifier for drugs that were not 

acquired under the 340B Program would 

place hospitals at significant risk for 

noncompliance if not implemented 

correctly, which many commenters 

believe is nearly impossible to do. As an 

alternative approach, numerous 

commenters recommended that CMS 

require hospitals that do purchase a 

drug under the 340B Program to report 

the modifier, rather than those that do 

not. 

Regarding a January 1, 2018, 

implementation date for the modifier, 

some commenters expressed concern 

and doubted their ability to implement 

the modifier as described in the 

proposed rule accurately. The 

commenters indicated that additional 

time would be needed to adapt billing 

systems, allow for testing of claims 

reported with the modifier, and educate 

staff. Based on discussion of how the 

modifier would work in the proposed 

rule, the commenters stated that 

hospitals would either have to append 

the modifier to the claim at the time the 

drug is furnished, or retroactively apply 

the modifier, thus delaying claims 

submission to Medicare. 

The commenters provided detailed 

descriptions on hospital pharmacy set 

up, including information on software 

tools to support inventory management 

of drugs dispensed to 340B and non340B patients (based on HRSA 

definition of an eligible patient). One 

commenter indicated that the drug 

supply system used for purchasing 

covered outpatient drugs is completely 

separate from—and does not necessarily 

communicate with—the hospital’s 

pharmacy drug dispensing and patient 

billing systems. While these software 

tools enable split-billing to distinguish 

340B and non-340B patients, the 

commenters noted that this patient 

determination is typically not done in 

real time when a drug is administered. 

Commenters noted that 340B hospitals 

that use split-billing software do not 

receive information on 340B patient 

status on a daily basis and the proposal 

could result in delayed billing. The 

commenters stated that hospitals 

typically make these determinations 

retrospectively and it may be 3 to 10 

days post-dispensing before the hospital 

knows whether a drug was replenished 

under 340B or at regular pricing. The 

commenters noted that, under this 

‘‘replenishment model,’’ hospitals track 

how many 340B-eligible drugs are used, 

and once enough drugs are dispensed to 

complete a package, they will replenish 

the drug at the 340B rate. As such, the 

commenters argued that hospitals do 

not know when the drug is dispensed 

whether it will cost them the 340B rate 

or the wholesale acquisition cost 

(WAC). Therefore, the commenters 

expressed concern that the modifier 

requirement as described in the 

proposed rule would result in billing 

delays and, for some hospitals, may 

cause a short-term interruption in cash 

flow. 

In addition, the commenters 

requested that, while the payment 

reduction would apply to nonpassthrough separately payable drugs 

purchased with a 340B discount, CMS 

accept the modifier when reported with 

drug HCPCS codes that are packaged 

(and for which no separate payment will 

be made) to reduce or prevent 

operational burden that may be caused 

if affected providers have to determine 

on a claim-by-claim basis whether a 

drug is eligible for separate payment. 

With respect to State Medicaid 

programs that also require a modifier to 

identify 340B-purchased drugs on 

outpatient claims, the commenters 

noted that CMS’ proposal would be 

counter to Medicaid requirements and 

would create confusion and add 

complexity for providers who treat 

Medicaid recipients in multiple states. 

The commenters reported that many 

State Medicaid programs require a 

modifier to identify drugs that were 

purchased under 340B to administer 

their Medicaid drug rebate programs to 

prevent duplicate discounts on 340B 

drugs. The commenters suggested that if 

CMS reversed its position on 

application of the modifier, it would 

ensure crossover claims (claims 

transferred from Medicare to Medicaid) 

are correctly interpreted by State 

Medicaid programs so that they can 

appropriately request manufacturer 

rebates on drugs not purchased under 

the 340B Program. Moreover, some 

commenters believed that if CMS 

required the modifier to be reported for 

340B-purchased drugs, State Medicaid 

programs would also adopt the 

modifier, leading to national uniformity 

in reporting of 340B drugs. 

Finally, in the event that CMS 

required the modifier on claims for 

340B drugs, rather than non-340B drugs, 

commenters sought clarity on whether 

the modifier applies only to drugs 

purchased under the 340B Program 

which are subject to a ceiling price 

payment from the manufacturer or if the 

modifier would also apply to drugs 

purchased by a 340B-registered facility, 

but purchased under the Prime Vendor 

Program for which only 340B facilities 

are eligible. One commenter asked that 

CMS emphasize that 340B pricing is not 

available on drugs furnished to hospital 

inpatients. 

Response: We appreciate the detailed 

comments that were submitted. As 

noted in the proposed rule, we did not 

propose to establish the modifier but 

rather noted our intent to establish the 

modifier, regardless of whether we 

adopted the alternative payment 

methodology for drugs acquired through 

the 340B Program. However, we are 

responding to some of the comments 

submitted in this final rule with 

comment period with information on 

this modifier that we believe is 

important to communicate as soon as 

possible. We will consider whether 

additional details will need to be 

communicated through a subregulatory 

process, such as information posted to 

the CMS Web site. 

After considering the administrative 

and financial challenges associated with 

providers reporting the modifier as 

described in the CY 2018 OPPS/ASC 

proposed rule, and in order to reduce 

regulatory burden, we are reversing our 

position on how the modifier will be 

used by providers to effectuate the 

payment adjustment for 340B-purchased 

drugs. 

Specifically, beginning January 1, 

2018, providers who are not excepted 

from the 340B payment adjustment will 

report modifier ‘‘JG’’ (Drug or biological 

acquired with 340B Drug Pricing 

Program Discount) to identify if a drug 

was acquired under the 340B Program. 

This requirement is aligned with the 

modifier requirement already mandated 

in several States under their Medicaid 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59369 

programs. Therefore, we believe that 

this option will pose less of an 

administrative burden. Further, having 

consistent application of the modifier 

being required for a drug that was 

purchased under the 340B Program 

instead of a drug not purchased under 

the 340B Program will help improve 

program integrity by helping ensure that 

hospitals are not receiving ‘‘duplicate 

discounts’’ through both the Medicaid 

rebate program and the 340B Program. 

The phrase ‘‘acquired under the 340B 

Program’’ is inclusive of all drugs 

acquired under the 340B Program or 

PVP, regardless of the level of discount 

applied to the drug. Drugs that were not 

acquired under the 340B Program 

should not be reported with the 

modifier ‘‘JG’’. For separately payable 

drugs (status indicator ‘‘K’’), application 

of modifier ‘‘JG’’ will trigger a payment 

adjustment such that the 340B-acquired 

drug is paid at ASP minus 22.5 percent. 

In response to the commenters’ request 

that we allow the 340B modifier to be 

reported with status indicator ‘‘N’’ drugs 

(that is, drugs that are always packaged), 

we will accept modifier ‘‘JG’’ or ‘‘TB’’ to 

be reported with a packaged drug 

(although such modifier will not result 

in a payment adjustment). 

In addition, beginning January 1, 

2018, providers that are excepted from 

the 340B drug payment policy for CY 

2018, which include rural SCHs, 

children’s hospitals, and PPS-exempt 

cancer hospitals, should not report 

modifier ’’JG’’. Instead, these excepted 

providers should report the 

informational modifier ‘‘TB’’ (Drug or 

Biological Acquired With 340B Drug 

Pricing Program Discount, Reported for 

Informational Purposes) to identify 

OPPS separately payable drugs 

purchased with a 340B discount. The 

informational modifier ‘‘TB’’ will 

facilitate the collection and tracking of 

340B claims data for OPPS providers 

that are excepted from the payment 

adjustment in CY 2018. However, use of 

modifier ‘‘TB’’ will not trigger a 

payment adjustment and these 

providers will receive ASP+6 percent 

for separately payable drugs furnished 

in CY 2018, even if such drugs were 

acquired under the 340B Program. 

For drugs administered to dualeligible beneficiaries (that is, 

beneficiaries covered under both 

Medicare and Medicaid) for whom 

covered entities do not receive a 

discount under the 340B Program, the 

State Medicaid programs should be 

aware of modifier ‘‘JG’’ to help further 

prevent inappropriate billing of 

manufacturer rebates. 

With respect to comments about 

timing to operationalize a modifier, we 

note that hospitals have been on notice 

since the proposed rule went on display 

at the Office of the Federal Register on 

July 13, 2017 that we intended to 

establish a modifier to implement the 

policy for payment of drugs acquired 

under the 340B Program, if finalized. In 

addition, the modifier will not be 

required until January 1, 2018, which 

after display of this final rule with 

comment period will give hospitals two 

additional months to operationalize the 

modifier. Under section 1835(a) of the 

Act, providers have 12 months after the 

date of service to timely file a claim for 

payment. Therefore, for those hospitals 

that may need more time to ensure that 

they are in compliance with the 

modifier requirements, they have 12 

months from the date of service to do so. 

Further, to the extent many hospitals 

already report a modifier through their 

State Medicaid program, we believe that 

also requiring the modifier on 

outpatient claims for 340B-acquired 

drugs paid for under the OPPS would 

not be a significant administrative 

burden and would promote consistency 

between the two programs. With respect 

to providers in States that are not 

currently required to report a modifier 

under the Medicaid program, we note 

that providers are nonetheless 

responsible for ensuring that drugs are 

furnished to ‘‘covered patients’’ under 

the 340B Program and, therefore, should 

already have a tracking mechanism in 

place to ensure that they are in 

compliance with this requirement. 

Furthermore, modifiers are commonly 

used for payment purposes; in this case, 

the presence of the modifier will enable 

us to pay the applicable 340B drug rate 

of ASP minus 22.5 percent and track 

these claims in the Medicare data (in the 

case of ‘‘JG’’ modifier) and will allow us 

to track other drugs billed on claims that 

are not subject to the payment reduction 

(modifier ‘‘TB’’). In addition, the 

presence of the both modifiers will 

enable Medicare and other entities to 

conduct research on 340B-acquired 

drugs in the future. 

We remind readers that our 340B 

payment policy applies to only OPPS 

separately payable drugs (status 

indicator ‘‘K’’) and does not apply to 

vaccines (status indicator ‘‘L’’ or ‘‘M’’), 

or drugs with transitional pass-through 

payment status (status indicator ‘‘G’’). 

Finally, Federal law permits Medicare 

to recover its erroneous payments. 

Medicare requires the return of any 

payment it erroneously paid as the 

primary payer. Medicare can also fine 

providers for knowingly, willfully, and 

repeatedly billing incorrectly coded 

claims. Providers are required to submit 

accurate claims, maintain current 

knowledge of Medicare billing policies, 

and ensure all documentation required 

to support the validity of the services 

reported on the claim is available upon 

request. 

d. Summary of Final Policies for CY 

2018 

In summary, for CY 2018, in 

accordance with section 

1833(t)(14)(A)(iii)(II) of the Act, 

separately payable Part B drugs 

(assigned status indicator ‘‘K’’), other 

than vaccines and drugs on passthrough payment status, that meet the 

definition of ‘‘covered outpatient drug’’ 

as defined in the section 1927(k) of the 

Act, that are acquired through the 340B 

Program or through the 340B PVP at or 

below the 340B ceiling price will be 

paid at the ASP minus 22.5 percent 

when billed by a hospital paid under 

the OPPS that is not excepted from the 

payment adjustment. Part B drugs or 

biologicals excluded from the 340B 

payment adjustment include vaccines 

(assigned status indicator ‘‘L’’ or ‘‘M’’) 

and drugs with OPPS transitional passthrough payment status (assigned status 

indicator ‘‘G’’). Medicare will continue 

to pay drugs that were not purchased 

with a 340B discount at ASP+6 percent. 

Effective January 1, 2018, biosimilar 

biological products not on pass-through 

payment status that are purchased 

through the 340B program or through 

the 340B PVP will be paid at ASP minus 

22.5 percent of the reference product’s 

ASP, while biosimilar biological 

products on drug pass-through payment 

status will continue to be paid ASP+6 

percent of the reference product. 

To effectuate the payment adjustment 

for 340B-acquired drugs, CMS is 

implementing modifier ‘‘JG’’, effective 

January 1, 2018. Hospitals paid under 

the OPPS, other than a type of hospital 

excluded from the OPPS (such as CAHs 

or those hospitals paid under the 

Maryland waiver) or excepted from the 

340B drug payment policy for CY 2018, 

are required to report modifier ‘‘JG’’ on 

the same claim line as the drug HCPCS 

code to identify a 340B-acquired drug. 

For CY 2018, rural SCHs, children’s 

hospitals and PPS-exempt cancer 

hospitals will be excepted from the 

340B payment adjustment. These 

hospitals will be required to report 

informational modifier ‘‘TB’’ for 340Bacquired drugs, and will continue to be 

paid ASP+6 percent. 

To maintain budget neutrality within 

the OPPS, the estimated $1.6 billion in 

reduced drug payments from adoption 

of this final alternative 340B drug 

payment methodology will be 

redistributed in an equal offsetting 

amount to all hospitals paid under the 


sradovich on DSK3GMQ082PROD with RULES2
59370 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

OPPS through increased payment rates 

for non-drug items and services 

furnished by all hospitals paid under 

the OPPS for CY 2018. Specifically, the 

redistributed dollars will increase the 

conversion factor across non-drug rates 

by 3.2 percent for CY 2018. 

We may revisit the alternative 340B 

drug payment methodology in CY 2019 

rulemaking. 

e. Comment Solicitation on Additional 

340B Considerations 

As discussed above, we recognize 

there are data limitations in estimating 

the average discount for 340B drugs. In 

the CY 2018 OPPS/ASC proposed rule 

(82 FR 33634 through 33635), we 

welcomed stakeholder input with regard 

to MedPAC’s May 2015 analysis and the 

resulting estimate of ASP minus 22.5 

percent as the proposed payment rate 

for separately payable, nonpass-through 

OPPS drugs purchased under the 340B 

Program in CY 2018. We also requested 

comment on whether we should adopt 

a different payment rate to account for 

the average minimum discount of OPPS 

drugs purchased under the 340B 

Program. Also, we sought comment on 

whether the proposal to pay ASP minus 

22.5 percent for 340B-acquired drugs 

should be phased in over time (such as 

over a period of 2 to 3 years). 

In addition, we recognize that the 

acquisition costs for drugs may vary 

among hospitals, depending on a 

number of factors such as size, patient 

volume, labor market area and case-mix. 

Accordingly, in the longer term, we are 

interested in exploring ways to more 

closely align the actual acquisition costs 

that hospitals incur rather than using an 

average minimum discounted rate that 

would apply uniformly across all 340B 

hospitals. In the proposed rule, we 

requested public comment on whether, 

as a longer term option, Medicare 

should require 340B hospitals to report 

their acquisition costs in addition to 

charges for each drug on the Medicare 

claim. Having the acquisition cost on a 

drug-specific basis would enable us to 

pay a rate under the OPPS that is 

directly tied to the acquisition costs for 

each separately payable drug. To the 

extent that the acquisition costs for 

some drugs may equal the ceiling price 

for a drug, we recognize that there may 

be challenges with keeping the ceiling 

price confidential as required by section 

1927(b)(3)(D) of the Act and we sought 

comment on this point. 

Lastly, for consideration for future 

policy refinements, we requested public 

comment on (1) whether, due to access 

to care issues, exceptions should be 

granted to certain groups of hospitals, 

such as those with special adjustments 

under the OPPS (for example, rural 

SCHs or PPS-exempt cancer hospitals) if 

a policy were adopted to adjust OPPS 

payments to 340B participating 

hospitals (if so, describe how adjusted 

rates for drugs purchased under the 

340B Program would disproportionately 

affect access in these provider settings); 

(2) whether other types of drugs, such 

as blood clotting factors, should also be 

excluded from the reduced payment; 

and (3) whether hospital-owned or 

affiliated ASCs have access to 340B 

discounted drugs. 

We received feedback on a variety of 

issues in response to the comment 

solicitation on additional future 

considerations. These comments are 

summarized below. 

Comment: One commenter 

recommended that CMS establish an 

exemption mechanism for use by 

stakeholders to request exemptions for 

certain groups of hospitals. The 

commenters urged CMS to propose and 

seek comment on specific guidelines 

that outline procedures for stakeholders 

to request an exemption and the criteria 

CMS would use to determine whether to 

grant an exception. 

Response: We appreciate the 

comment. As we stated in the summary 

of final policies, we may revisit the 

340B drug payment policy in the CY 

2019 rulemaking. For CY 2018, as stated 

earlier in this section, rural SCHs, 

children’s hospitals and PPS-exempt 

cancer hospitals will be excepted from 

the alternative 340B drug payment 

methodology being adopted in this final 

rule with comment period. However, 

each of these excepted providers will 

report informational modifier ‘‘TB’’ on 

the same claim line as the HCPCS code 

for their 340B-acquired drugs. 

Comment: In response to the 

solicitation of comments on whether 

CMS should exclude certain types of 

drugs from the proposed alternative 

340B drug payment methodology, 

manufacturers of blood clotting factors 

and radiopharmaceuticals 

recommended that CMS continue to pay 

these drug types at ASP+6 percent. With 

respect to blood clotting factors, the 

commenters stated that individuals with 

bleeding disorders have unique needs 

and are expensive to treat such that the 

proposed reduced payment could 

threaten access and/or create 

unnecessary treatment delays for these 

patients. With respect to 

radiopharmaceuticals, the commenters 

stated that they do not believe that these 

products are covered outpatient drugs 

(because it is not possible for the 

manufacturer to accurately report final 

dose and pricing information), and 

therefore these drugs should be 

excluded as a category of drugs 

included in the covered drug definition 

for the 340B Program. 

In addition, one commenter 

recommended that CMS develop a 

process for stakeholders to request 

exemptions from the alternative 340B 

payment methodology that CMS would 

evaluate using objective patient 

guidelines designed to ensure patient 

access. 

Response: We appreciate the 

comments. To the extent that blood 

clotting factors and 

radiopharmaceuticals are covered 

outpatient drugs purchased under the 

340B Program, we believe that the OPPS 

payment rate for these drugs should 

account for the discounted rate under 

which they were purchased. Therefore, 

for CY 2018, OPPS payment for 

separately payable, nonpass-through 

drugs, biologicals, and 

radiopharmaceuticals, including blood 

clotting factors and 

radiopharmaceuticals, if purchased 

through the 340B Program, will be paid 

at ASP minus 22.5 percent. As we stated 

in the summary of final policies, we 

may revisit the 340B drug payment 

policy in the CY 2019 rulemaking. We 

will consider these requests for 

exceptions for certain drug classes in 

development of the CY 2019 OPPS/ASC 

proposed rule. 

It is unclear to us whether the 

commenter meant that 

radiopharmaceuticals are not 

considered covered outpatient drugs 

under the OPPS or not considered a 

covered outpatient drug for purposes of 

the 340B Program. We assume the 

commenter was referring to the 

definition of covered outpatient drug for 

purposes of the 340B Program and, as 

such, these comments are outside the 

scope of the CY 2018 OPPS/ASC 

proposed rule. We refer commenters to 

HRSA with questions related to the 

340B Program. 

Comment: One commenter 

representing community oncology 

practices urged CMS not to ‘‘reduce the 

size of the reimbursement reduction’’ or 

to phase in the adjustment over 2 to 3 

years because the commenter believed 

that hospitals would use that time to 

‘‘aggressively strong-arm independent 

community oncology practices to sell 

out to them.’’ 

Response: As stated earlier in this 

section, we are finalizing our proposal 

to pay ASP minus 22.5 percent for 

separately payable nonpass-through 

drugs (other than vaccines). In addition, 

we agree that it is not necessary to phase 

in the payment reduction and are 

implementing the full adjustment for CY 

2018. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59371 

Comment: Commenters expressed 

concern about the challenges and costs 

of implementing acquisition cost billing. 

The commenters reported that hospital 

charge masters are not designed to bill 

drugs to one payer at a different rate 

than other payers. The commenters 

cited a survey response from hospitals 

that revealed acquisition cost billing 

would require investment in expensive 

software upgrades, obtaining a second 

charge master, or devising burdensome 

manual workarounds. One commenter 

stated that hospital cost reports already 

reflect the 340B acquisition cost based 

on expenses reported in the pharmacy 

cost center. The commenter further 

stated that these lower costs are already 

reflected in the drug CCR, which will 

likely be lower because the cost to 

acquire these drugs is lower. Thus, the 

commenter asserted, the OPPS 

ratesetting process already reflects a 

blend of discounting/lower expenses 

with respect to 340B drug acquisition in 

the annual application of CCRs to 

pharmacy charges. 

Response: We thank the commenters 

for their feedback and will take these 

comments into consideration for future 

policymaking. We note that several 

State Medicaid programs require 

reporting of actual acquisition cost 

(AAC) for 340B drugs so the magnitude 

of the challenges to implement may be 

less than the commenter suggests. 

VI. Estimate of OPPS Transitional PassThrough Spending for Drugs, 

Biologicals, Radiopharmaceuticals, and 

Devices 

A. Background 

Section 1833(t)(6)(E) of the Act limits 

the total projected amount of 

transitional pass-through payments for 

drugs, biologicals, 

radiopharmaceuticals, and categories of 

devices for a given year to an 

‘‘applicable percentage,’’ currently not 

to exceed 2.0 percent of total program 

payments estimated to be made for all 

covered services under the OPPS 

furnished for that year. If we estimate 

before the beginning of the calendar 

year that the total amount of passthrough payments in that year would 

exceed the applicable percentage, 

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

requires a uniform prospective 

reduction in the amount of each of the 

transitional pass-through payments 

made in that year to ensure that the 

limit is not exceeded. We estimate the 

pass-through spending to determine 

whether payments exceed the 

applicable percentage and the 

appropriate prorata reduction to the 

conversion factor for the projected level 

of pass-through spending in the 

following year to ensure that total 

estimated pass-through spending for the 

prospective payment year is budget 

neutral, as required by section 

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

For devices, developing an estimate of 

pass-through spending in CY 2018 

entails estimating spending for two 

groups of items. The first group of items 

consists of device categories that are 

currently eligible for pass-through 

payment and that will continue to be 

eligible for pass-through payment in CY 

2018. The CY 2008 OPPS/ASC final rule 

with comment period (72 FR 66778) 

describes the methodology we have 

used in previous years to develop the 

pass-through spending estimate for 

known device categories continuing into 

the applicable update year. The second 

group of items consists of items that we 

know are newly eligible, or project may 

be newly eligible, for device passthrough payment in the remaining 

quarters of CY 2017 or beginning in CY 

2018. The sum of the CY 2018 passthrough spending estimates for these 

two groups of device categories equals 

the total CY 2018 pass-through spending 

estimate for device categories with passthrough payment status. We base the 

device pass-through estimated payments 

for each device category on the amount 

of payment as established in section 

1833(t)(6)(D)(ii) of the Act, and as 

outlined in previous rules, including the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75034 through 

75036). We note that, beginning in CY 

2010, the pass-through evaluation 

process and pass-through payment for 

implantable biologicals newly approved 

for pass-through payment beginning on 

or after January 1, 2010, that are 

surgically inserted or implanted 

(through a surgical incision or a natural 

orifice) use the device pass-through 

process and payment methodology (74 

FR 60476). As has been our past practice 

(76 FR 74335), in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33635), we 

proposed to include an estimate of any 

implantable biologicals eligible for passthrough payment in our estimate of 

pass-through spending for devices. 

Similarly, we finalized a policy in CY 

2015 that applications for pass-through 

payment for skin substitutes and similar 

products be evaluated using the medical 

device pass-through process and 

payment methodology (76 FR 66885 

through 66888). Therefore, as we did 

beginning in CY 2015, for CY 2018, we 

also proposed to include an estimate of 

any skin substitutes and similar 

products in our estimate of pass-through 

spending for devices. 

For drugs and biologicals eligible for 

pass-through payment, section 

1833(t)(6)(D)(i) of the Act establishes the 

pass-through payment amount as the 

amount by which the amount 

authorized under section 1842(o) of the 

Act (or, if the drug or biological is 

covered under a competitive acquisition 

contract under section 1847B of the Act, 

an amount determined by the Secretary 

equal to the average price for the drug 

or biological for all competitive 

acquisition areas and year established 

under such section as calculated and 

adjusted by the Secretary) exceeds the 

portion of the otherwise applicable fee 

schedule amount that the Secretary 

determines is associated with the drug 

or biological. Because we proposed to 

pay for most nonpass-through separately 

payable drugs and biologicals under the 

CY 2018 OPPS at ASP+6 percent, and 

because we proposed to pay for CY 2018 

pass-through drugs and biologicals at 

ASP+6 percent, as we discussed in 

section V.A. of the proposed rule, our 

estimate of drug and biological passthrough payment for CY 2018 for this 

group of items was $0, as discussed 

below. In the proposed rule, we noted 

that our estimate did not reflect the 

proposed payment policy for drugs 

purchased through the 340B program, as 

we discussed in section V.A. of the 

proposed rule. 

Furthermore, payment for certain 

drugs, specifically diagnostic 

radiopharmaceuticals and contrast 

agents without pass-through payment 

status, is packaged into payment for the 

associated procedures, and these 

products will not be separately paid. In 

addition, we policy-package all 

nonpass-through drugs, biologicals, and 

radiopharmaceuticals that function as 

supplies when used in a diagnostic test 

or procedure and drugs and biologicals 

that function as supplies when used in 

a surgical procedure, as discussed in 

section II.A.3. of the proposed rule and 

this final rule with comment period. In 

the CY 2018 OPPS/ASC proposed rule 

(82 FR 33635 through 33636), we 

proposed that all of these policypackaged drugs and biologicals with 

pass-through payment status would be 

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

2018. Therefore, our estimate of passthrough payment for policy-packaged 

drugs and biologicals with pass-through 

payment status approved prior to CY 

2018 was not $0, as discussed below. In 

section V.A.5. of the proposed rule, we 

discussed our policy to determine if the 

costs of certain policy-packaged drugs 

or biologicals are already packaged into 

the existing APC structure. If we 


sradovich on DSK3GMQ082PROD with RULES2
59372 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

determine that a policy-packaged drug 

or biological approved for pass-through 

payment resembles predecessor drugs or 

biologicals already included in the costs 

of the APCs that are associated with the 

drug receiving pass-through payment, 

we proposed to offset the amount of 

pass-through payment for the policypackaged drug or biological. For these 

drugs or biologicals, the APC offset 

amount is the portion of the APC 

payment for the specific procedure 

performed with the pass-through drug 

or biological, which we refer to as the 

policy-packaged drug APC offset 

amount. If we determine that an offset 

is appropriate for a specific policypackaged drug or biological receiving 

pass-through payment, we proposed to 

reduce our estimate of pass-through 

payments for these drugs or biologicals 

by this amount. 

Similar to pass-through spending 

estimates for devices, the first group of 

drugs and biologicals requiring a passthrough payment estimate consists of 

those products that were recently made 

eligible for pass-through payment and 

that will continue to be eligible for passthrough payment in CY 2018. The 

second group contains drugs and 

biologicals that we know are newly 

eligible, or project will be newly eligible 

in the remaining quarter of CY 2017 or 

beginning in CY 2018. The sum of the 

CY 2018 pass-through spending 

estimates for these two groups of drugs 

and biologicals equals the total CY 2018 

pass-through spending estimate for 

drugs and biologicals with pass-through 

payment status. 

B. Estimate of Pass-Through Spending 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33636), we proposed to set 

the applicable pass-through payment 

percentage limit at 2.0 percent of the 

total projected OPPS payments for CY 

2018, consistent with section 

1833(t)(6)(E)(ii)(II) of the Act and our 

OPPS policy from CY 2004 through CY 

2017 (81 FR 79676 through 79678). 

For the first group, consisting of 

device categories that are currently 

eligible for pass-through payment and 

will continue to be eligible for passthrough payment in CY 2018, there are 

no active categories for CY 2018. 

Because there are no active device 

categories for CY 2018, we proposed an 

estimate for the first group of devices of 

$0. 

We did not receive any public 

comments on our proposed estimate for 

the first group of devices. For this final 

rule with comment period, using the 

latest available data, we calculated a CY 

2018 spending estimate for this first 

group of devices of $0. 

In estimating our proposed CY 2018 

pass-through spending for device 

categories in the second group, we 

included: Device categories that we 

knew at the time of the development of 

the proposed rule will be newly eligible 

for pass-through payment in CY 2018; 

additional device categories that we 

estimated could be approved for passthrough status subsequent to the 

development of the proposed rule and 

before January 1, 2018; and contingent 

projections for new device categories 

established in the second through fourth 

quarters of CY 2018. In the CY 2018 

OPPS/ASC proposed rule (82 FR 33636), 

we proposed to use the general 

methodology described in the CY 2008 

OPPS/ASC final rule with comment 

period (72 FR 66778), while also taking 

into account recent OPPS experience in 

approving new pass-through device 

categories. For the proposed rule, the 

estimate of CY 2018 pass-through 

spending for this second group of device 

categories was $10 million. 

We did not receive any public 

comments on our proposed estimate for 

the second group of devices. For this 

final rule with comment period, using 

the latest available data, we calculated 

a CY 2018 spending estimate for this 

second group of devices of $10 million. 

To estimate proposed CY 2018 passthrough spending for drugs and 

biologicals in the first group, 

specifically those drugs and biologicals 

recently made eligible for pass-through 

payment and continuing on passthrough payment status for CY 2018, we 

proposed to use the most recent 

Medicare hospital outpatient claims 

data regarding their utilization, 

information provided in the respective 

pass-through applications, historical 

hospital claims data, pharmaceutical 

industry information, and clinical 

information regarding those drugs or 

biologicals to project the CY 2018 OPPS 

utilization of the products. 

For the known drugs and biologicals 

(excluding policy-packaged diagnostic 

radiopharmaceuticals, contrast agents, 

drugs, biologicals, and 

radiopharmaceuticals that function as 

supplies when used in a diagnostic test 

or procedure, and drugs and biologicals 

that function as supplies when used in 

a surgical procedure) that will be 

continuing on pass-through payment 

status in CY 2018, we estimated the 

pass-through payment amount as the 

difference between ASP+6 percent and 

the payment rate for nonpass-through 

drugs and biologicals that will be 

separately paid at ASP+6 percent, 

which is zero for this group of drugs. 

Because payment for policy-packaged 

drugs and biologicals is packaged if the 

product was not paid separately due to 

its pass-through payment status, we 

proposed to include in the CY 2018 

pass-through estimate the difference 

between payment for the policypackaged drug or biological at ASP+6 

percent (or WAC+6 percent, or 95 

percent of AWP, if ASP or WAC 

information is not available) and the 

policy-packaged drug APC offset 

amount, if we determine that the policypackaged drug or biological approved 

for pass-through payment resembles a 

predecessor drug or biological already 

included in the costs of the APCs that 

are associated with the drug receiving 

pass-through payment. For the proposed 

rule, using the proposed methodology 

described above, we calculated a CY 

2018 proposed spending estimate for 

this first group of drugs and biologicals 

of approximately $7.7 million. 

We did not receive any public 

comments on our proposed spending 

estimate for this first group of drugs and 

biologicals. For this final rule with 

comment period, using the latest 

available data, we calculated a CY 2018 

spending estimate for this first group of 

drugs and biologicals of approximately 

$9.83 million. We note that this estimate 

does not reflect drugs purchased with a 

340B discount and therefore subject to 

a payment reduction based on final 

policy for CY 2018. 

To estimate proposed CY 2018 passthrough spending for drugs and 

biologicals in the second group (that is, 

drugs and biologicals that we knew at 

the time of development of the proposed 

rule were newly eligible for passthrough payment in CY 2018, additional 

drugs and biologicals that we estimated 

could be approved for pass-through 

status subsequent to the development of 

the proposed rule and before January 1, 

2017, and projections for new drugs and 

biologicals that could be initially 

eligible for pass-through payment in the 

second through fourth quarters of CY 

2018), we proposed to use utilization 

estimates from pass-through applicants, 

pharmaceutical industry data, clinical 

information, recent trends in the per 

unit ASPs of hospital outpatient drugs, 

and projected annual changes in service 

volume and intensity as our basis for 

making the CY 2018 pass-through 

payment estimate. We also proposed to 

consider the most recent OPPS 

experience in approving new passthrough drugs and biologicals. Using 

our proposed methodology for 

estimating CY 2018 pass-through 

payments for this second group of 

drugs, we calculated a proposed 

spending estimate for this second group 

of drugs and biologicals of 

approximately $8.5 million. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59373 

We did not receive any public 

comments on our proposed 

methodology or the proposed spending 

estimate for this second group of drugs. 

Therefore, for CY 2018, we are 

continuing to use the general 

methodology described earlier. For this 

final rule with comment period, based 

on the latest available data, we 

calculated a CY 2018 spending estimate 

for this second group of drugs and 

biologicals of approximately $8.23 

million. 

In summary, in accordance with the 

methodology described earlier in this 

section, for this final rule with comment 

period, we estimate that total passthrough spending for the device 

categories and the drugs and biologicals 

that are continuing to receive passthrough payment in CY 2018 and those 

device categories, drugs, and biologicals 

that first become eligible for passthrough payment during CY 2018 is 

approximately $28.06 million 

(approximately $10 million for device 

categories and approximately $18.06 

million for drugs and biologicals) 

compared to the proposed $26.2 million 

(approximately $10 million for device 

categories and approximately $16.2 

million for drugs and biologicals)), 

which represents 0.04 percent of total 

projected OPPS payments for CY 2018 

(approximately $70 billion). Therefore, 

we estimate that pass-through spending 

in CY 2018 will not amount to 2.0 

percent of total projected OPPS CY 2018 

program spending. 

VII. OPPS Payment for Hospital 

Outpatient Visits and Critical Care 

Services 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33637), for CY 2018, we 

proposed to continue with our current 

clinic and emergency department (ED) 

hospital outpatient visits payment 

policies. For a description of the current 

clinic and ED hospital outpatient visits 

policies, we refer readers to the CY 2016 

OPPS/ASC final rule with comment 

period (80 FR 70448). We also proposed 

to continue with and not propose any 

change to our payment policy for 

critical care services for CY 2018. For a 

description of the current payment 

policy for critical care services, we refer 

readers to the CY 2016 OPPS/ASC final 

rule with comment period (80 FR 

70449), and for the history of the 

payment policy for critical care services, 

we refer readers to the CY 2014 OPPS/ 

ASC final rule with comment period (78 

FR 75043). In the proposed rule, we 

sought public comments on any changes 

to these codes that we should consider 

for future rulemaking cycles. We 

continued to encourage those parties 

who comment to provide the data and 

analysis necessary to justify any 

suggested changes. 

We did not receive any public 

comments on our proposals for CY 

2018. Therefore, we are finalizing our 

proposal, without modification, to 

continue our current clinic and ED 

hospital outpatient visits and critical 

care services payment policies. We also 

did not receive any public comments on 

any changes to these codes that we 

should consider for future rulemaking 

cycles. 

VIII. Payment for Partial 

Hospitalization Services 

A. Background 

A partial hospitalization program 

(PHP) is an intensive outpatient 

program of psychiatric services 

provided as an alternative to inpatient 

psychiatric care for individuals who 

have an acute mental illness, which 

includes, but is not limited to, 

conditions such as depression, 

schizophrenia, and substance use 

disorders. Section 1861(ff)(1) of the Act 

defines partial hospitalization services 

as the items and services described in 

paragraph (2) prescribed by a physician 

and provided under a program 

described in paragraph (3) under the 

supervision of a physician pursuant to 

an individualized, written plan of 

treatment established and periodically 

reviewed by a physician (in 

consultation with appropriate staff 

participating in such program), which 

sets forth the physician’s diagnosis, the 

type, amount, frequency, and duration 

of the items and services provided 

under the plan, and the goals for 

treatment under the plan. Section 

1861(ff)(2) of the Act describes the items 

and services included in partial 

hospitalization services. Section 

1861(ff)(3)(A) of the Act specifies that a 

PHP is a program furnished by a 

hospital to its outpatients or by a 

community mental health center 

(CMHC), as a distinct and organized 

intensive ambulatory treatment service, 

offering less than 24-hour-daily care, in 

a location other than an individual’s 

home or inpatient or residential setting. 

Section 1861(ff)(3)(B) of the Act defines 

a CMHC for purposes of this benefit. 

Section 1833(t)(1)(B)(i) of the Act 

provides the Secretary with the 

authority to designate the OPD services 

to be covered under the OPPS. The 

Medicare regulations that implement 

this provision specify, at 42 CFR 419.21, 

that payments under the OPPS will be 

made for partial hospitalization services 

furnished by CMHCs as well as 

Medicare Part B services furnished to 

hospital outpatients designated by the 

Secretary, which include partial 

hospitalization services (65 FR 18444 

through 18445). 

Section 1833(t)(2)(C) of the Act 

requires the Secretary, in part, to 

establish relative payment weights for 

covered outpatient department (OPD) 

services (and any groups of such 

services described in section 

1833(t)(2)(B) of the Act) based on 

median (or, at the election of the 

Secretary, mean) hospital costs using 

data on claims from 1996 and data from 

the most recent available cost reports. In 

pertinent part, section 1833(t)(2)(B) of 

the Act provides that the Secretary may 

establish groups of covered OPD 

services, within a classification system 

developed by the Secretary for covered 

OPD services, so that services classified 

within each group are comparable 

clinically and with respect to the use of 

resources. In accordance with these 

provisions, we have developed the PHP 

APCs. Because a day of care is the unit 

that defines the structure and 

scheduling of partial hospitalization 

services, we established a per diem 

payment methodology for the PHP 

APCs, effective for services furnished on 

or after July 1, 2000 (65 FR 18452 

through 18455). Under this 

methodology, the median per diem costs 

were used to calculate the relative 

payment weights for the PHP APCs. 

Section 1833(t)(9)(A) of the Act requires 

the Secretary to review, not less often 

than annually, and revise the groups, 

the relative payment weights, and the 

wage and other adjustments described 

in section 1833(t)(2) of the Act to take 

into account changes in medical 

practice, changes in technology, the 

addition of new services, new cost data, 

and other relevant information and 

factors. 

We began efforts to strengthen the 

PHP benefit through extensive data 

analysis, along with policy and payment 

changes finalized in the CY 2008 OPPS/ 

ASC final rule with comment period (72 

FR 66670 through 66676). In that final 

rule with comment period, we made 

two refinements to the methodology for 

computing the PHP median: The first 

remapped 10 revenue codes that are 

common among hospital-based PHP 

claims to the most appropriate cost 

centers; and the second refined our 

methodology for computing the PHP 

median per diem cost by computing a 

separate per diem cost for each day 

rather than for each bill. 

In CY 2009, we implemented several 

regulatory, policy, and payment 

changes, including a two-tier payment 

approach for partial hospitalization 

services under which we paid one 


sradovich on DSK3GMQ082PROD with RULES2
59374 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

amount for days with 3 services under 

PHP APC 0172 (Level 1 Partial 

Hospitalization) and a higher amount 

for days with 4 or more services under 

PHP APC 0173 (Level 2 Partial 

Hospitalization) (73 FR 68688 through 

68693). We also finalized our policy to 

deny payment for any PHP claims 

submitted for days when fewer than 3 

units of therapeutic services are 

provided (73 FR 68694). Furthermore, 

for CY 2009, we revised the regulations 

at 42 CFR 410.43 to codify existing basic 

PHP patient eligibility criteria and to 

add a reference to current physician 

certification requirements under 42 CFR 

424.24 to conform our regulations to our 

longstanding policy (73 FR 68694 

through 68695). We also revised the 

partial hospitalization benefit to include 

several coding updates (73 FR 68695 

through 68697). 

For CY 2010, we retained the two-tier 

payment approach for partial 

hospitalization services and used only 

hospital-based PHP data in computing 

the PHP APC per diem costs, upon 

which PHP APC per diem payment rates 

are based. We used only hospital-based 

PHP data because we were concerned 

about further reducing both PHP APC 

per diem payment rates without 

knowing the impact of the policy and 

payment changes we made in CY 2009. 

Because of the 2-year lag between data 

collection and rulemaking, the changes 

we made in CY 2009 were reflected for 

the first time in the claims data that we 

used to determine payment rates for the 

CY 2011 rulemaking (74 FR 60556 

through 60559). 

In the CY 2011 OPPS/ASC final rule 

with comment period (75 FR 71994), we 

established four separate PHP APC per 

diem payment rates: Two for CMHCs 

(APC 0172 (for Level 1 services) and 

APC 0173 (for Level 2 services)) and two 

for hospital-based PHPs (APC 0175 (for 

Level 1 services) and 0176 (for Level 2 

services)), based on each provider type’s 

own unique data. For CY 2011, we also 

instituted a 2-year transition period for 

CMHCs to the CMHC APC per diem 

payment rates based solely on CMHC 

data. Under the transition methodology, 

CMHC APCs Level 1 and Level 2 per 

diem costs were calculated by taking 50 

percent of the difference between the 

CY 2010 final hospital-based PHP 

median costs and the CY 2011 final 

CMHC median costs and then adding 

that number to the CY 2011 final CMHC 

median costs. A 2-year transition under 

this methodology moved us in the 

direction of our goal, which is to pay 

appropriately for partial hospitalization 

services based on each provider type’s 

data, while at the same time allowing 

providers time to adjust their business 

operations and protect access to care for 

Medicare beneficiaries. We also stated 

that we would review and analyze the 

data during the CY 2012 rulemaking 

cycle and, based on these analyses, we 

might further refine the payment 

mechanism. We refer readers to section 

X.B. of the CY 2011 OPPS/ASC final 

rule with comment period (75 FR 71991 

through 71994) for a full discussion. 

In addition, in accordance with 

section 1301(b) of the Health Care and 

Education Reconciliation Act of 2010 

(HCERA 2010), we amended the 

description of a PHP in our regulations 

to specify that a PHP must be a distinct 

and organized intensive ambulatory 

treatment program offering less than 24- 

hour daily care other than in an 

individual’s home or in an inpatient or 

residential setting. In accordance with 

section 1301(a) of HCERA 2010, we 

revised the definition of a CMHC in the 

regulations to conform to the revised 

definition now set forth under section 

1861(ff)(3)(B) of the Act (75 FR 71990). 

For CY 2012, as discussed in the CY 

2012 OPPS/ASC final rule with 

comment period (76 FR 74348 through 

74352), we determined the relative 

payment weights for partial 

hospitalization services provided by 

CMHCs based on data derived solely 

from CMHCs and the relative payment 

weights for partial hospitalization 

services provided by hospital-based 

PHPs based exclusively on hospital 

data. 

In the CY 2013 OPPS/ASC final rule 

with comment period, we finalized our 

proposal to base the relative payment 

weights that underpin the OPPS APCs, 

including the four PHP APCs (APCs 

0172, 0173, 0175, and 0176), on 

geometric mean costs rather than on the 

median costs. We established these four 

PHP APC per diem payment rates based 

on geometric mean cost levels 

calculated using the most recent claims 

and cost data for each provider type. For 

a detailed discussion on this policy, we 

refer readers to the CY 2013 OPPS/ASC 

final rule with comment period (77 FR 

68406 through 68412). 

In the CY 2014 OPPS/ASC proposed 

rule (78 FR 43621 through 43622), we 

solicited comments on possible future 

initiatives that may help to ensure the 

long-term stability of PHPs and further 

improve the accuracy of payment for 

PHP services, but proposed no changes. 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75050 

through 75053), we summarized the 

comments received on those possible 

future initiatives. We also continued to 

apply our established policies to 

calculate the four PHP APC per diem 

payment rates based on geometric mean 

per diem costs using the most recent 

claims data for each provider type. For 

a detailed discussion on this policy, we 

refer readers to the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

75047 through 75050). 

In the CY 2015 OPPS/ASC final rule 

with comment period (79 FR 66902 

through 66908), we continued to apply 

our established policies to calculate the 

four PHP APC per diem payment rates 

based on PHP APC geometric mean per 

diem costs, using the most recent claims 

and cost data for each provider type. 

In the CY 2016 OPPS/ASC final rule 

with comment period (80 FR 70455 

through 70465), we described our 

extensive analysis of the claims and cost 

data and ratesetting methodology. We 

found aberrant data from some hospitalbased PHP providers that were not 

captured using the existing OPPS ±3 

standard deviation trims for extreme 

CCRs and excessive CMHC charges 

resulting in CMHC geometric mean 

costs per day that were approximately 

the same as or more than the daily 

payment for inpatient psychiatric 

facility services. Consequently, we 

implemented a trim to remove hospitalbased PHP service days that use a CCR 

that was greater than 5 (CCR5) to 

calculate costs for at least one of their 

component services, and a trim on 

CMHCs with a geometric mean cost per 

day that is above or below 2 (±2) 

standard deviations from the mean. We 

stated in the CY 2016 OPPS/ASC final 

rule with comment period (80 FR 

70456) that, without using a trimming 

process, the data from these providers 

would inappropriately skew the 

geometric mean per diem cost for Level 

2 CMHC services. 

In addition, in the CY 2016 OPPS/ 

ASC final rule with comment period (80 

FR 70459 through 70460), we corrected 

a cost inversion that occurred in the 

final rule data with respect to hospitalbased PHP providers. We corrected the 

cost inversion with an equitable 

adjustment to the actual geometric mean 

per diem costs by increasing the Level 

2 hospital-based PHP APC geometric 

mean per diem costs and decreasing the 

Level 1 hospital-based PHP APC 

geometric mean per diem costs by the 

same factor, to result in a percentage 

difference equal to the average percent 

difference between the hospital-based 

Level 1 PHP APC and the Level 2 PHP 

APC for partial hospitalization services 

from CY 2013 through CY 2015. 

Finally, we renumbered the PHP 

APCs, which were previously 0172, 

0173, 0175, and 0176, to 5851, 5852, 

5861, and 5862, respectively. For a 

detailed discussion of the PHP 

ratesetting process, we refer readers to 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59375 

the CY 2016 OPPS/ASC final rule with 

comment period (80 FR 70462 through 

70467). 

In the CY 2017 OPPS/ASC final rule 

with comment period (81 FR 79687 

through 79691), we continued to apply 

our established policies to calculate the 

PHP APC per diem payment rates based 

on geometric mean per diem costs using 

the most recent claims and cost data for 

each provider type. However, we 

finalized a policy to combine the Level 

1 and Level 2 PHP APCs for CMHCs and 

to combine the Level 1 and Level 2 

APCs for hospital-based PHPs because 

we believed this would best reflect 

actual geometric mean per diem costs 

going forward, provide more predictable 

per diem costs, particularly given the 

small number of CMHCs, and generate 

more appropriate payments for these 

services, for example by avoiding the 

cost inversions for hospital-based PHPs 

addressed in the CY 2016 and CY 2017 

OPPS/ASC final rules with comment 

period (80 FR 70459 and 81 FR 79682). 

We implemented an 8-percent outlier 

cap for CMHCs to mitigate potential 

outlier billing vulnerabilities by limiting 

the impact of inflated CMHC charges on 

outlier payments. We will continue to 

monitor the trends in outlier payments 

and consider policy adjustments as 

necessary. 

For a comprehensive description on 

the background of the PHP payment 

policy, we refer readers to the CY 2016 

and CY 2017 OPPS/ASC final rules with 

comment period (80 FR 70453 through 

70455 and 81 FR 79678 through 79680). 

B. PHP APC Update for CY 2018 

1. PHP APC Geometric Mean Per Diem 

Costs 

For CY 2018, in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33639), we 

proposed to continue to apply our 

established policies to calculate the PHP 

APC per diem payment rates based on 

geometric mean per diem costs using 

the most recent claims and cost data for 

each provider type. Specifically, we 

proposed to continue to use CMHC APC 

5853 (Partial Hospitalization (3 or More 

Services Per Day)) and hospital-based 

PHP APC 5863 (Partial Hospitalization 

(3 or More Services Per Day)). We 

proposed to continue to calculate the 

geometric mean per diem costs for CY 

2018 for APC 5853 for CMHCs using 

only CY 2016 CMHC claims data and 

the most recent CMHC cost data, and 

the CY 2018 geometric mean per diem 

costs for APC 5863 for hospital-based 

PHPs using only CY 2016 hospital-based 

PHP claims data and the most recent 

hospital cost data. 

2. Development of the PHP APC 

Geometric Mean Per Diem Costs 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33639), for CY 2018 and 

subsequent years, we proposed to follow 

the PHP ratesetting methodology 

described in section VIII.B.2. of the CY 

2016 OPPS/ASC final rule with 

comment period (80 FR 70462 through 

70466) to determine the PHP APCs’ 

geometric mean per diem costs and to 

calculate the payment rates for APCs 

5853 and 5863, incorporating the 

modifications made in our CY 2017 

OPPS/ASC final rule with comment 

period. As discussed in section VIII.B.1. 

of the CY 2017 OPPS/ASC final rule 

with comment period (81 FR 79680 

through 79687), we finalized our 

proposal that, for CY 2017 and 

subsequent years, the geometric mean 

per diem cost for hospital-based PHP 

APC 5863 would be based upon actual 

hospital-based PHP claims and costs for 

PHP service days providing 3 or more 

services. Similarly, we finalized our 

proposal that, for CY 2017 and 

subsequent years, the geometric mean 

per diem cost for CMHC APC 5853 

would be based upon actual CMHC 

claims and costs for CMHC service days 

providing 3 or more services. 

The CMHC or hospital-based PHP 

APC per diem costs are the providertype specific costs derived from the 

most recent claims and cost data. The 

CMHC or hospital-based PHP APC per 

diem payment rates are the national 

unadjusted payment rates calculated 

from the CMHC or hospital-based PHP 

APC per diem costs, after applying the 

OPPS budget neutrality adjustments 

described in section II.A.4. of this final 

rule with comment period. 

We proposed to apply our established 

methodologies in developing the CY 

2018 geometric mean per diem costs 

and payment rates, including the 

application of a ±2 standard deviation 

trim on costs per day for CMHCs and a 

CCR≤5 hospital service day trim for 

hospital-based PHP providers. These 

two trims were finalized in the CY 2016 

OPPS/ASC final rule with comment 

period (80 FR 70455 through 70462) for 

CY 2016 and subsequent years. 

a. CMHC Data Preparation: Data Trims, 

Exclusions, and CCR Adjustments 

For the CY 2018 proposed rule, prior 

to calculating the proposed geometric 

mean per diem cost for CMHC APC 

5853, we prepared the data by first 

applying trims and data exclusions, and 

assessing CCRs as described in the CY 

2016 OPPS/ASC final rule with 

comment period (80 FR 70463 through 

70465), so that ratesetting is not skewed 

by providers with extreme data. For this 

CY 2018 OPPS/ASC final rule with 

comment period, we followed the same 

data preparation steps. Before any trims 

or exclusions, there were 50 CMHCs in 

the final PHP claims data file (compared 

to 47 CMHCs in the CY 2018 OPPS/ASC 

proposed rule). Under the ±2 standard 

deviation trim policy, we excluded any 

data from a CMHC for ratesetting 

purposes when the CMHC’s geometric 

mean cost per day was more than ±2 

standard deviations from the geometric 

mean cost per day for all CMHCs. By 

applying this trim for CY 2018 

ratesetting, in this final rule with 

comment period, we excluded 3 CMHCs 

with geometric mean per diem costs per 

day below the trim’s lower limit of 

$47.44 and 1 CMHC above the trim’s 

upper limit of $427.72 from the final 

ratesetting for CY 2018. This standard 

deviation trim removed 4 providers 

from ratesetting whose data would have 

skewed the calculated final geometric 

mean per diem cost. 

In accordance with our PHP 

ratesetting methodology, in the 

proposed rule, we also removed service 

days with no wage index values because 

we use the wage index data to remove 

the effects of geographic variation in 

costs prior to APC geometric mean per 

diem cost calculation (80 FR 70465). In 

this CY 2018 final rule ratesetting, no 

CMHCs were missing wage index data 

for all of their service days. Therefore, 

we did not exclude any CMHCs due to 

lack of wage index data. 

In addition to our trims and data 

exclusions, before determining the PHP 

APC geometric mean per diem costs, we 

also assess CCRs (80 FR 70463). Our 

longstanding PHP OPPS ratesetting 

methodology defaults any CMHC CCR>1 

to the statewide hospital ancillary CCR 

(80 FR 70457). In this CY 2018 final rule 

ratesetting, we identified one CMHC 

that had a CCR>1. This CMHC’s CCR 

was 1.002, and it was defaulted to its 

appropriate statewide hospital ancillary 

CCR for CY 2018 ratesetting purposes. 

In summary, these data preparation 

steps adjusted the CCR for 1 CMHC and 

excluded 4 CMHCs, resulting in the 

inclusion of a total of 46 CMHCs in our 

CY 2018 final rule ratesetting modeling 

(compared to 39 CMHCs in our 

proposed rule ratesetting modeling in 

the CY 2018 OPPS/ASC proposed rule). 

The trims removed 864 CMHC claims 

from the 16,242 total CMHC claims, 

resulting in 15,378 CMHC claims used 

in ratesetting. We believe that excluding 

providers with extremely low or high 

geometric mean costs per day or 

extremely low or high CCRs protects 

CMHCs from having that data 

inappropriately skew the calculation of 


sradovich on DSK3GMQ082PROD with RULES2
59376 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

the CMHC APC geometric mean per 

diem cost. Moreover, we believe that 

these trims, exclusions, and adjustments 

help prevent inappropriate fluctuations 

in the PHP APC geometric mean per 

diem payment rates. 

After applying all of the above trims, 

exclusions, or adjustments, the final CY 

2018 geometric mean per diem cost for 

all CMHCs for providing 3 or more 

services per day (APC 5853) is $143.22 

(compared to the proposed geometric 

mean per diem cost of $128.81). 

b. Hospital-Based PHP Data Preparation: 

Data Trims and Exclusions 

For the CY 2018 proposed rule and for 

this CY 2018 final rule with comment 

period, we followed a data preparation 

process for hospital-based PHP 

providers that is similar to that used for 

CMHCs by applying trims and data 

exclusions as described in the CY 2016 

OPPS/ASC final rule with comment 

period (80 FR 70463 through 70465) so 

that our ratesetting is not skewed by 

providers with extreme data. Before any 

trimming or exclusions, there were 424 

hospital-based PHP providers in the CY 

2016 final PHP claims data used in this 

CY 2018 OPPS/ASC final rule with 

comment period (compared to 420 

hospital-based PHPs in the CY 2018 

OPPS/ASC proposed rule). 

For hospital-based PHP providers, we 

applied a trim on hospital service days 

when the CCR was greater than 5 at the 

cost center level. The CCR>5 hospital 

service day trim removed hospital-based 

PHP service days that use a CCR>5 to 

calculate costs for at least one of their 

component services. Unlike the ±2 

standard deviation trim, which 

excluded CMHC providers that failed 

the trim, the CCR>5 trim excluded any 

hospital-based PHP service day where 

any of the services provided on that day 

were associated with a CCR>5. 

Applying this trim removed from our 

final rule ratesetting service days from 

8 hospital-based PHP providers with 

CCRs ranging from 5.2024 to 17.5702. 

However, all of the service days for 

these 8 hospital-based PHP providers 

had at least one service associated with 

a CCR>5, so the trim removed these 

providers entirely from our final rule 

ratesetting. In addition, 16 hospitalbased PHPs reported zero daily costs, 

and therefore were removed for having 

no days with PHP payment; 1 hospitalbased PHP was removed for missing 

wage index data; and 1 hospital-based 

PHP was removed by the OPPS ±3 

standard deviation trim on costs per 

day. 

Therefore, we excluded 26 hospitalbased PHP providers, resulting in 398 

hospital-based PHP providers in the 

data used for final rule ratesetting 

(compared to 393 hospital-based PHPs 

in the CY 2018 OPPS/ASC proposed 

rule). In addition, 2 hospital-based PHP 

providers were defaulted to using their 

overall hospital ancillary CCR due to 

outlier cost center CCR values (72.7362 

and 117.1943). After completing these 

data preparation steps, we calculated 

the final geometric mean per diem cost 

for hospital-based PHP APC 5863 for 

hospital-based PHP services. The final 

geometric mean per diem cost for 

hospital-based PHP providers that 

provide 3 or more services per service 

day (hospital-based PHP APC 5863) is 

$208.09 (compared to $213.60 from the 

CY 2018 OPPS/ASC proposed rule). 

We received a few public comments 

relating to our proposal to use our 

established methodology and policies in 

developing the PHP geometric mean per 

diem costs. 

Comment: One commenter opposed 

CMS continuing to use the single-tier 

payment system implemented in CY 

2017 OPPS/ASC rulemaking because the 

commenter believed this system 

punished CMHCs for the cost inversion 

in the hospital-based PHP data. The 

commenter suggested that CMS return 

to the two-tier payment system. Another 

commenter was concerned that the 

single-tier payment system could have 

unintended consequences, including 

reducing the number of PHPs or the 

number of services provided per day, 

and urged CMS to monitor the data. 

One commenter disagreed with CMS 

paying CMHCs and hospital-based PHPs 

differently for providing the exact same 

services and believed that the APCs 

distinguished by provider type hurts 

rather than rewards CMHCs for being 

more cost effective than hospital-based 

PHPs. The commenter referred to a 2011 

bill introduced in the Congress to 

address the ‘‘inequity’’ of the current 

payment system and stated that CMHCs 

should be paid the same rate as 

hospital-based PHPs. This commenter 

also stated that setting CMHCs’ payment 

rates based on a small number of 

CMHCs does not reflect the actual cost 

of providing these services and 

expressed concern that basing payments 

at the mean or median level would 

result in half of CMHCs receiving 

payments less than their costs, which 

would guarantee that more CMHCs 

would close, further limiting access to 

care. 

Response: We thank the commenters 

for their input. We reiterate our singletier payment policy and rationale. In the 

CY 2017 OPPS/ASC final rule with 

comment period, we combined the 

Level 1 and Level 2 PHP APCs into a 

single tier PHP APC for CMHCs, and we 

did the same for hospital-based PHPs. 

We cited several reasons for 

implementing the single-tier payment 

system (81 FR 79682 through 79686) 

and noted that one primary reason for 

combining the two-tier system into a 

single tier, by provider type, was the 

decrease in the number of CMHCs (81 

FR 79683). With a small number of 

providers, data from large providers 

with a high percentage of all PHP 

service days and unusually high or low 

geometric mean costs per day would 

have a more pronounced effect on the 

PHP APCs geometric mean per diem 

costs, skewing costs up or down. The 

effect would be magnified by continuing 

to split the geometric mean per diem 

costs further by distinguishing between 

Level 1 and Level 2 PHP services. We 

believed that creating a single PHP APC 

for each provider type for providing 3 or 

more PHP services per day would 

reduce these cost fluctuations and 

provide more stability in the PHP APC 

geometric mean per diem costs. 

We do not believe that the single-tier 

payment system will lead to a reduction 

in the number of PHPs, but rather that 

the increased stability in CMHC and 

hospital-based PHP payment rates will 

provide more stability for the PHP 

APCs. In addition, the calculated rates 

for APCs 5853 and 5863 continue to be 

based upon the actual costs of CMHCs 

and hospital-based PHPs, respectively. 

Therefore, we believe that the payment 

rates for the single-tier PHP APCs 

should be an appropriate approximation 

of provider costs, and should not result 

in reduced access to care. 

Because the single-tier PHP APCs 

5853 and 5863 became effective January 

1, 2017, we will have to wait until our 

CY 2017 claims data are available to 

determine any effect of the payment 

rates for these APCs on the provision of 

services per day. We will continue to 

monitor PHP data for any unintended 

consequences resulting from the singletier APC policy. 

The OPPS pays for hospital outpatient 

services, including partial 

hospitalization services. This system 

bases payment on the geometric mean 

per diem costs of providing services 

using provider data from claims and 

cost reports. We calculate the PHP APC 

geometric mean per diem costs based on 

the data provided for each type of 

provider to determine payment for these 

services. We believe that this system 

provides appropriate payment for 

partial hospitalization services based on 

actual provider costs. The final PHP 

APC geometric mean per diem costs for 

CY 2018 reflect these actual provider 

costs. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59377 

Regarding the 2011 bill introduced in 

the Congress that would have required 

CMHCs and hospital-based PHPs to be 

paid at the same rate, we note that this 

bill was not enacted. 

The difference in payment between 

CMHCs and hospital-based PHPs is 

based upon differences in resource use 

(or costs). When Congress required the 

Secretary to implement an outpatient 

prospective payment system, it 

generally required that this payment 

system group clinically similar covered 

services with respect to resource use 

(section 1833(t)(2) of the Act). Because 

the resource uses of CMHCs and 

hospital-based PHPs are different, these 

two provider types are paid under 

different APCs, based on their actual 

resource use. 

Because the cost of providing partial 

hospitalization services differs 

significantly by site of service, we 

established different PHP APC payment 

rates for hospital-based PHPs and 

CMHCs in the CY 2011 OPPS/ASC final 

rule with comment period (75 FR 71991 

through 71994). However, we allowed a 

2-year transition to the CMHC payment 

rates based solely on CMHC data. With 

respect to the continued use of PHP 

APC geometric mean per diem costs for 

determining payment rates by provider, 

we refer readers to the CY 2013 OPPS/ 

ASC final rule with comment period (77 

FR 68406 through 68412) for a 

discussion of the implementation of this 

policy. The resulting payment rates 

reflect the geometric mean cost of what 

providers expend to maintain such 

programs, based on data provided by 

CMHCs and hospital-based PHPs, which 

we believe are an improvement over the 

payment rates under the two-tier 

methodology calculated based on 

median costs using only hospital-based 

data. 

Comment: One commenter was 

concerned that the PHP trim 

methodologies could cause changes to 

the payment rates which could lead to 

a reduction in the number of PHPs. The 

commenter urged CMS to monitor the 

data to ensure that there are no 

unintended consequences, such as a 

reduction in the number of PHPs. 

Response: We thank the commenter 

for sharing these concerns. We are 

continuing to monitor PHP data, 

including the number of PHPs that 

provide care to Medicare beneficiaries. 

Our trim methodologies should protect 

PHP ratesetting from skewing by 

aberrant data, such as extremely low or 

extremely high costs per day. We do not 

believe that our PHP trim methodologies 

will lead to a reduction in PHPs, but 

rather that the trims we apply will 

provide stability to PHPs by reducing 

fluctuations in their payment rates due 

to aberrant data. 

Comment: One commenter suggested 

that CMS consider paying PHPs using a 

quality-based payment system, and that 

CMS use a value-based purchasing 

program for PHPs. 

Response: Currently, there is no 

statutory language explicitly authorizing 

a value-based purchasing program for 

PHPs. We responded to a similar public 

comment in the CY 2016 OPPS/ASC 

final rule with comment period (80 FR 

70462) and refer readers to a summary 

of that comment and our response. To 

reiterate, sections 1833(t)(2) and 

1833(t)(9) of the Act set forth the 

requirements for establishing and 

adjusting OPPS payment rates, which 

include PHP payment rates. Section 

1833(t)(17) of the Act authorizes the 

Hospital OQR Program, which applies a 

payment reduction to subsection (d) 

hospitals that fail to meet program 

requirements. In the CY 2015 OPPS/ 

ASC proposed rule (79 FR 41040), we 

considered future inclusion of, and 

requested comments on, the following 

quality measures addressing PHP issues 

that would apply in the hospital 

outpatient setting: (1) 30-day 

Readmissions; (2) Group Therapy; and 

(3) No Individual Therapy. We also refer 

readers to the CY 2015 OPPS/ASC final 

rule with comment period (79 FR 66957 

through 66959) for a detailed discussion 

of PHP measures considered for 

inclusion in the Hospital OQR Program 

in future years. The Hospital OQR 

Program does not apply to CMHCs. 

Comment: One commenter presented 

a number of suggestions for a more 

holistic approach to the way Medicare 

(or Medicaid) pays for and covers PHP 

services, including coverage for case 

management, and assistance with 

medication compliance, proper housing, 

and work and training facilities. 

Response: We appreciate these 

suggestions. As we noted in the 

preceding comment response, the 

payment methodology for PHP services 

is governed by sections 1833(t)(2) and 

1833(t)(9) of the Act. PHP services are 

defined in section 1861(ff) of the Act 

and do not include those services 

described by the commenter. We do not 

have the authority to cover and pay for 

services beyond those described in the 

Act, or to pay outside of the statutory 

methodology. 

Comment: One commenter stated that 

the CMHC PHP payment rate is too low, 

which can affect access to care by some 

of the most disadvantaged Medicare 

beneficiaries. This commenter 

expressed concern about the closure of 

CMHCs, which the commenter 

attributed to low CMHC PHP payment 

rates. The commenter noted that 

declining payment rates are occurring at 

a time when CMHCs have experienced 

higher costs due to the establishment of 

CMHC conditions of participation 

(CoPs) and higher bad debt expenses. 

The commenter believed that CMS is 

only concerned about protecting access 

to hospital-based PHPs, and not to 

CMHCs PHPs. 

Response: The final CY 2018 CMHC 

geometric mean per diem costs are 11 

percent higher than the proposed 

geometric mean per diem costs, and are 

approximately 15 percent higher than 

those costs finalized in the CY 2017 

rulemaking. These final CY 2018 CMHC 

geometric mean per diem costs are 

based upon the most recent CMHC 

claims and cost data reported by 

providers. Therefore, we believe the 

payment rate derived from these 

geometric mean per diem costs 

represents an appropriate payment to 

CMHCs and should not result in 

provider closures or affect beneficiary 

access to care. 

Most (if not all) of the costs associated 

with adhering to CoPs should be 

captured in the cost report data used in 

ratesetting and, therefore, are accounted 

for when computing the geometric mean 

per diem costs. The reduction to bad 

debt reimbursement was a result of 

provisions of section 3201 of the Middle 

Class Tax Extension and Job Creation 

Act of 2012 (Pub. L. 112–96). The 

reduction to bad debt reimbursement 

impacted all providers eligible to 

receive bad debt reimbursement, as 

discussed in the CY 2013 End-Stage 

Renal Disease final rule (77 FR 67518). 

Medicare currently reimburses bad debt 

for eligible providers at 65 percent. 

We appreciate the commenter’s input 

regarding the effect any reduction in 

PHP payment rates would have on 

access to care, but we disagree with the 

commenter’s assertion that CMS is only 

concerned about access to hospitalbased PHPs. We are working to 

strengthen continued access to both 

CMHCs and hospital-based PHPs for 

eligible Medicare beneficiaries. For 

example, for the CY 2016 ratesetting, we 

conducted an extensive analysis of the 

ratesetting process, and discovered 

errors providers had made in claims 

coding of revenue and HCPCS codes 

that were leading to lower geometric 

mean per diem costs. In the CY 2016 

OPPS/ASC final rule with comment 

period (80 FR 70462 through 70466), we 

also included a detailed description of 

the ratesetting process to help all PHPs 

record costs correctly so that we can 

more fully capture PHP costs in 

ratesetting. In that same final rule with 

comment period, we also addressed 


sradovich on DSK3GMQ082PROD with RULES2
59378 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

fluctuations in payments and protected 

ratesetting from aberrant data by 

implementing trims on all PHP data 

used in ratesetting (80 FR 70455 through 

70457). For example, the CMHC ±2 

standard deviation trim has protected 

CMHCs by removing from ratesetting 

those providers with aberrantly low 

costs per day, which would have 

lowered total CMHC geometric mean 

per diem costs, and thus lowered CMHC 

per diem payment rates. In this CY 2018 

final rule with comment period 

ratesetting, that ±2 standard deviation 

trim resulted in our removing 4 CMHCs 

from the ratesetting data, 3 of which had 

costs per day that were extremely low. 

We agree that both CMHCs and 

hospital-based PHPs serve some of the 

most disadvantaged Medicare 

beneficiaries, and appreciate the care 

that these providers give. We remain 

concerned about access to all PHP 

services, and particularly about the 

small numbers of CMHCs. The CY 2016 

PHP data file of claims used for CY 2018 

ratesetting showed only 50 CMHCs 

before we applied our data trims. We 

want to ensure that CMHCs remain a 

viable option as providers of mental 

health care, and will continue to explore 

policy options for strengthening the 

PHP benefit and increasing access to the 

valuable services provided by CMHCs 

and hospital-based PHPs. 

We did not receive any public 

comments on the hospital-based PHP 

geometric mean per diem costs. 

After consideration of the public 

comments we received, we are 

finalizing our proposals to apply our 

established policies to calculate the PHP 

APC per diem payment rates based on 

geometric mean per diem costs using 

the most recent claims and cost data for 

each provider type. Specifically, we are 

finalizing our proposal to continue to 

pay CMHCs using APC 5853 (Partial 

Hospitalization (3 or More Services Per 

Day)) and to continue to pay hospitalbased PHPs using APC 5863 (Partial 

Hospitalization (3 or More Services Per 

Day)). We calculated the geometric 

mean per diem costs for CY 2018 for 

APC 5853 for CMHCs using only CY 

2016 CMHC claims data and the most 

recent CMHC cost data, and the CY 2018 

geometric mean per diem costs for APC 

5863 for hospital-based PHPs using only 

CY 2016 hospital-based PHP claims data 

and the most recent hospital cost data. 

We also are finalizing our proposal to 

continue applying our established trim 

methodologies, including the 

application of a ±2 standard deviation 

trim on costs per day for CMHCs and a 

CCR>5 hospital service day trim for 

hospital-based PHP providers. 

The final CY 2018 PHP APC 

geometric mean per diem costs for 

CMHC PHP APC 5853 are $143.22 and 

for hospital-based PHP APC 5863 are 

$208.09, as shown in Table 74 below. 

The final PHP APC payment rates are 

included in Addendum A to this final 

rule with comment period (which is 

available via the Internet on the CMS 

Web site). 

TABLE 74—CY 2018 PHP APC GEOMETRIC MEAN PER DIEM COSTS

CY 2018 APC Group title 

Final PHP APC 

geometric mean 

per diem costs 

5853 ............................................................ Partial Hospitalization (3 or more services per day) for CMHCs .......................... $143.22 

5863 ............................................................ Partial Hospitalization (3 or more services per day) for hospital-based PHPs ..... $208.09 

3. PHP Service Utilization Updates 

In the CY 2016 OPPS/ASC final rule 

with comment period (81 FR 79684 

through 79685), we expressed concern 

over the low frequency of individual 

therapy provided to beneficiaries. The 

final CY 2016 claims data used for this 

CY 2018 final rule with comment period 

revealed some increases in the provision 

of individual therapy compared to CY 

2015 claims data. In the CY 2016 final 

claims data, hospital-based PHPs 

provided individual therapy on 4.7 

percent of days with only 3 services and 

5.8 percent of days with 4 or more 

services (compared to 4.0 percent and 

6.2 percent, respectively, in CY 2015). 

Similarly, in the CY 2016 final claims 

data, CMHCs provided individual 

therapy on 8.5 percent of days with only 

3 services provided and 5.0 percent of 

days with 4 or more services provided 

(compared to 7.9 percent and 4.4 

percent, respectively, in CY 2015 

claims). 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33640), we stated that we 

are aware that our single-tier payment 

policy may influence a change in 

service provision because providers are 

able to obtain payment that is heavily 

weighted to the cost of providing 4 or 

more services when they provide only 3 

services. We indicated that we are 

interested in ensuring that providers 

furnish an appropriate number of 

services to beneficiaries enrolled in 

PHPs. Therefore, with the CY 2017 

implementation of APC 5853 and APC 

5863 for providing 3 or more PHP 

services per day, we are continuing to 

monitor utilization of days with only 3 

PHP services. 

For this CY 2018 final rule with 

comment period, we used the final 

update of the CY 2016 claims data. The 

final CY 2016 claims data showed that 

PHPs maintained an appropriately low 

utilization of 3 service days compared to 

CY 2015. Hospital-based PHPs have 

increased their provision of services 

since CY 2015 by providing fewer days 

with 3 services only, and more days 

with 5 or more services. CMHCs have 

remained steady in providing an 

appropriately low level of 3 service 

days. 

TABLE 75—PERCENTAGE OF PHP DAYS BY SERVICE UNIT FREQUENCY

CY 2015 

(%) 

CY 2016 * 

(%) 

Change 

(%) 

CMHCs: 

Percent of Days with 3 services ........................................................................................... 4.7 4.8 2.1 

Percent of Days with 4 services ........................................................................................... 62.9 70.3 11.8 

Percent of Days with 5 or more services ............................................................................. 32.4 24.9 ¥23.1 

Hospital-based PHPs: 

Percent of Days with 3 services ........................................................................................... 12.4 10.9 ¥12.1 

Percent of Days with 4 services ........................................................................................... 69.8 64.9 ¥7.0 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59379 

TABLE 75—PERCENTAGE OF PHP DAYS BY SERVICE UNIT FREQUENCY—Continued 

CY 2015 

(%) 

CY 2016 * 

(%) 

Change 

(%) 

Percent of Days with 5 or more services ............................................................................. 17.8 24.1 35.4 

* May not sum to 100 percent by provider type due to rounding. 

As we noted in the CY 2017 OPPS/ 

ASC final rule with comment period (81 

FR 79685), we will continue to monitor 

the provision of days with only 3 

services, particularly now that the 

single-tier PHP APCs 5853 and 5863 are 

in place for providing 3 or more services 

per day to CMHCs and hospital-based 

PHPs, respectively. 

It is important to reiterate our 

expectation that days with only 3 

services are meant to be an exception 

and not the typical PHP day. In the CY 

2009 OPPS/ASC final rule with 

comment period, we clearly stated that 

we consider the acceptable minimum 

units of PHP services required in a PHP 

day to be 3 and explained that it was 

never our intention that 3 units of 

service represent the number of services 

to be provided in a typical PHP day. 

PHP is furnished in lieu of inpatient 

psychiatric hospitalization and is 

intended to be more intensive than a 

half-day program. We further indicated 

that a typical PHP day should include 

5 to 6 hours of services (73 FR 68687 

through 68694). We explained that days 

with only 3 units of services may be 

appropriate to bill in certain limited 

circumstances, such as when a patient 

might need to leave early for a medical 

appointment and, therefore, would be 

unable to complete a full day of PHP 

treatment. At that time, we noted that if 

a PHP were to only provide days with 

3 services, it would be difficult for 

patients to meet the eligibility 

requirement in 42 CFR 410.43, that 

patients must require a minimum of 20 

hours per week of therapeutic services 

as evidenced in their plan of care (73 FR 

68689). 

4. Minimum Service Requirement: 20 

Hours Per Week 

In the CY 2009 OPPS/ASC final rule 

with comment period (73 FR 68694), we 

codified patient eligibility criteria to 

reflect the intensive nature of a PHP. At 

that time, we noted that many of the 

patient eligibility criteria had been 

longstanding policy requirements that 

did not reflect a change in policy. The 

added regulatory text was intended to 

strengthen and enhance the integrity of 

the PHP benefit. We further stated that 

because PHP is provided in lieu of 

inpatient care, it should be a highly 

structured and clinically intensive 

program. Our goal was to improve the 

level of service furnished in a day of 

PHP, while also ensuring that the 

appropriate population utilizes the PHP 

benefit (73 FR 68695). 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33641 

through 33642), when we codified these 

eligibility criteria, we acknowledged 

commenters’ concerns related to the 

eligibility requirement that a patient 

must require a minimum of 20 hours per 

week of therapeutic services as 

evidenced in their plan of care. For 

example, we recognized commenters’ 

concerns that it may sometimes be 

difficult for patients to receive 20 hours 

per week of therapeutic services, such 

as when transitioning into or out of a 

PHP program (73 FR 68695). Therefore, 

to permit flexibility in treating PHP 

patients, we require a minimum of 20 

hours per week of therapeutic services, 

with the understanding that patients 

may not always meet this minimum, 

and qualified the requirement by adding 

‘‘as evidenced in their plan of care.’’ 

This eligibility requirement only 

addresses the minimum amount of PHP 

services beneficiaries must require as 

evidenced in their plan of care. It does 

not address whether or not beneficiaries 

receive a particular number of 

therapeutic services per week. However, 

we have noted in multiple prior OPPS/ 

ASC final rules with comment period 

that a typical PHP day would include 5 

to 6 hours per day of PHP services (70 

FR 68548, 71 FR 67999, 72 FR 66671, 

and 73 FR 68687). 

Most recently, we discussed the 20 

hours of services requirement in the CY 

2017 rulemaking when we reminded 

providers that our regulations at 

§§ 410.43(a)(3) and (c)(1) continue to 

require that PHP beneficiaries must 

require a minimum of 20 hours per 

week of therapeutic services as 

evidenced in their plan of care, and that 

PHP services must be furnished in 

accordance with a physician 

certification and the beneficiary’s plan 

of care reflecting that need. 

We analyzed CY 2015 and CY 2016 

PHP claims data to assess the intensity 

of PHP services provided, using PHPallowable HCPCS codes and provider 

and service date information. To 

calculate the number of hours of PHP 

services provided to each beneficiary 

each day, we assumed each unit of 

service equaled 1 hour of time. Each 

service day was then mapped to its 

Sunday through Saturday calendar 

week, and the number of PHP hours per 

week was calculated for each 

beneficiary. Next, the service weeks for 

each beneficiary were sorted 

chronologically and assessed: The first 

service week in a continuous series of 

service weeks was flagged as an 

‘‘Admission’’ week, and the last service 

week in a continuous series of service 

weeks was flagged as a ‘‘Discharge’’ 

week. We removed from the analysis the 

admission and discharge weeks for each 

beneficiary to permit us to assess the 

intensity of services provided to 

beneficiaries fully engaged in PHPs (that 

is, those in ‘‘nontransitional’’ weeks). 

We then calculated the total number of 

service weeks and the number of service 

weeks with at least 20 PHP hours for 

each beneficiary. These two values were 

then used to determine the percentage 

of nontransitional service weeks that 

met the 20-hour PHP threshold for each 

beneficiary. 

As stated in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33641), we found 

that a majority of PHP patients did not 

receive at least 20 hours of PHP services 

per week. Approximately half of 

Medicare beneficiaries receiving PHP 

services received 20 hours or more of 

services in 50 percent or more of 

nontransitional weeks. In CY 2016 

claims data, only 16.4 percent of 

Medicare beneficiaries in CMHCs and 

34.8 percent of Medicare beneficiaries 

in hospital-based PHPs received at least 

20 hours of PHP services in 100 percent 

of nontransitional weeks. 


sradovich on DSK3GMQ082PROD with RULES2
59380 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 76—NUMBER AND PERCENTAGE OF MEDICARE BENEFICIARIES RECEIVING AT LEAST 20 HOURS OF PHP SERVICES

PER WEEK—CY 2015 THROUGH CY 2016 

Type 

Beneficiaries Receiving 20 or more hours 

of PHP services per nontransitional 

week * 

CY 2015 CY 2016 

Number Percentage Number Percentage 

CMHC PHP Beneficiaries ......................... In 50 percent or more of weeks ............... 1,205 53.1 1,016 57.3 

In 100 percent of weeks ........................... 319 14.1 291 16.4 

Hospital-Based PHP Beneficiaries ........... In 50 percent or more of weeks ............... 8,610 51.0 8,333 56.7 

In 100 percent of weeks ........................... 5,003 29.6 5,115 34.8 

* Weeks are trimmed to exclude admission and discharge weeks based on a Sunday through Saturday week. Nontransitional weeks are weeks 

that are not admission or discharge weeks. 

Overall, the data suggest that some 

PHP beneficiaries may not be receiving 

the intensive services that eligible 

beneficiaries actually need. In the CY 

2018 OPPS/ASC proposed rule, we 

stated that we were concerned about 

these findings, and encouraged PHPs to 

review their admission practices and 

ensure they are providing the services 

beneficiaries need. 

Given similar concerns, in the CY 

2017 OPPS/ASC final rule with 

comment period, we solicited public 

comments on potential future editing of 

PHP claims for the 20 hours per week 

minimum eligibility requirement and on 

strengthening the tie between a 

beneficiary’s receipt of 20 hours per 

week of PHP services and payment for 

those services (81 FR 79686). We 

received a number of public comments 

in response to our solicitation, which 

we addressed in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33641 through 

33642). 

In the CY 2018 OPPS/ASC proposed 

rule, we solicited public comments on 

the advisability of applying a payment 

requirement conditioned on a 

beneficiary’s receipt of a minimum of 20 

hours of therapeutic services per week. 

We also solicited public comments 

addressing the need for exceptions to 

such a policy. Specifically, we wanted 

to know and understand the type of 

occurrences or circumstances that 

would cause a PHP patient to not 

receive at least 20 hours of PHP services 

per week, particularly where payment 

would still be appropriate. 

Comment: Many commenters agreed 

it is critical that beneficiaries requiring 

PHP services receive the appropriate 

intensity of services, but suggested that 

CMS work with industry to define 

‘‘intensity’’ more broadly than total 

hours of services received per week. A 

few commenters suggested that CMS 

check the Local Coverage 

Determinations (LCDs) when evaluating 

intensity. One commenter provided a 

history of the PHP benefit, and noted 

that, historically, day programs similar 

to PHPs were required to offer 20 hours 

per week in programming, but the 

patient and the treatment team 

determined the amount of time in 

treatment. 

A few commenters suggested that 

CMS forego editing, and instead 

implement a targeted medical review of 

those providers whose data are 

problematic. These and other 

commenters suggested that CMS 

educate the PHP provider community 

about a 20-hour per week minimum 

service requirement. A number of 

commenters suggested that CMS reissue 

the rescinded Special Edition 1607 

MedLearn Matters article and its 

associated Change Request 9880, about 

messaging on the remittance advice to 

providers. One commenter suggested 

that CMS include beneficiaries in any 

communications about a 20-hour per 

week minimum service requirement. 

Several commenters believed that it 

would be premature to edit claims until 

CMS could determine the effect of the 

single-tier payment system on provision 

of services. These commenters urged a 

delay in editing until the CY 2019 

rulemaking when CMS could analyze 

the CY 2017 data (the first year that 

could show the effect of the single-tier 

payment system on provision of 

services) and monitor utilization in the 

meantime. A few commenters stated 

that CMS should not require weekly 

billing of claims in order to implement 

payment editing of the 20-hour 

requirement, as it would increase 

providers’ administrative burden 

because it would increase the number of 

claims providers would be required to 

submit. 

Some commenters cited language 

from the CY 2009 OPPS/ASC final rule 

with comment period which 

implemented this eligibility 

requirement: That CMS stated it is to be 

documented in the plan of care and the 

language did not require PHP patients to 

receive 20 hours of care. One 

commenter believed that an edit 

limiting payment would be unduly 

burdensome, particularly given the PHP 

preamble language in the CY 2009 final 

rule with comment period. One 

commenter suggested that allowing 

nurse practitioners to create the 

treatment plan, and supervise and direct 

patients in PHPs, would give providers 

more flexibility in providing services to 

meet the minimum requirements. 

One commenter was concerned that a 

20-hour minimum service requirement, 

combined with limiting payment to 

essentially a 3-service encounter, would 

not fully serve the patients and would 

push patients out of PHPs and into 

‘‘Intensive Outpatient Programs (IOPs).’’ 

One commenter stated that if there were 

editing for a 20-hour requirement, the 

PHP revenue for one provider, for 

example, would decline by $100,000 at 

a time when the provider is struggling 

to find nursing staff, and its psychiatry 

and nursing costs are rising. 

Multiple commenters described 

reasons why PHP patients are 

sometimes unable to attend the program 

for 20 hours per week. Commenters 

suggested exceptions for weather, acute 

illness or comorbid disease, family or 

childcare issues, holidays, 

transportation problems, other medical 

or social service appointments, court or 

legal appointments, and local 

emergencies or disasters. Several 

commenters discussed problems with 

medication compliance and medication 

adjustments, the cognitive effects of 

which could make attending for 20 

hours per week clinically suboptimal. 

Several commenters noted that an 

overly strict edit could result in 

inappropriate changes and reduce 

access to PHP services. 

Response: We thank the commenters 

for their insights and suggestions. We 

will consider these comments in future 

rulemaking and in developing 

subregulatory guidance. 

We wish to correct two erroneous 

assumptions included in the comments. 

First, we have not rescinded Change 

Request 9880 about messaging on the 

provider remittance advice. This Change 

Request is available online at: https://

www.cms.gov/Regulations-andGuidance/Guidance/Transmittals/2017- 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59381 

Transmittals-Items/R1833OTN.html?DL

Page=1&DLEntries=10&DLFilter=9880&

DLSort=1&DLSortDir=ascending. 

However, we did rescind MLN Special 

Edition (SE) article 1607, partly because 

it referred to requiring weekly billing. 

We do not currently require PHPs to bill 

weekly, although PHPs may do so if 

they wish. Second, regarding the 

comment about limiting payment to a 3- 

service encounter, it was unclear if the 

commenter believed that PHP per diem 

payment was limited to that for 3 

services. We note that the single-tier 

APCs for CMHCs and for hospital-based 

PHPs are based upon the geometric 

mean per diem costs for providing 3 or 

more PHP services per day. PHP APCs 

5853 and 5863 do not limit PHP services 

to 3 per day. 

Our goal is for PHP providers to 

continue to have flexibility in providing 

PHP services. However, we must ensure 

that Medicare beneficiaries enrolled in 

PHPs are legitimately eligible for PHP 

services and receive appropriately 

intensive treatment. As we seek to 

understand the usage of PHP services by 

Medicare beneficiaries, we also will 

continue to monitor the intensity of 

services provided on a weekly basis. 

C. Outlier Policy for CMHCs 

As discussed in the CY 2004 OPPS 

final rule with comment period (68 FR 

63469 through 63470), after examining 

the costs, charges, and outlier payments 

for CMHCs, we concluded that 

establishing a separate OPPS outlier 

policy for CMHCs would be appropriate. 

Beginning in CY 2004, we created a 

separate outlier policy specific to the 

estimated costs and OPPS payments 

provided to CMHCs. We designated a 

portion of the estimated OPPS outlier 

threshold specifically for CMHCs, 

consistent with the percentage of 

projected payments to CMHCs under the 

OPPS each year, excluding outlier 

payments, and established a separate 

outlier threshold for CMHCs. 

The separate outlier threshold for 

CMHCs resulted in $1.8 million in 

outlier payments to CMHCs in CY 2004, 

and $0.5 million in outlier payments to 

CMHCs in CY 2005. In contrast, in CY 

2003, more than $30 million was paid 

to CMHCs in outlier payments. We note 

that, in the CY 2009 OPPS/ASC final 

rule with comment period, we also 

established an outlier reconciliation 

policy to address charging aberrations 

related to OPPS outlier payments (73 FR 

68594 through 68599). In CY 2017, we 

implemented a CMHC outlier payment 

cap to be applied at the provider level, 

such that in any given year, an 

individual CMHC will receive no more 

than a set percentage of its CMHC total 

per diem payments in outlier payments 

(81 FR 79692 through 79695). This 

outlier payment cap only affects 

CMHCs, and does not affect other 

provider types. This outlier payment 

cap is in addition to and separate from 

the current outlier policy and 

reconciliation policy in effect. We 

finalized the CMHC outlier payment cap 

to be set at 8 percent of the CMHC’s 

total per diem payments (81 FR 79694 

through 79695). 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33642), we proposed to 

continue to designate a portion of the 

estimated 1.0 percent hospital 

outpatient outlier threshold specifically 

for CMHCs, consistent with the 

percentage of projected payments to 

CMHCs under the OPPS in CY 2018, 

excluding outlier payments. This policy 

results in CMHC outliers being paid 

under limited circumstances associated 

with costs from complex cases, rather 

than as a substitute for the standard PHP 

payment to CMHCs. In the CY 2018 

OPPS/ASC proposed rule, we also noted 

that CMHCs are projected to receive 

0.02 percent of total hospital outpatient 

payments in CY 2018, excluding outlier 

payments. Therefore, we proposed to 

designate approximately 0.0027 percent 

of the estimated 1.0 percent hospital 

outpatient outlier threshold for CMHCs. 

As we do for each rulemaking cycle, we 

have updated the CMHC CCRs and 

claims data used to model the PHP 

payments rates for this final rule with 

comment period. 

Based on our simulations of CMHC 

payments for CY 2018, in the proposed 

rule, we proposed to continue to set the 

cutoff point for outlier payments for CY 

2018 at 3.4 times the highest CMHC 

APC payment rate implemented for that 

calendar year, which for CY 2018 is the 

payment rate for CMHC APC 5853. In 

addition, we proposed to continue to 

apply the same outlier payment 

percentage that applies to hospitals. 

Therefore, for CY 2018, we proposed to 

continue to pay 50 percent of CMHC 

APC geometric mean per diem costs 

over the cutoff point. For example, for 

CY 2018, if a CMHC’s cost for partial 

hospitalization services paid under 

CMHC APC 5853 exceeds 3.4 times the 

proposed payment rate for CMHC APC 

5853, the outlier payment would be 

calculated as 50 percent of the amount 

by which the cost exceeds 3.4 times the 

payment rate for CMHC APC 5853. 

In section II.G. of the proposed rule, 

for the hospital outpatient outlier 

payment policy, we proposed to set a 

fixed dollar threshold in addition to an 

APC multiplier threshold. APC 5853 is 

the only APC for which CMHCs may 

receive payment under the OPPS, and is 

for providing a defined set of services 

that are relatively low cost when 

compared to other OPPS services. As 

such, it is not necessary to also impose 

a fixed dollar threshold on CMHCs. 

Therefore, we did not propose to set a 

dollar threshold for CMHC outlier 

payments. 

In summary, we proposed to continue 

to calculate our CMHC outlier threshold 

and CMHC outlier payments according 

to our established policies. 

We did not receive any public 

comments on these proposals. 

Therefore, we are finalizing our 

proposals to continue to calculate 

CMHC outlier threshold and CMHC 

outlier payments according to our 

established policies. Using the updated 

data for this final rule with comment 

period, CMHCs are projected to receive 

0.03 percent of total hospital outpatient 

payments in CY 2018, excluding outlier 

payments. Therefore, for CY 2018 we 

are designating approximately 0.02 

percent of the estimated 1.0 percent 

hospital outpatient outlier threshold for 

CMHCs. 

IX. Procedures That Will Be Paid Only 

as Inpatient Procedures 

A. Background 

We refer readers to the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74352 through 74353) for 

a full historical discussion of our 

longstanding policies on how we 

identify procedures that are typically 

provided only in an inpatient setting 

(referred to as the inpatient only (IPO) 

list) and, therefore, will not be paid by 

Medicare under the OPPS, and on the 

criteria that we use to review the IPO 

list each year to determine whether or 

not any procedures should be removed 

from the list. The complete list of codes 

that will be paid by Medicare in CY 

2018 as inpatient only procedures is 

included as Addendum E to this final 

rule with comment period (which is 

available via the Internet on the CMS 

Web site). 

B. Changes to the Inpatient Only (IPO) 

List 

1. Methodology for Identifying 

Appropriate Changes to IPO List 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33642 through 33645), for 

CY 2018, we proposed to use the same 

methodology (described in the 

November 15, 2004 final rule with 

comment period (69 FR 65834)) of 

reviewing the current list of procedures 

on the IPO list to identify any 

procedures that may be removed from 

the list. We have established five criteria 

that are part of this methodology. As 


sradovich on DSK3GMQ082PROD with RULES2
59382 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

noted in the CY 2012 OPPS/ASC final 

rule with comment period (76 FR 

74353), we utilize these criteria when 

reviewing procedures to determine 

whether or not they should be removed 

from the IPO list and assigned to an 

APC group for payment under the OPPS 

when provided in the hospital 

outpatient setting. We note that a 

procedure is not required to meet all of 

the established criteria to be removed 

from the IPO list. The criteria include 

the following: 

1. Most outpatient departments are 

equipped to provide the services to the 

Medicare population. 

2. The simplest procedure described 

by the code may be performed in most 

outpatient departments. 

3. The procedure is related to codes 

that we have already removed from the 

IPO list. 

4. A determination is made that the 

procedure is being performed in 

numerous hospitals on an outpatient 

basis. 

5. A determination is made that the 

procedure can be appropriately and 

safely performed in an ASC, and is on 

the list of approved ASC procedures or 

has been proposed by us for addition to 

the ASC list. 

Using the above-listed criteria, in the 

CY 2018 OPPS/ASC proposed rule (82 

FR 33643 and 33644), we identified the 

procedures described by the following 

codes that we proposed to remove from 

the IPO list for CY 2018: CPT code 

27447 (Arthroplasty, knee, condyle and 

plateau; medical and lateral 

compartments with or without patella 

resurfacing (total knee arthroplasty)) 

and CPT code 55866 (Laparoscopy, 

surgical prostatectomy, retropubic 

radical, including nerve sparing, 

includes robotic assistance, when 

performed). The procedures that we 

proposed to remove from the IPO list for 

CY 2018 and subsequent years, 

including the HCPCS code, long 

descriptors, and the CY 2018 payment 

indicators, were displayed in Table 29 

of the proposed rule. 

We note that we address the public 

comments we received on removing the 

procedure described by CPT code 55866 

from the IPO list under section IX.B.2. 

of this final rule with comment period. 

We address the public comments we 

received on removing CPT code 27447 

from the IPO list under section IX.B.3. 

of this final rule with comment period. 

2. Removal of Procedure Described by 

CPT Code 55866 

In the CY 2018 OPPS/ASC proposed 

rule, we proposed to remove CPT code 

55866 from the IPO list and to assign it 

to C–APC 5362 (Level 2 Laparoscopy & 

Related Services) with status indicator 

‘‘J1’’. We stated in the proposed rule 

that after consulting with stakeholders 

and our clinical advisors regarding the 

procedure described by CPT code 

55866, we believe that this procedure 

meets criteria 1 and 2. We sought 

comment on whether the public 

believes that these criteria are met and 

whether CPT code 55866 meets any 

other of the five criteria cited earlier. 

Comment: Commenters, including 

cancer centers, physicians, and 

individual stakeholders, supported the 

proposal to remove CPT code 55866 

from the IPO list. These commenters 

believed this procedure could be safely 

performed on hospital outpatients and 

noted that many hospital outpatient 

departments are equipped to do so. 

Response: We appreciate the 

commenters’ support. 

Comment: One commenter opposed 

the removal of CPT code 55866 from the 

IPO list, stating that the procedure 

cannot be safely performed as an 

outpatient procedure for a majority of 

patients. 

Response: We continue to believe that 

the procedure described by CPT code 

55866 can be safely performed in the 

hospital outpatient setting on patients 

who are appropriate candidates to 

receive the procedure in that setting. 

Because the procedure meets several of 

the criteria for removal from the IPO 

list, we believe it is appropriate to 

remove it. 

3. Removal of the Total Knee 

Arthroplasty (TKA) Procedure 

Described by CPT Code 27447 

For a number of years, total knee 

arthroplasty (TKA) has been a topic of 

discussion for removal from the IPO list 

with both stakeholder support and 

opposition. Most recently, in the CY 

2017 OPPS/ASC proposed rule (81 FR 

45679 through 45681), we sought public 

comments on the removal of the TKA 

procedure from the IPO list from 

interested parties, including 

specifically: Medicare beneficiaries and 

advocate associations for Medicare 

beneficiaries; orthopedic surgeons and 

physician specialty societies that 

represent orthopedic surgeons who 

perform TKA procedures; hospitals and 

hospital trade associations; and any 

other interested stakeholders. In the CY 

2017 proposed rule comment 

solicitation, we requested stakeholder 

input on whether the TKA procedure 

met the established criteria used to 

identify procedures to remove from the 

IPO list. We also requested input 

regarding how to modify current 

Medicare payment models that include 

TKA, such as the Bundled Payments for 

Care Improvement (BPCI) and the 

Comprehensive Care for Joint 

Replacement (CJR) initiatives, if the 

procedure was removed from the IPO 

list. 

Below is a summary of the public 

comments we received in response to 

the comment solicitation in the CY 2017 

OPPS/ASC proposed rule. These public 

comments were varied and nuanced. 

• A number of commenters believed 

that continued refinements to the TKA 

surgical procedure allowed it to be 

performed safely on properly selected 

Medicare beneficiaries in the outpatient 

setting. A number of facilities indicated 

that they were currently performing 

TKA procedures on an outpatient basis 

in both the HOPD and ASC on nonMedicare patients. Commenters who 

supported removing the TKA procedure 

from the IPO list also noted recent peerreviewed publications that reported on 

investigations of the feasibility of 

outpatient TKA with positive results; 

that is, TKA outpatients did not 

experience higher rates of complications 

or readmissions in comparison to TKA 

inpatients. 

• A minority of commenters 

(including teaching hospital 

stakeholders and some professional 

organizations representing orthopedic 

surgeons) stated that the risk of 

postsurgical complications was too high 

for patients with the TKA procedure 

performed in the outpatient setting for 

the Medicare population and noted that 

patients appropriate for the TKA 

procedure performed on an outpatient 

basis tend to be younger, more active, 

have fewer complications, and have 

more at home support than most 

Medicare beneficiaries. These 

commenters also believed there was 

insufficient research on the TKA 

procedure performed on an outpatient 

basis to definitively claim that the 

procedure could be safely performed in 

the outpatient setting. 

• Some commenters noted that if the 

TKA procedure was removed from the 

IPO list, inpatient TKA cases should not 

be subject to Recovery Audit Contractor 

(RAC) review for appropriate site-ofservice. In addition, some commenters 

expressed concerns about the effect that 

removing the TKA procedure from the 

IPO list could have on the BPCI and CJR 

Medicare payment models. We stated in 

the CY 2017 OPPS/ASC final rule with 

comment period (81 FR 79699) that we 

would consider all public comments 

received in future policymaking. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33643), we stated that we 

have reviewed the clinical 

characteristics of the TKA procedure 

and related evidence, including current 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59383 

length-of-stay (LOS) data for inpatient 

TKA procedures and peer-reviewed 

literature related to outpatient TKA 

procedures. We also stated that we have 

considered input from the comment 

solicitation in the CY 2017 OPPS/ASC 

proposed rule (as summarized earlier) 

and the professional opinions of 

orthopedic surgeons and CMS clinical 

advisors. In addition, we stated that we 

have taken into account the 

recommendation from the summer 2016 

meeting of the HOP Panel to remove the 

TKA procedure from the IPO list. Based 

on this information, we stated in the CY 

2018 OPPS/ASC proposed rule that we 

have determined that the TKA 

procedure would be an appropriate 

candidate for removal from the IPO list. 

We stated that we expect providers to 

carefully develop evidence-based 

patient selection criteria to identify 

patients who are appropriate candidates 

for an outpatient TKA procedure as well 

as exclusionary criteria that would 

disqualify a patient from receiving an 

outpatient TKA procedure. We believe 

that the subset of Medicare beneficiaries 

who meet patient selection criteria for 

performance of the TKA procedure on 

an outpatient basis may have the 

procedure performed safely in the 

outpatient setting. 

In the CY 2018 OPPS/ASC proposed 

rule, we stated that we believe that the 

TKA procedure described by CPT code 

27447 meets a number of criteria for 

removal from the IPO list, including 

criteria 1, 2, and 4. We sought 

comments on whether the public 

believes that these criteria are met and 

whether the TKA procedure meets any 

other of the five criteria stated in the 

beginning of this section. In the 

proposed rule, we also proposed that 

CPT code 27447 would be assigned to 

C–APC 5115 (Level 5 Musculoskeletal 

Procedures) with status indicator ‘‘J1’’. 

Comment: Numerous commenters, 

including individual stakeholders, 

orthopedic surgeons, clinical specialty 

societies, national and State-level 

hospital associations, hospital systems, 

device manufacturers, and private 

insurance providers responded to this 

proposal. Some commenters, including 

some orthopedic specialty societies and 

surgeons, private insurance providers, 

ambulatory surgical centers, hospital 

systems, and beneficiaries supported the 

proposal to remove CPT code 27447 

from the IPO list. Many of these 

commenters believed that TKA met 

CMS’ established criteria for removing a 

procedure from the IPO list and stated 

that appropriately selected patients who 

were in excellent health and with no or 

limited medical comorbidities and 

sufficient caregiver support could be 

successful candidates for outpatient 

TKA. Several commenters referenced 

their personal, positive experiences 

with outpatient TKA. Other commenters 

supported the proposal, but with certain 

caveats regarding patient safety, 

including requests that CMS develop, 

with input from stakeholders, patient 

selection criteria and risk stratification 

protocols for TKA to be performed in an 

outpatient setting. Two orthopedic 

specialty societies stated that their 

organization was in the process of 

developing these patient selection and 

protocol tools. 

In addition, some commenters 

requested that CMS explicitly state that 

the surgeon is the final arbiter of the 

appropriate site for the surgical 

procedure, that CMS provide an 

incentive for outpatient and ambulatory 

settings performing TKA, PHA, and 

THA to be a part of a registry such as 

the American Joint Replacement 

Registry, and that CMS confirm that 

surgeons will continue to have the 

option to select the appropriate setting 

(inpatient or outpatient) for the 

procedure. 

Some commenters expressed concerns 

that removal of TKA from the IPO list 

may lead commercial payers to 

implement coverage policies that would 

drive these surgeries from the inpatient 

setting to lower cost outpatient settings 

that may not be sufficiently prepared to 

handle the complexities or risks 

associated with some outpatient TKA 

procedures. Further, some commenters 

stated that removing TKA from the IPO 

list could drive TKA to specific facilities 

based on cost alone, which could result 

in significant further stresses in isolated 

rural care settings. 

Response: We appreciate the 

commenters’ support of our proposal. 

As previously stated in the discussion of 

the CY 2018 OPPS/ASC proposed rule, 

we continue to believe that the decision 

regarding the most appropriate care 

setting for a given surgical procedure is 

a complex medical judgment made by 

the physician based on the beneficiary’s 

individual clinical needs and 

preferences and on the general coverage 

rules requiring that any procedure be 

reasonable and necessary. We also 

reiterate our previous statement that the 

removal of any procedure from the IPO 

list does not require the procedure to be 

performed only on an outpatient basis. 

While we continue to expect 

providers who perform outpatient TKA 

on Medicare beneficiaries to use 

comprehensive patient selection criteria 

to identify appropriate candidates for 

the procedure, we believe that the 

surgeons, clinical staff, and medical 

specialty societies who perform 

outpatient TKA and possess specialized 

clinical knowledge and experience are 

most suited to create such guidelines. 

Therefore, we do not expect to create or 

endorse specific guidelines or content 

for the establishment of providers’ 

patient selection protocols. However, 

we remind commenters that the ‘‘2- 

midnight’’ rule continues to be in effect 

and was established to provide guidance 

on when an inpatient admission would 

be appropriate for payment under 

Medicare Part A (inpatient hospital 

services). In general, this guidance 

provides that if the physician expects 

the beneficiary to require hospital care 

that spans at least 2 midnights and 

admits the beneficiary based upon that 

expectation, the case is appropriate for 

payment under the IPPS (80 FR 70539). 

For stays for which the physician 

expects the patient to need less than 2 

midnights of hospital care, an inpatient 

admission is payable under Medicare 

Part A on a case-by-case basis if the 

documentation in the medical record 

supports the admitting physician’s 

determination that the patient requires 

inpatient hospital care. This 

documentation and the physician’s 

admission decision are subject to 

medical review, which is discussed in 

greater detail below (80 FR 70541). The 

2-midnight rule does not apply to 

procedures on the IPO list; that is, 

medically necessary procedures that are 

on the IPO list are appropriate for 

Medicare Part A payment without 

regard to the actual or expected length 

of stay (80 FR 70539). 

With regard to the behavior of 

commercial insurance providers and 

site selection for outpatient TKA, while 

we believe that these comments are out 

of the scope of the proposed rule, we 

note that commercial providers are 

responsible for establishing their own 

rules governing payment for services. 

Comment: Several commenters 

opposed the proposal to remove the 

TKA procedure from the IPO list, 

including national and State-level 

hospital associations, hospital systems, 

and individual stakeholders. Some of 

these commenters expressed concerns 

that TKA was not clinically appropriate 

for the outpatient setting. The 

commenters stated that the TKA 

procedure is invasive and Medicare 

beneficiaries are more likely to have 

comorbidities that could make pain 

more difficult to control. The 

commenters also stated that, because of 

these comorbidities, Medicare 

beneficiaries will face greater 

complications, recovery times, and 

rehabilitation needs than non-Medicare 

populations to recover from TKA 

procedures. 


sradovich on DSK3GMQ082PROD with RULES2
59384 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

Response: We continue to believe that 

the TKA procedure meets a number of 

our established criteria for removal from 

the IPO list, including criteria 1, 2, and 

4. We also continue to believe that there 

are a subset of Medicare beneficiaries 

with less medical complexity who are 

able to receive this procedure safely on 

a hospital outpatient basis and that 

providers should adopt evidence-based 

patient selection protocols to 

appropriately identify these patients. As 

previously noted, removal of a 

procedure from the IPO list does not 

require the procedure to be performed 

only on an outpatient basis. Rather, it 

allows payment to be made under the 

OPPS when the procedure is performed 

on a hospital outpatient. In addition, we 

expect that physicians will continue to 

exercise their complex medical 

judgment, based on a number of factors, 

including the patient’s comorbidities, 

the expected length of stay in the 

hospital (in accordance with the 2- 

midnight rule), the patient’s anticipated 

need for postoperative skilled nursing 

care, and other factors. 

Comment: Several commenters stated 

their concerns regarding the ability of 

beneficiaries to access postacute care for 

a TKA procedure at an SNF. By statute, 

beneficiaries must have a prior inpatient 

hospital stay of no fewer than 3 

consecutive days to be eligible for 

Medicare coverage of inpatient SNF 

care. The commenters stated that 

discharging outpatient TKA patients 

without a 3-day stay and access to 

adequate rehabilitation would increase 

the likelihood of further medical 

concerns that may result in 

readmissions, which will result in 

higher expenses for the beneficiary, the 

Medicare program, and the hospital. 

These commenters stated that if there is 

no commensurate waiver of the SNF 3- 

day stay requirement, all outpatient 

TKA patients would need to be 

appropriate for discharge to home or 

home health care. One commenter 

questioned beneficiaries’ ability to 

access the SNF benefit if a beneficiary 

has outpatient TKA surgery and is then 

admitted as an inpatient after being 

discharged from the hospital outpatient 

department. Other commenters noted 

that the vast majority of beneficiaries 

who fit the criteria for an outpatient 

TKA or THA procedure would not need 

institutional postacute care services. 

Commenters also stated that a large 

percentage of TKA inpatients do not 

require a 3-day length of stay, and that 

removing TKAs from the IPO list would 

not preclude these patients from 

meeting the 3-day qualifying stay 

requirement when warranted. 

Response: We reiterate that removal of 

the TKA procedure from the IPO list 

does not require the procedure to be 

performed only on an outpatient basis. 

Removal of the TKA procedure from the 

IPO list allows for payment of the 

procedure in either the inpatient setting 

or the outpatient setting. The 

commenter is correct that a prior 

inpatient hospital stay of at least 3 

consecutive days is required by law 

under Medicare FFS as a prerequisite 

for SNF coverage. We note that 

Medicare Advantage plans may elect, 

pursuant to 42 CFR 409.30 and 

422.101(c), to provide SNF coverage 

without imposing the SNF 3-day 

qualifying stay requirement and that 

CMS has issued conditional waivers of 

the 3-day qualifying stay requirement as 

necessary to carry out the Medicare 

Shared Savings Program and to test 

certain Innovation Center payment 

models, including the Next Generation 

ACO Model. 

We agree that the physician should 

take the beneficiaries’ need for postsurgical services into account when 

selecting the site of care to perform the 

surgery. We would expect that Medicare 

beneficiaries who are selected for 

outpatient TKA would be less medically 

complex cases with few comorbidities 

and would not be expected to require 

SNF care following surgery. Instead, we 

expect that many of these beneficiaries 

would be appropriate for discharge to 

home (with outpatient therapy) or home 

health care. We believe that 

comprehensive patient selection 

protocols should be implemented to 

properly identify these beneficiaries. 

However, we do not believe that 

Medicare should establish such 

protocols and believe that physicians 

and providers should select an 

appropriate patient selection protocol. 

Comment: Numerous commenters 

from stakeholders addressed the effect 

that removing TKA from the IPO list 

could potentially have on two Medicare 

payment models currently being 

administered by the Center for Medicare 

and Medicaid Innovation: BPCI and the 

CJR model. The commenters were 

concerned that the proposal to remove 

TKA from the IPO list could 

significantly alter the composition of 

BPCI and CJR participant hospitals’ 

patient populations. Specifically, the 

commenters believed that younger and 

healthier patients would be more likely 

to receive outpatient TKAs and that a 

higher proportion of patients receiving 

inpatient TKAs would be high risk and/ 

or more likely to require additional 

postacute care support. As a result, the 

commenters believed that a change in 

patient-mix could increase the average 

episode payment of the remaining 

inpatient TKA BPCI and CJR episodes 

when compared to current payment 

levels and affect a hospital’s ability to 

fall below the established target price 

for the episode, thereby hindering the 

hospital’s ability to generate savings 

under the BPCI or CJR model. The 

commenters presented several proposed 

refinements to the BPCI and CJR models 

to mitigate these effects, including 

adjusting the target price for BPCI and 

CJR episodes involving TKA to exclude 

procedures that could have been 

performed in the HOPD or allowing 

BPCI Model 2 and CJR episodes to be 

initiated by TKA performed in the 

hospital outpatient department. 

Response: As mentioned earlier, we 

believe that there is a subset of less 

medically complex TKA cases that 

could be appropriately and safely 

performed on an outpatient basis. 

However, we do not expect a significant 

volume of TKA cases currently being 

performed in the hospital inpatient 

setting to shift to the hospital outpatient 

setting as a result of removing this 

procedure from the IPO list. At this 

time, we expect that a significant 

number of Medicare beneficiaries will 

continue to receive treatment as an 

inpatient for TKA procedures. As 

providers’ knowledge and experience in 

the delivery of hospital outpatient TKA 

treatment develops, there may be a 

greater migration of cases to the hospital 

outpatient setting. However, we do not 

expect a significant shift in TKA cases 

from the hospital inpatient setting to the 

hospital outpatient setting between 

January 1, 2018 (the effective date for 

the removal of TKA from the IPO list) 

and the current end dates of the 

performance periods for the BPCI and 

CJR models, September 30, 2018 and 

December 31, 2020, respectively. 

Accordingly, we do not expect a 

substantial impact on the patient-mix 

for the BPCI and CJR models. We intend 

to monitor the overall volume and 

complexity of TKA cases performed in 

the hospital outpatient department to 

determine whether any future 

refinements to these models are 

warranted. 

Comment: Some commenters asked 

CMS to reconsider the proposed 

assignment of CPT code 27447 to C– 

APC 5115 (Level 5 Musculoskeletal 

Procedures) with status indicator ‘‘J1’’. 

The commenters presented an analysis 

of OPPS claims data which indicated 

that approximately one-third of the TKA 

claims reported no joint implant HCPCS 

C-code on the claim. Some of these 

commenters asserted that the claims 

that did not include a joint implant had 

a geometric mean cost of approximately 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59385 

$3,808 and the claims that did include 

a joint implant had a geometric mean 

cost of approximately $13,843, while 

the overall geometric mean cost for 

claims with CPT code 27447 was 

approximately $8,602. The commenters 

requested that CMS only use claims for 

ratesetting for CPT 27447 that include a 

joint implant and to assign the 

procedure to APC 5116 (Level 6 

Musculoskeletal Procedures). One 

commenter also stated that CMS failed 

to provide the general public with an 

explanation of the source of the 

geometric mean cost of the TKA 

procedure, which was CMS’ basis for 

assigning the TKA procedure to a C– 

APC. 

Response: Since the assignment of 

CPT code 27447 to the IPO list, no 

payment for claim lines billing this 

procedure code were made. Based on 

clinical similarity with other 

musculoskeletal procedures, we 

continue to believe that C–APC 5115 is 

an appropriate APC assignment for CPT 

code 27447. Further, we note that the 

50th percentile IPPS payment for TKA 

without major complications or 

comorbidities (MS–DRG 470) is roughly 

$11,760 for FY 2018. We note that the 

geometric mean cost for C–APC 5116 is 

over $15,000. As previously stated, we 

would expect that beneficiaries selected 

for outpatient TKA would generally be 

expected to be less complex and to not 

have major complications or 

comorbidities. Therefore, we do not 

believe that it would be appropriate for 

the OPPS payment rate to exceed the 

IPPS payment rate for TKA without 

major complications/comorbidities 

because IPPS cases would generally be 

expected to be more complicated and 

complex than those selected for 

performance in the hospital outpatient 

setting and because inpatient cases 

would include room and board as well 

as more time in the hospital. 

With respect to the billing concern, 

we rely on hospitals to bill all HCPCS 

codes accurately in accordance with 

their code descriptors and CPT and 

CMS instructions, as applicable, and to 

report charges on claims and charges 

and costs on their Medicare hospital 

cost reports appropriately (77 FR 

68324). As we do every year, we will 

review and evaluate the APC groupings 

based on the latest available data in the 

next rulemaking cycle. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to remove the 

TKA procedure described by CPT code 

27447 from the IPO list beginning in CY 

2018 and to assign the TKA procedure 

to C–APC 5115 with status indicator 

‘‘J1’’. 

4. Recovery Audit Contractor (RAC) 

Review of TKA Procedures 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33643 and 33644), we 

proposed that if we finalized our 

proposal to remove the TKA procedure 

described by CPT code 27447 from the 

IPO list, we would also prohibit RAC 

review of patient status for TKA 

procedures performed in the inpatient 

setting for a period of 2 years to allow 

providers time to gain experience with 

these procedures in the outpatient 

setting. We believe this approach will 

help ensure that hospitals can 

determine whether to perform the 

procedure on a hospital outpatient or 

hospital inpatient basis without taking 

into account the possibility of an 

inpatient TKA claim being denied upon 

a patient status review by a RAC. That 

is, given that this surgical procedure is 

newly eligible for payment under either 

the IPPS or the OPPS, we proposed that 

RAC patient status reviews of a hospital 

claim is prohibited for a period of 2 

years. We note that RAC reviews of TKA 

procedures described by CPT code 

27447 will continue to be permitted for 

issues other than patient status as an 

inpatient or outpatient, including those 

for underlying medical necessity. 

Comment: Many commenters 

supported a prohibition on RAC review 

for patient status for TKA procedures 

performed in the inpatient setting for a 

period of 2 years. Some commenters 

suggested that CMS prohibit RAC 

review for a period of at least 36 months 

to allow consensus to develop around 

appropriate evidence-based patient 

selection criteria. One commenter 

requested that CMS impose a permanent 

moratorium on RAC reviews of patient 

status for TKA or confirm that after any 

moratorium is lifted, a RAC will only be 

permitted to undertake such a review 

upon a referral by a Quality 

Improvement Organization (‘‘QIO’’). 

One commenter also requested that 

CMS also clarify that its current 2- 

midnight policy will apply to the TKA 

procedure if it were to be removed from 

the IPO, as it does for other inpatient 

admissions. 

Response: We continue to believe that 

a 2-year prohibition on RAC review for 

TKA procedures performed in the 

inpatient setting is an adequate amount 

of time to allow providers to gain 

experience with determining the most 

appropriate setting to perform these 

procedures and establishing patient 

selection criteria to assist in the 

determination. As stated in the CY 2016 

OPPS/ASC final rule with comment 

period (80 FR 70538 through 70549), 

under the 2-midnight rule, an inpatient 

admission is generally appropriate for 

Medicare Part A payment if the 

physician (or other qualified 

practitioner) admits the patient as an 

inpatient based upon the expectation 

that the patient will need hospital care 

that crosses at least 2 midnights. 

However, Medicare Part A payment is 

allowed on a case-by-case basis for 

inpatient admissions that do not satisfy 

the 2-midnight benchmark, if the 

documentation in the medical record 

supports the admitting physician’s 

determination that the patient requires 

inpatient hospital care despite an 

expected length of stay that is less than 

2 midnights. The initial medical reviews 

of claims for short-stay inpatient 

admissions are conducted by QIOs, 

which may refer providers to the RACs 

due to exhibiting persistent 

noncompliance with Medicare payment 

policies, including, but not limited to: 

Having high denial rates and 

consistently failing to adhere to the 2- 

midnight rule, or failing to improve 

their performance after QIO educational 

intervention. The 2-midnight rule and 

this medical review policy do not apply 

to procedures that are included on the 

IPO list. However, these policies do 

apply to other inpatient admissions for 

procedures that are not included on the 

IPO list and would also generally apply 

to TKA procedures performed in the 

hospital inpatient setting. As mentioned 

previously, however, RAC patient status 

reviews for TKA procedures performed 

in the hospital inpatient setting is 

prohibited for a period of 2 years. 

5. Public Requests for Additions to or 

Removal of Procedures on the IPO List 

Commenters who responded to the 

CY 2018 OPPS/ASC proposed rule also 

requested that CMS remove several 

additional procedures from the IPO list. 

These additional procedures are listed 

in Table 77 below. 


sradovich on DSK3GMQ082PROD with RULES2
59386 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 77—PROCEDURES REQUSTED BY COMMENTERS TO BE REMOVED FROM THE CY 2018 INPATIENT ONLY LIST

CY 2018 

PT code CY 2018 long descriptor 

23470 .............. Arthroplasty, glenohumeral joint; hemiarthroplasty. 

23472 .............. Arthroplasty, glenohumeral joint; total shoulder (glenoid and proximal humeral replacement (eg, total shoulder)). 

27125 .............. Hemiarthroplasty, hip, partial (eg, femoral stem prosthesis, bipolar arthroplasty). 

27130 .............. Arthroplasty, acetabular and proximal femoral prosthetic replacement (total hip arthroplasty), with or without autograft or 

allograft. 

27702 .............. Arthroplasty, ankle; with implant (total ankle). 

27703 .............. Arthroplasty, ankle; revision, total ankle. 

43282 .............. Laparoscopy, surgical, repair of paraesophageal hernia with implantation of mesh. 

43772 .............. Laparoscopy, surgical, gastric restrictive procedure; removal of adjustable gastric restrictive device component only. 

43773 .............. Laparoscopy, surgical, gastric restrictive procedure; removal and replacement of adjustable gastric restrictive device component only. 

43774 .............. Laparoscopy, surgical, gastric restrictive procedure; removal of adjustable gastric restrictive device and subcutaneous port 

components. 

After evaluating the above list of 

codes that commenters requested to be 

removed from the IPO list against our 

established criteria, we believe that CPT 

codes 43282, 43772, 43773, 43774 meet 

several criteria to be removed from the 

IPO list, including criteria 3. 

Accordingly, we are removing these four 

CPT codes from the IPO list for CY 2018 

and assigning them to APCs in this final 

rule with comment period. 

For the remaining CPT codes 

requested to be removed from the IPO 

list that describe joint replacement 

procedures, because of the strong public 

interest and numerous comments that 

we have received from stakeholders 

regarding our proposals to remove other 

joint replacement procedures, namely 

the TKA procedure, from the IPO list, 

we are not removing these procedures 

from the IPO list at this time to allow 

for further discussion. We will take 

these requests into consideration and 

any proposed policy changes regarding 

these procedures will be announced in 

future rulemaking. A further discussion 

of the comment solicitation of the 

possible removal of partial hip 

arthroplasty (PHA) and total hip 

arthroplasty (THA) procedures from the 

IPO list is included under section IX.C. 

of this final rule with comment period. 

One commenter requested that CMS 

add the procedure described by CPT 

code 92941 (Percutaneous transluminal 

revascularization of acute total/subtotal 

occlusion during acute myocardial 

infarction, coronary artery or coronary 

artery bypass graft, any combination of 

intracoronary stent, artherectomy and 

angioplasty, including aspiration 

thrombectomy when performed, single 

vessel) to the IPO list because this 

procedure is performed emergently to 

treat acute myocardial infarction 

patients. 

We evaluated the procedure described 

by CPT code 92941 against our criteria, 

and we agree with the commenter that 

CPT code 92941 should be added to the 

IPO list. 

6. Summary of Changes to the IPO List 

for CY 218 

After consideration of the public 

comments we received and for the 

reasons discuss previously, we are 

removing the following procedures from 

the IPO list for CY 2018: CPT codes 

27447, 43282, 43772, 43773, 43774, and 

55866. We also are adding CPT code 

92941 to the IPO list for CY 2018. The 

specific procedures, including the CPT 

code, long descriptors, and the CY 2018 

status indicators, are displayed in Table 

78 below. 

TABLE 78—CHANGES TO THE INPATIENT ONLY LIST FOR CY 2018 

CY 2018 

CPT code CY 2018 long descriptor Status 

CY 2018 

OPPS APC 

assignment 

CY 2018 

OPPS Status 

indicator 

27447 ............. Arthroplasty, knee, condyle and plateau; medical and lateral compartments with or without patella resurfacing (total knee arthroplasty).Removed ............ 5115 J1 

43282 ............. Laparoscopy, surgical, repair of paraesophageal hernia with implantation 

of mesh.

Removed ............ 5362 J1 

43772 ............. Laparoscopy, surgical, gastric restrictive procedure; removal of adjustable gastric restrictive device component only.Removed ............ 5303 J1 

43773 ............. Laparoscopy, surgical, gastric restrictive procedure; removal and replacement of adjustable gastric restrictive device component only.Removed ............ 5361 J1 

43774 ............. Laparoscopy, surgical, gastric restrictive procedure; removal of adjustable gastric restrictive device and subcutaneous port components.Removed ............ 5303 J1 

55866 ............. Laparoscopy, surgical prostatectomy, retropubic radical, including nerve 

sparing, includes robotic assistance, when performed.

Removed ............ 5362 J1 

92941 ............. Percutaneous transluminal revascularization of acute total/subtotal occlusion during acute myocardial infarction, coronary artery or coronary 

artery bypass graft, any combination of intracoronary stent, 

artherectomy and angioplasty, including aspiration thrombectomy 

when performed, single vessel.

Added ................. N/A C 

The complete list of codes (the IPO 

list) that will be paid by Medicare in CY 

2018 as inpatient only procedures is 

included as Addendum E to this final 

rule with comment period (which is 

available via the Internet on the CMS 

Web site). 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59387 

C. Discussion of Solicitation of Public 

Comments on the Possible Removal of 

Partial Hip Arthroplasty (PHA) and 

Total Hip Arthroplasty (THA) 

Procedures From the IPO List 

1. Background 

Partial hip arthroplasty (PHA), CPT 

code 27125 (Hemiarthroplasty, hip, 

partial (eg, femoral stem prosthesis, 

bipolar arthroplasty)), and total hip 

arthroplasty (THA) or total hip 

replacement, CPT code 27130 

(Arthroplasty, acetabular and proximal 

femoral prosthetic replacement (total 

hip arthroplasty), with or without 

autograft or allograft), have traditionally 

been considered inpatient surgical 

procedures. The procedures were placed 

on the original IPO list in the CY 2001 

OPPS final rule (65 FR 18780). In 2000, 

the primary factors that were used to 

determine the assignment of a 

procedure to the IPO list were as 

follows: (1) The invasive nature of the 

procedure; (2) the need for at least 24 

hours of postoperative care; and (3) the 

underlying physical condition of the 

patient who would require the surgery 

(65 FR 18455). In 2000, the geometric 

mean average length of stay for the DRG 

to which uncomplicated PHA and THA 

procedures were assigned was 4.6 days, 

and in 2016, the average length of stay 

for current uncomplicated PHA and 

THA procedures for the MS–DRG was 

2.7 days. 

In the CY 2017 OPPS/ASC proposed 

rule, we solicited public comments on 

the possible removal of total knee 

arthroplasty (TKA) from the IPO list (81 

FR 45679 through 45681). Included in 

the public comments received related to 

the removal of TKA from the IPO list 

were several comments in support of 

removal of THA from the IPO list as 

well. Among those commenters 

expressing support for removal of THA 

from the IPO list were several surgeons 

and other stakeholders who believed 

that, given thorough preoperative 

screening by medical teams with 

significant experience and expertise 

involving hip replacement procedures, 

the THA procedure could be provided 

on an outpatient basis for some 

Medicare beneficiaries. These 

commenters noted significant success 

involving same day discharge for 

patients who met the screening criteria 

and whose experienced medical teams 

were able to perform the procedure 

early enough in the day for the patients 

to achieve postoperative goals, allowing 

home discharge by the end of the day. 

The commenters believed that the 

benefits of providing the THA 

procedure on an outpatient basis will 

lead to significant enhancements in 

patient well-being, improved efficiency, 

and cost savings to the Medicare 

program, including shorter hospital 

stays resulting in fewer medical 

complications, improved results, and 

enhanced patient satisfaction. 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33644 and 

33645), recent innovations have enabled 

surgeons to perform the PHA and THA 

procedures on an outpatient basis on 

non-Medicare patients (both in the 

HOPD and in the ASC). These 

innovations in PHA and THA care 

include minimally invasive techniques, 

improved perioperative anesthesia, 

alternative postoperative pain 

management, and expedited 

rehabilitation protocols. Patients 

undergoing minimally invasive surgical 

procedures instead of open surgical 

techniques generally benefit from a 

shorter hospital stay. However, not all 

patients are candidates for minimally 

invasive PHA or THA. Commenters on 

the CY 2017 OPPS/ASC proposed rule 

comment solicitation on the TKA 

procedure have stated that benefits of 

outpatient PHA and THA procedures 

include a likelihood of fewer 

complications, more rapid recovery, 

increased patient satisfaction, recovery 

at home with the assistance of family 

members, and a likelihood of overall 

improved outcomes. On the contrary, 

unnecessary inpatient hospitalization 

exposes patients to the risk of hospitalacquired conditions such as infections 

and a host of other iatrogenic mishaps. 

We stated in the CY 2018 OPPS/ASC 

proposed rule that, like most surgical 

procedures, both PHA and THA need to 

be tailored to the individual patient’s 

needs. Patients with a relatively low 

anesthesia risk and without significant 

comorbidities who have family 

members at home who can assist them 

may likely be good candidates for an 

outpatient PHA or THA procedure. 

These patients may be determined to 

also be able to tolerate outpatient 

rehabilitation in either an outpatient 

facility or at home postsurgery. On the 

other hand, patients with multiple 

medical comorbidities, aside from their 

osteoarthritis, would more likely require 

inpatient hospitalization and possibly 

postacute care in a skilled nursing 

facility or other facility. Surgeons who 

have discussed outpatient PHA and 

THA procedures in public comments in 

response to our CY 2017 OPPS/ASC 

proposed rule comment solicitation on 

the TKA procedure have emphasized 

the importance of careful patient 

selection and strict protocols to 

optimize outpatient hip replacement 

outcomes. These protocols typically 

manage all aspects of the patient’s care, 

including the at-home preoperative and 

postoperative environment, anesthesia, 

pain management, and rehabilitation to 

maximize rapid recovery, ambulation, 

and performance of activities of daily 

living. 

We also noted in the proposed rule 

that not uncommonly we receive 

questions from the public about the IPO 

list that lead us to believe that some 

members of the public may 

misunderstand certain aspects of the 

IPO list. Therefore, two important 

principles of the IPO list must be 

reiterated at the outset of this 

discussion. First, just because a 

procedure is not on the IPO list does not 

mean that the procedure cannot be 

performed on an inpatient basis. IPO list 

procedures must be performed on an 

inpatient basis (regardless of the 

expected length of the hospital stay) in 

order to qualify for Medicare payment, 

but procedures that are not on the IPO 

list can be and very often are performed 

on individuals who are inpatients (as 

well as individuals who are hospital 

outpatients and ASC patients). Second, 

the IPO list status of a procedure has no 

effect on the MPFS professional 

payment for the procedure. Whether or 

not a procedure is on the IPO list is not 

in any way a factor in the MPFS 

payment methodology. 

2. Topics and Questions for Public 

Comments 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33645), we sought public 

comments on whether we should 

remove the procedures described by 

CPT codes 27125 and 27130 from the 

IPO list from all interested parties, 

including the following groups or 

individuals: Medicare beneficiaries and 

advocate associations for Medicare 

beneficiaries; orthopedic surgeons and 

physician specialty societies that 

represent orthopedic surgeons who 

perform PHA and/or THA procedures; 

hospitals and hospital trade 

associations; and any other interested 

stakeholders. We sought public 

comments on the following questions: 

• Are most outpatient departments 

equipped to provide PHA and/or THA 

to some Medicare beneficiaries? 

• Can the simplest procedure 

described by CPT codes 27125 and 

27130 be performed in most outpatient 

departments? 

• Are the procedures described by 

CPT codes 27125 and 27130 sufficiently 

related to or similar to other procedures 

we have already removed from the IPO 

list? 

• How often is the procedure 

described by CPT codes 27125 and 

27130 being performed on an outpatient 


sradovich on DSK3GMQ082PROD with RULES2
59388 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

basis (either in an HOPD or ASC) on 

non-Medicare patients? 

• Would it be clinically appropriate 

for some Medicare beneficiaries in 

consultation with his or her surgeon and 

other members of the medical team to 

have the option of either a PHA or THA 

procedure as a hospital outpatient, 

which may or may not include a 24- 

hour period of recovery in the hospital 

after the operation? 

In addition, we sought public 

comments on whether the PHA and 

THA procedures may meet the criteria 

to be added to the ASC Covered 

Procedures List. We refer readers to 

section XII.C.1.d. of this final rule with 

comment period for a complete 

discussion of the ASC Covered 

Procedures List. 

Finally, as noted when we solicited 

public comment on removing the TKA 

procedure from the IPO list in the CY 

2017 rulemaking, we solicited public 

comment on the effect of removing the 

TKA procedure from the IPO list on the 

CJR Model and the BPCI Model. We 

refer readers to the CY 2017 OPPS/ASC 

proposed rule for a discussion of 

questions we raised for public 

comments, and we again sought public 

comment on the effect of removing the 

PHA and THA procedures from the IPO 

list on these models. For a discussion of 

these models in the CY 2017 

rulemaking, we refer readers to 81 FR 

79698 through 79699. 

Comment: Numerous commenters 

representing a variety of stakeholders, 

including physicians and other care 

providers, individual stakeholders, 

specialty societies, hospital 

associations, hospital systems, ASCs, 

device manufacturers, and beneficiaries 

responded to our solicitation of 

comments regarding the removal of PHA 

and THA from the IPO list. The 

comments were diverse and some were 

similar to the comments we received on 

our proposal to remove TKA from the 

IPO list. Some commenters, including 

hospital systems and associations, as 

well as specialty societies and 

physicians, stated that it would not be 

clinically appropriate to remove PHA 

and THA from the IPO list, indicating 

that the patient safety profile of 

outpatient THA and PHA in the nonMedicare population is not wellestablished. Commenters representing 

orthopedic surgeons also stated that 

patients requiring a hemiarthroplasty 

(PHA) for fragility fractures are by 

nature higher risk, suffer more extensive 

comorbidities and require closer 

monitoring and preoperative 

optimization; therefore, it would not be 

medically appropriate to remove the 

PHA procedure from the IPO list. 

Other commenters, including 

ambulatory surgery centers, physicians, 

and beneficiaries, supported the 

removal of PHA and THA from the IPO 

list. These commenters stated that the 

procedures were appropriate for certain 

Medicare beneficiaries and most 

outpatient departments are equipped to 

provide THA to some Medicare 

beneficiaries. They also referenced their 

own personal successful experiences 

with outpatient THA. 

Finally, commenters stated concerns 

regarding the effect of removing THA on 

the pricing methodologies, target 

pricing, and reconciliation process of 

the procedure in certain Medicare 

payment models (that is, the CJR and 

the BPCI models). They requested 

modifications to these models if the 

THA procedure is removed from the IPO 

list and requested that these procedures 

be suspended from quality programs 

such as the Hospital Readmissions 

Reduction Program, the Hospital ValueBased Purchasing Program, and Hospital 

Inpatient Quality Reporting Program if 

they are removed from the IPO list. 

Response: We thank the commenters 

for their detailed responses. We will 

consider these comments in future 

policymaking. 

X. Nonrecurring Policy Changes 

A. Payment for Certain Items and 

Services Furnished by Certain OffCampus Departments of a Provider 

1. Background 

Section 603 of the Bipartisan Budget 

Act of 2015 (Pub. L. 114–74), enacted on 

November 2, 2015, amended section 

1833(t) of the Act by amending 

paragraph (1)(B) and adding a new 

paragraph (21). As a general matter, 

under sections 1833(t)(1)(B)(v) and 

(t)(21) of the Act, applicable items and 

services furnished by certain off campus 

outpatient departments of a provider on 

or after January 1, 2017, will not be 

considered covered OPD services as 

defined under section 1833(t)(1)(B) of 

the Act for purposes of payment under 

the OPPS and will instead be paid 

‘‘under the applicable payment system’’ 

under Medicare Part B if the 

requirements for such payment are 

otherwise met. To be considered part of 

a hospital, an off-campus department of 

a hospital must meet the provider-based 

criteria established under 42 CFR 

413.65. The implementation of section 

603 of the Bipartisan Budget Act of 2015 

was finalized in the CY 2017 OPPS/ASC 

final rule with comment period (81 FR 

79699 through 79719) and interim final 

rule with comment period (79720 

through 79729). 

2. Expansion of Services by Excepted 

Off-Campus Hospital Outpatient 

Departments 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33645 through 33648), we 

did not propose any policies to limit 

clinical service line expansion or 

volume increases at excepted offcampus provider-based departments 

(PBDs). However, we stated that we 

would continue to monitor claims data 

for changes in billing patterns and 

utilization, and continue to invite 

public comments on the issue of service 

expansion. 

We received a number of comments 

from various stakeholders regarding 

both clinical service line expansion and 

volume increases, as well as other topics 

not discussed in the CY 2018 OPPS/ 

ASC proposed rule, including relocation 

and change of ownership. We appreciate 

all of the comments received, and we 

will consider them as we consider 

whether to pursue future rulemaking on 

these issues. 

We also received some public 

comments regarding issues that are 

outside the scope of the policies 

addressed in the CY 2018 OPPS/ASC 

proposed rule, including comments 

related to the proposed payment 

adjustment applied for nonexcepted 

items and services furnished by 

nonexcepted off-campus PBDs, which 

are addressed in the CY 2018 MPFS 

final rule, and comments regarding 

technical billing questions. With respect 

to the payment adjustment for 

nonexcepted items and services 

furnished by nonexcepted off-campus 

PBDs and changes to the payment 

relativity adjuster, we refer readers to 

the CY 2018 MPFS final rule for that 

information and, more broadly, for the 

payment rates under the MPFS that will 

apply to nonexcepted items and services 

furnished by nonexcepted off-campus 

PBDs for CY 2018. We expect the CY 

2018 MPFS final rule to be issued on or 

about the same date as this OPPS/ASC 

final rule with comment. Comments 

submitted regarding technical billing 

questions are addressed through 

applicable program instructions. 

3. Section 16002 of the 21st Century 

Cures Act (Treatment of Cancer 

Hospitals in Off-Campus Outpatient 

Department of a Provider Policy) 

As discussed in the CY 2018 OPPS/ 

ACS proposed rule (82 FR 33648), in the 

CY 2017 OPPS/ASC final rule with 

comment period (81 FR 79699), we 

finalized a number of proposals to 

implement section 603 of the Bipartisan 

Budget Act of 2016 (Pub. L. 114–74), 

enacted on November 2, 2015, which 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59389 

amended section 1833(t) of the Act. 

Specifically, this provision amended the 

OPPS statute to require that certain 

items and services furnished by certain 

off-campus PBDs on or after January 1, 

2017 will not be considered covered 

OPD services as defined under section 

1833(t)(1)(B) of the Act for purposes of 

payment under the OPPS, and instead 

will be paid ‘‘under the applicable 

payment system’’ under Medicare Part B 

if the requirements for such payment are 

otherwise met. In the CY 2017 OPPS/ 

ASC final rule with comment period (81 

FR 79699), we established the Medicare 

Physician Fee Schedule as the 

‘‘applicable payment system’’ for the 

majority of the nonexcepted items and 

services furnished by nonexcepted offcampus PBDs. 

Section 16002(a) of the 21st Century 

Cures Act (Pub. L. 114–255) amended 

the Act at section 1833(t)(20)(B) and 

provided that, with respect to applicable 

items and services furnished during 

2017 or a subsequent year, the term ‘‘offcampus outpatient department of a 

provider’’ excludes certain cancer 

hospitals. To meet this exclusion, 

section 16002(a) requires that such 

cancer hospitals (1) be described in 

section 1886(d)(1)(B)(v) of the Act; and 

(2) for hospital outpatient departments 

that meet the requirements for 42 CFR 

413.65, after November 1, 2015 and 

before December 15, 2016, that the 

Secretary has received from the provider 

an attestation that the department met 

such requirements not later than 60 

days after the date of enactment of 

section 16002 (December 13, 2016), or, 

for departments that meet the 

requirements after December 13, 2016, 

the Secretary has received from the 

provider an attestation that the 

department met the requirements not 

later than 60 days after the date the 

department first met the requirements of 

42 CFR 413.65. As we stated in the CY 

2018 OPPS/ASC proposed rule, through 

operational guidance, we have provided 

direction to all MACs regarding this 

provision. We also have provided 

guidance on this provision to hospital 

providers, which can be found on the 

CMS Web site at: https://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/ 

Downloads/Sections-16001-16002.pdf. 

Section 16002(b) of Public Law 114– 

255 amended section 1833(t)(18) of the 

Act by adding a new subparagraph (C) 

that requires the Secretary, in applying 

42 CFR 419.43(i) for services furnished 

on or after January 1, 2018, to use a 

target payment-to-cost ratio (PCR) that is 

1 percentage point less than the target 

PCR that would otherwise apply. In 

addition to the 1 percentage point 

reduction, the Secretary may consider 

making an additional percentage point 

reduction to the target PCR that takes 

into account payment rates for 

applicable items and services described 

in section 1833(t)(21)(C) of the Act other 

than for services furnished by certain 

cancer hospitals. Further, in making any 

budget neutrality adjustments under 

section 1833(t) of the Act, the Secretary 

shall not take into account the reduced 

expenditures that result from 

application of section 1833(t)(18)(C) of 

the Act. We refer readers to section II.F. 

of this final rule with comment period 

for a discussion on the calculation of the 

target PCR for cancer hospitals for CY 

2018. 

B. Medicare Site-of-Service Price 

Transparency (Section 4011 of the 21st 

Century Cures Act) 

Section 4011 of the 21st Century 

Cures Act (Pub. L. 114–255), enacted on 

December 13, 2016, amended section 

1834 of the Act by adding a new 

subsection (t). New section 1834(t) of 

the Act provides that, in order to 

facilitate price transparency with 

respect to items and services for which 

payment may be made either to a 

hospital outpatient department or to an 

ambulatory surgical center under Title 

XVIII, the Secretary shall, for 2018 and 

each year thereafter, make available to 

the public via a searchable Web site, 

with respect to an appropriate number 

of items and services, the estimated 

payment amount for the item or service 

under the OPPS and ASC payment 

system and the estimated beneficiary 

liability applicable to the item or 

service. In the CY 2018 OPPS/ASC 

proposed rule (82 FR 33648), we 

announced our plan to establish the 

searchable Web site required by section 

1834(t) of the Act. We indicated that 

details regarding the Web site will be 

issued through our subregulatory 

process. We stated in the proposed rule 

that we anticipate that the Web site will 

be made available in early CY 2018. 

Comment: One commenter requested 

that CMS ensure that the Web site is 

designed in a user-friendly manner, and 

err on the side of including services for 

display. Another commenter requested 

that Web site users be provided with the 

proper context for understanding some 

of the reasons for potential cost 

differences. 

Response: We appreciate these 

comments and will take them into 

consideration as we develop the Web 

site. 

C. Appropriate Use Criteria for 

Advanced Diagnostic Imaging Services 

Section 218(b) of the Protecting 

Access to Medicare Act of 2014 (PAMA) 

(Pub. L. 113–93) added subsection (q) to 

section 1834 of the Act, which directs 

the Secretary to establish a program to 

promote the use of appropriate use 

criteria (AUC) for advanced diagnostic 

imaging services (the AUC program). 

Section 1834(q)(1)(B) of the Act defines 

AUC as criteria that are evidence-based 

(to the extent feasible) and assist 

professionals who order and furnish 

applicable imaging services to make the 

most appropriate treatment decisions for 

a specific clinical condition. The 

current policies for the AUC program for 

advanced diagnostic imaging services 

are codified in the regulations at 42 CFR 

414.94. 

There are four components of the 

AUC program for advanced diagnostic 

imaging services program. In the CY 

2016 MPFS final rule with comment 

period (80 FR 71102 through 71116 and 

80 FR 71380 through 71382), we 

addressed the first component of the 

Medicare AUC program. The first 

component includes the requirements 

and process for the establishment and 

specification of the AUC. In the CY 2017 

MPFS final rule (81 FR 80403 through 

80428 and 81 FR 80554 through 80555), 

we addressed the second component of 

the AUC program. The second 

component includes the specification of 

qualified clinical decision support 

mechanisms (CDSMs). A CDSM is the 

electronic tool through which the 

ordering practitioner consults AUC. In 

the CY 2018 OPPS/ASC proposed rule 

(82 FR 33648 and 33649), we stated that 

we had proposed in the CY 2018 MPFS 

proposed rule to address the third 

component of the AUC program. The 

third component includes the 

requirements for an ordering 

professional to consult with a qualified 

CDSM when ordering an applicable 

imaging service, and for the furnishing 

professional to include that consultation 

information on claims for the service 

that is furnished in an applicable setting 

and paid under an applicable payment 

system. Based on the statutory language 

of section 1834(q)(4)(B) of the Act, the 

AUC program applies to advanced 

imaging services for which payment is 

made under the following applicable 

payment systems: The MPFS; the OPPS; 

and the ASC payment system. The 

fourth component of the program is 

prior authorization for outlier ordering 

professionals. This component will be 

discussed in future rulemaking. 

We indicated in the CY 2018 OPPS/ 

ASC proposed rule that public 


sradovich on DSK3GMQ082PROD with RULES2
59390 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

comments related to the requirements 

for the AUC program should be 

addressed in response to the CY 2018 

MPFS proposed rule. Therefore, we 

refer readers to the CY 2018 MPFS final 

rule for further information governing 

the Medicare AUC program and the 

finalized policies for CY 2018, including 

summaries of any public comments we 

received on the proposals in the CY 

2018 MPFS proposed rule and our 

responses to those comments. 

D. Enforcement Instruction for the 

Supervision of Outpatient Therapeutic 

Services in Critical Access Hospitals 

(CAHs) and Certain Small Rural 

Hospitals 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33649), in the 

CY 2009 OPPS/ASC proposed rule and 

final rule with comment period (73 FR 

41518 through 41519 and 73 FR 68702 

through 68704, respectively), we 

clarified that direct supervision is 

required for hospital outpatient 

therapeutic services covered and paid 

by Medicare that are furnished in 

hospitals as well as in PBDs of 

hospitals, as set forth in the CY 2000 

OPPS final rule with comment period 

(65 FR 18525). In the CY 2010 OPPS/ 

ASC final rule with comment period (74 

FR 60575 through 60591), we finalized 

a technical correction to the title and 

text of the applicable regulation at 42 

CFR 410.27 to clarify that this standard 

applies in CAHs as well as hospitals. In 

response to concerns expressed by the 

hospital community, in particular CAHs 

and small rural hospitals, that they 

would have difficulty meeting this 

standard, on March 15, 2010, we 

instructed all MACs not to evaluate or 

enforce the supervision requirements for 

therapeutic services provided to 

outpatients in CAHs from January 1, 

2010 through December 31, 2010, while 

the agency revisited the supervision 

policy during the CY 2011 OPPS/ASC 

rulemaking cycle. 

Due to continued concerns expressed 

by CAHs and small rural hospitals, we 

extended this notice of nonenforcement 

(‘‘enforcement instruction’’) as an 

interim measure for CY 2011, and 

expanded it to apply to small rural 

hospitals having 100 or fewer beds (75 

FR 72007). We continued to consider 

the issue further in our annual OPPS 

notice-and-comment rulemaking, and 

implemented an independent review 

process in 2012 to obtain advice from 

the HOP Panel on this matter (76 FR 

74360 through 74371). Under this 

process used since CY 2012, the HOP 

Panel considers and advises CMS 

regarding stakeholder requests for 

changes in the required level of 

supervision of individual hospital 

outpatient therapeutic services. In 

addition, we extended the enforcement 

instruction through CY 2012 and CY 

2013. The enforcement instruction has 

not been in effect since December 31, 

2013. Congress has taken legislative 

action (Pub. L. 113–198 and Pub. L. 

114–112) to extend nonenforcement of 

the direct supervision requirement for 

hospital outpatient therapeutic services 

in CAHs and small rural hospitals 

having 100 or fewer beds since 

December 31, 2013. The latest 

legislative action (Pub. L. 114–255) 

extended nonenforcement until 

December 31, 2016. The current 

enforcement instruction is available on 

the CMS Web site at: https://

www.cms.gov/Regulations-andGuidance/Guidance/FACA/Downloads/ 

Moratorium-on-Hospital-SupervisionEnforcement.pdf. 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule, stakeholders have 

consistently requested that CMS 

continue the nonenforcement of the 

direct supervision requirement for 

hospital outpatient therapeutic services 

for CAHs and small rural hospitals 

having 100 or fewer beds. Stakeholders 

stated that some small rural hospitals 

and CAHs have insufficient staff 

available to furnish direct supervision. 

The primary reason stakeholders cited 

for this request is the difficulty that 

CAHs and small rural hospitals have in 

recruiting physicians and nonphysician 

practitioners to practice in rural areas. 

These stakeholders noted that it is 

particularly difficult to furnish direct 

supervision for critical specialty 

services, such as radiation oncology 

services, that cannot be directly 

supervised by a hospital emergency 

department physician or nonphysician 

practitioner because of the volume of 

emergency patients or lack of specialty 

expertise. In addition, we are not aware 

of any quality of care complaints from 

beneficiaries or providers relating to the 

enforcement instruction related to direct 

physician supervision. 

Therefore, in the CY 2018 OPPS/ASC 

proposed rule, we proposed to reinstate 

the enforcement instruction for 

outpatient therapeutic services 

furnished in CAHs and small rural 

hospitals having 100 or fewer beds for 

CYs 2018 and 2019 to give these CAHs 

and small rural hospitals more time to 

comply with the supervision 

requirements for outpatient therapeutic 

services and to give all parties 

additional time to submit specific 

services to be evaluated by the HOP 

Panel for a recommended change in the 

supervision level. We stated that these 

hospitals will continue to be subject to 

conditions of participation for hospitals 

and other Medicare rules regarding 

supervision. We welcomed public 

comments on this proposal. 

Comment: A few commenters 

opposed the proposal to reinstate the 

enforcement instruction for CAHs and 

small rural hospitals because of 

concerns about patient safety or having 

qualified physicians perform certain 

medical services. One commenter 

believed that supervision requirements 

should be applied uniformly to 

hospitals in all care settings to ensure 

patient safety. Another commenter 

focused on radiation oncology services 

and believed that those services should 

be delivered by personnel trained in 

radiation oncology. The commenter 

understood concerns about physician 

availability in rural areas, but 

encouraged CMS to create more 

incentives for radiation oncologists to 

practice in rural areas instead of not 

enforcing requirements for direct 

supervision. 

Response: We agree that patient safety 

is a critically important consideration 

for each service, and that only qualified 

physicians and nonphysician 

practitioners who are practicing within 

their State scope of practice should 

perform and oversee therapeutic 

services, as applicable. We note that our 

proposal did not change State licensure 

and scope of practice requirements. We 

would expect all hospitals to ensure that 

appropriate clinical personnel direct 

and oversee each beneficiary’s care such 

that patient safety is not compromised. 

As stated in our proposal, we are not 

aware of any quality of care complaints 

from beneficiaries or providers relating 

to the level of physician supervision for 

hospital outpatient therapeutic services. 

In addition, CAHs and small rural 

hospitals will continue to be subject to 

the Medicare conditions of participation 

for hospitals and other Medicare rules 

regarding supervision. 

Comment: Several commenters 

supported the proposal for CYs 2018 

and 2019. Some commenters suggested 

that CMS adopt the nonenforcement 

policy for CY 2017 and permanently 

beyond CY 2019. Commenters also 

suggested changing the level of 

supervision for some or most hospital 

outpatient therapeutic services, such as 

therapy services, to general supervision 

as the default supervision level. These 

commenters also suggested that the 

change in supervision level should 

apply to additional categories of 

hospitals or to all hospitals and not just 

for CAHs and small rural hospitals. The 

commenters believed changing the level 

of supervision for all hospitals will help 

rural providers with the shortages of 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59391 

health care professionals and reduce the 

regulatory burden on providers while 

providing a level of supervision 

consistent with the conditions of 

participation for CAHs. 

Response: We appreciate the support 

for this proposal. Permanent changes to 

the supervision level for outpatient 

therapeutic services for all hospitals are 

beyond the scope of this proposal. We 

note that we have an established process 

for stakeholders to submit specific 

services to be evaluated by the HOP 

Panel for a recommended change in the 

supervision levels. Likewise, 

permanently reinstating the 

enforcement instruction after CY 2019 is 

beyond the scope of this proposal. As 

we stated in the CY 2018 OPPS/ASC 

proposed rule, we proposed to reinstate 

the enforcement instruction for 2 years 

to give small rural hospitals and CAHs 

additional time to comply with the 

supervision requirements for outpatient 

therapeutic services and to give all 

parties additional time to submit 

specific services to be evaluated by the 

HOP Panel for a recommended change 

in the supervision level. 

With respect to applying the 

nonenforcement policy to CY 2017, we 

proposed to reinstate the enforcement 

instruction prospectively, for services 

administered beginning on the effective 

date of this final rule with comment 

period, which is scheduled for January 

1, 2018; and we are finalizing that 

proposal. We anticipate issuing 

guidance outside of this rule to address 

enforcement policy for the direct 

supervision requirement for outpatient 

therapeutic services for CY 2017. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to reinstate the 

nonenforcement policy for direct 

supervision enforcement of outpatient 

therapeutic services furnished in CAHs 

and small rural hospitals having 100 or 

fewer beds, and to reinstate our 

enforcement instruction for CYs 2018 

and 2019. 

E. Payment Changes for Film X-Ray 

Services and Payment Changes for 

X-Rays Taken Using Computed 

Radiography Technology 

Section 502 of Division O, title V of 

the Consolidated Appropriations Act, 

2016 (Pub. L. 114–113), which was 

enacted on December 18, 2015, contains 

provisions to incentivize the transition 

from traditional X-ray imaging to digital 

radiography. In particular, section 

502(b) of Public Law 114–113 amended 

section 1833(t)(16) of the Act by adding 

subparagraph (F), which includes 

provisions that limit payment for film 

X-ray imaging services and computed 

radiography imaging services. 

Section 1833(t)(16)(F)(i) of the Act 

specifies that, effective for services 

furnished during 2017 or a subsequent 

year, the payment under the OPPS for 

imaging services that are X-rays taken 

using film (including the X-ray 

component of a packaged service) that 

would otherwise be made under the 

OPPS (without application of 

subparagraph (F)(i) and before 

application of any other adjustment 

under section 1833(t) of the Act) shall 

be reduced by 20 percent. Section 

1833(t)(16)(F)(iii) of the Act provides 

that the reductions made under section 

1833(t)(16)(F) of the Act shall not be 

considered an adjustment under section 

1833(t)(2)(E) of the Act, and shall not be 

implemented in a budget neutral 

manner. 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33649 

through 33650), consistent with section 

1833(t)(16)(F)(iv) of the Act, which 

requires the implementation of the 

reductions in payment set forth in 

subparagraph (F) through appropriate 

mechanisms, which may include 

modifiers, we implemented section 

1833(t)(16)(F)(i) of the Act by 

establishing the modifier ‘‘FX’’ (X-ray 

taken using film), effective January 1, 

2017. The payment for X-rays taken 

using film and furnished during 2017 or 

a subsequent year is reduced by 20 

percent when modifier ‘‘FX’’ (X-ray 

taken using film) is reported with the 

appropriate HCPCS codes. The 

applicable HCPCS codes describing 

imaging services can be found in 

Addendum B to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site). 

When payment for an X-ray service 

taken using film is packaged into the 

payment for another item or service 

under the OPPS, no separate payment 

for the X-ray service is made and, 

therefore, there is no payment amount 

that can be attributed to the X-ray 

service. Accordingly, the amount of the 

payment reduction for a packaged film 

X-ray service is $0 (20 percent of $0). 

Further discussion of these policies and 

modifier ‘‘FX’’ can be found in the CY 

2017 OPPS/ASC final rule with 

comment period (81 FR 79729 through 

79730). 

Section 1833(t)(16)(F)(ii) of the Act 

provides for a phased-in reduction of 

payments for imaging services that are 

taken using computed radiography 

technology (as defined in section 

1848(b)(9)(C) of the Act). Payments for 

such services (including the X-ray 

component of a packaged service) 

furnished during CY 2018, 2019, 2020, 

2021, or 2022, that would otherwise be 

determined under section 1833(t) of the 

Act (without application of 

subparagraph (F)(ii) and before 

application of any other adjustment), 

will be reduced by 7 percent, and if 

such services are furnished during CY 

2023 or a subsequent year, by 10 

percent. For purposes of this reduction, 

computed radiography technology is 

defined in section 1848(b)(9)(C) of the 

Act as cassette-based imaging which 

utilizes an imaging plate to create the 

image involved. (82 FR 33650). 

To further implement this provision, 

we stated in the proposed rule that we 

were establishing a new modifier (82 FR 

33650), specifically, ‘‘FY’’ (X-ray taken 

using computed radiography 

technology/cassette-based imaging), as 

permitted by section 1833(t)(16)(F)(iv) 

of the Act, that would be reported on 

claims to identify those HCPCS codes 

that describe X-rays taken using 

computed radiography technology. (We 

note that modifier ‘‘FY’’ was listed as 

placeholder ‘‘XX’’ in the CY 2018 OPPS/ 

ASC proposed rule and that we 

indicated (82 FR 33650) that the 2-digit 

modifier and long descriptor would be 

described in this final rule with 

comment period.) We proposed that the 

payment reduction would be taken 

when this payment modifier is reported 

with the applicable HCPCS code(s) to 

describe imaging services that are taken 

using computed radiography technology 

(82 FR 33650). In the proposed rule, we 

stated that the applicable HCPCS codes 

describing imaging services could be 

found in Addendum B to the proposed 

rule (which is available via the Internet 

on the CMS Web site). When payment 

for an X-ray service taken using 

computed radiography imaging is 

packaged into the payment for another 

item or service under the OPPS, no 

separate payment for the X-ray service 

is made and, therefore, there is no 

payment amount that can be attributed 

to the X-ray. Accordingly, the amount of 

the payment reduction for a packaged 

X-ray service would be $0 (7 percent of 

$0, and 10 percent of $0). We invited 

public comments on these proposals. 

Comment: One commenter believed 

that reporting the modifier ‘‘FY’’ would 

be burdensome to hospitals and create 

another opportunity for miscoding. 

Response: Modifier ‘‘FY’’ will be 

reported by hospitals only to identify 

those services that involve X-rays taken 

using computed radiography 

technology. We do not believe that the 

use of this modifier would be unduly 

burdensome to hospitals. The reporting 

of this modifier is similar to the 

reporting of other existing modifiers that 

hospitals currently include when 


sradovich on DSK3GMQ082PROD with RULES2
59392 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

reporting HCPCS codes and modifiers 

for procedures, services, and items on 

Medicare claims under the OPPS. To the 

extent the hospital is already reporting 

a code for an X-ray taken using 

computed radiography, appending the 

modifier to the same claim should not 

be unduly burdensome. Further, 

Medicare is required by law to make 

this payment adjustment and the 

commenter did not offer an alternative 

(less burdensome) method by which 

Medicare could ensure payment 

accuracy for these services. 

Comment: One commenter urged 

CMS to publish the list of specific CPT 

and HCPCS codes that would apply to 

this new modifier (‘‘FY’’) as well as to 

the film x-ray modifier (‘‘FX’’) that was 

implemented last year. The commenter 

indicated that not having published lists 

is burdensome to providers and also 

exposes them to additional risk of audit. 

This same commenter offered to provide 

technical assistance from its X-ray 

manufacturer members on the creation 

of such a list. 

Response: We thank the commenter 

for the offer of assistance. However, we 

expect hospitals to appropriately report 

the ‘‘FY’’ modifier to identify those 

services that involve X-rays taken using 

computed radiography technology, and 

to appropriately report the ‘‘FX’’ 

modifier to identify those X-ray services 

taken using film. The applicable HCPCS 

codes describing imaging services can 

be found in Addendum B to this final 

rule with comment period (which is 

available via the Internet on the CMS 

Web site). 

Comment: One commenter requested 

detailed guidance on the 

implementation of the computed 

radiography to digital X-ray payment 

differential. Specifically, the commenter 

stated that CMS instructions are unclear 

as to which specific CPT and HCPCS 

codes require the amended modifier. 

Prior to implementation, the commenter 

suggested that CMS publish all 

applicable codes requiring the modifier, 

with specific billing guidance. 

Response: As indicated above, the 

new ‘‘FY’’ modifier will be used to 

report those services that involve X-rays 

taken using computed radiography 

technology. HOPDs should append 

modifier ‘‘FY’’ to those HCPCS codes 

that involve the use of X-ray systems 

taken using computed radiography 

technology. We believe that hospitals 

should know when they are billing a 

HCPCS code that involves the use of an 

X-ray taken using computed 

radiography and, therefore, we are not 

providing a list of codes. 

In addition, in accordance with 

section 1833(t)(16)(F)(ii) of the Act, 

payments for X-rays taken using 

computed radiography technology will 

be reduced by 7 percent during CY 

2018, 2019, 2020, 2021, or 2022, and 

thereafter by 10 percent when furnished 

during CY 2023 or a subsequent year. 

Specifically, the payment reduction will 

apply when the ‘‘FY’’ modifier is 

reported with the applicable HCPCS 

code(s) to describe imaging services that 

are taken using computed radiography 

technology. In addition, when payment 

for an X-ray service taken using 

computed radiography imaging is 

packaged into the payment for another 

item or service under the OPPS, no 

separate payment for the X-ray service 

is made and, therefore, there is no 

payment amount that can be attributed 

to the X-ray. Accordingly, the amount of 

the payment reduction for a packaged 

X-ray service will be $0 (7 percent of $0, 

and 10 percent of $0). We note that the 

applicable HCPCS codes describing 

imaging services could be found in 

Addendum B to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site). 

Comment: Some commenters 

supported the transition to digital 

radiography. However, several 

commenters expressed concern with the 

statute requiring hospitals to upgrade to 

digital radiography systems and 

indicated that the requirement is 

financially burdensome and difficult to 

justify. One commenter stated that a 

typical computed radiography reader 

can cost between $60,000 and $80,000, 

while a new digital radiography system 

can cost up to $200,000. Another 

commenter indicated that it estimated 

its cost to replace or retrofit its nearly 

120 computed radiography systems to 

digital radiography systems to be 

approximately $11 million. 

One commenter suggested that, to 

truly incentivize the transition to digital 

radiography technology, CMS should 

offer bonus payments similar to the 

recently proposed 2015 Certified Health 

Record Technology (CEHRT) bonus 

under the Quality Payment Program 

(QPP) Year 2. This same commenter 

recommended that, in lieu of bonus 

payments, CMS work with Congress to 

implement a delay of these cuts for the 

useful life of a typical computed 

radiography machine (5 years) to allow 

practices time to replace older 

equipment with digital radiography 

technology. 

Other commenters further indicated 

there is no clinical benefit to using 

digital radiography systems, and that, 

for certain clinical situations, computed 

radiography systems are preferable. Still 

other commenters stated that the 

reduction in payments not only 

penalizes hospitals, particularly in rural 

and underserved communities that do 

not have the financial resources to 

update their equipment systems, but 

would also force small clinics and 

hospitals to no longer provide imaging 

services that require computed 

radiography technology. 

Response: We are required by section 

1833(t)(16)(F) of the Act to reduce 

payments under the OPPS for X-rays 

taken using film and X-rays taken using 

computed radiography technology. We 

note that the statute did not address 

either bonus payments to incentivize 

the transition to digital radiography 

technology or a delay in the 

implementation of section 1833(t)(16)(F) 

of the Act. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to establish a 

new modifier ‘‘FY’’ (X-ray taken using 

computed radiography technology/ 

cassette-based imaging) as permitted by 

section 1833(t)(16)(F)(iv) of the Act, that 

will be reported on claims to identify 

those HCPCS codes that describe X-rays 

taken using computed radiography 

technology. The payment reduction will 

be taken when this modifier is reported 

with the applicable HCPCS code(s) to 

describe imaging services that are taken 

using computed radiography 

technology. The applicable HCPCS 

codes describing imaging services can 

be found in Addendum B to this final 

rule with comment period (which is 

available via the Internet on the CMS 

Web site). 

In addition, although we adopted the 

payment reduction for the film X-ray 

imaging services, as required by section 

1833(t)(16)(F)(i) of the Act in the CY 

2017 OPPS/ASC final rule with 

comment period, we did not adopt 

corresponding regulation text. 

Therefore, in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33650 and 33723 

through 33724), we proposed to add 

new regulation text at 42 CFR 419.71 to 

codify our existing policies and our 

proposed policies for computed 

radiography technology services. We 

proposed to add the definition of 

‘‘computed radiography technology,’’ as 

it is defined in section 1848(b)(9)(C) of 

the Act, in paragraph (a) of proposed 

new § 419.71. We stated that the 

proposed regulation text under 

paragraph (b) of proposed new § 419.71 

would specify the 20-percent reduction 

for film X-ray imaging services. We 

proposed that the phased-in payment 

reduction for computed radiography 

technology imaging services would be 

codified at paragraph (c) of proposed 

new § 419.71. Finally, we proposed that 

paragraph (d) of proposed new § 419.71 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59393 

would provide that the payment 

reductions taken under the section are 

not considered adjustments under 

section 1833(t)(2)(E) of the Act and are 

not implemented in a budget neutral 

manner. We invited public comments 

on this proposed regulation text. 

We did not receive any public 

comments on our proposed regulation 

text. Therefore, we are finalizing our 

proposal to codify our previously 

adopted and newly finalized policies 

regarding section 1833(t)(16)(F) of the 

Act, without modifications. 

F. Revisions to the Laboratory Date of 

Service Policy 

1. Background on the Medicare Part B 

Laboratory Date of Service Policy 

As we discussed in the CY 2018 

OPPS/ASC proposed rule (82 FR 33650), 

the date of service (DOS) is a required 

data field on all Medicare claims for 

laboratory services. However, a 

laboratory service may take place over a 

period of time—the date the physician 

orders the laboratory test, the date the 

specimen is collected from the patient, 

the date the laboratory accesses the 

specimen, the date the laboratory 

performs the test, and the date results 

are produced may occur on different 

dates. In the final rule on coverage and 

administrative policies for clinical 

diagnostic laboratory services published 

in the Federal Register on November 23, 

2001 (66 FR 58791 through 58792), we 

adopted a policy under which the DOS 

for clinical diagnostic laboratory 

services generally is the date the 

specimen is collected. 

A special rule was developed to apply 

to ‘‘archived’’ specimens. For laboratory 

tests that use an archived specimen, we 

established that the DOS is the date the 

specimen was obtained from storage (66 

FR 58792). 

In 2002, we issued Program 

Memorandum AB–02–134 which 

permitted contractors discretion in 

making determinations regarding the 

length of time a specimen must be 

stored to be considered ‘‘archived.’’ In 

response to comments requesting that 

we issue a national standard to clarify 

when a stored specimen can be 

considered ‘‘archived,’’ in the 

Procedures for Maintaining Code Lists 

in the Negotiated National Coverage 

Determinations for Clinical Diagnostic 

Laboratory Services final notice, 

published in the Federal Register on 

February 25, 2005 (70 FR 9357), we 

defined an ‘‘archived’’ specimen as a 

specimen that is stored for more than 30 

calendar days before testing. We 

established that the DOS for archived 

specimens is the date the specimen was 

obtained from storage. Specimens stored 

for 30 days or less continued to have a 

DOS of the date the specimen was 

collected. 

2. Current Medicare DOS Policy (‘‘14- 

Day Rule’’) 

In the final rule with comment period 

entitled, in relevant part, ‘‘Revisions to 

Payment Policies, Five-Year Review of 

Work Relative Value Units, Changes to 

the Practice Expense Methodology 

Under the Physician Fee Schedule, and 

Other Changes to Payment Under Part 

B’’ published in the Federal Register on 

December 1, 2006 (MPFS final rule) (71 

FR 69705 through 69706), we added a 

new § 414.510 in Title 42 of the CFR 

regarding the clinical laboratory DOS 

requirements and revised our DOS 

policy for stored specimens. We 

explained in the MPFS final rule that 

the DOS of a test may affect payment for 

the test, especially in situations in 

which a specimen that is collected 

while the patient is being treated in a 

hospital setting (for example, during a 

surgical procedure), is later used for 

testing after the patient has been 

discharged from the hospital. We noted 

that payment for the test is usually 

bundled with payment for the hospital 

service, even where the results of the 

test did not guide treatment during the 

hospital stay. To address concerns 

raised for tests related to cancer 

recurrence and therapeutic 

interventions, we finalized 

modifications to the DOS policy in 

§ 414.510(b)(2)(i) for a test performed on 

a specimen stored less than or equal to 

30 calendar days from the date it was 

collected (a non-archived specimen), so 

that the DOS is the date the test was 

performed (instead of the date of 

collection) if the following conditions 

are met: 

• The test is ordered by the patient’s 

physician at least 14 days following the 

date of the patient’s discharge from the 

hospital; 

• The specimen was collected while 

the patient was undergoing a hospital 

surgical procedure; 

• It would be medically inappropriate 

to have collected the sample other than 

during the hospital procedure for which 

the patient was admitted; 

• The results of the test do not guide 

treatment provided during the hospital 

stay; and 

• The test was reasonable and 

medically necessary for the treatment of 

an illness. 

As we stated in the MPFS final rule, 

we established these five criteria, which 

we refer to as the ‘‘14-day rule,’’ to 

distinguish laboratory tests performed 

as part of post-hospital care from the 

care a beneficiary receives in the 

hospital. When the 14-day rule applies, 

laboratory tests are not bundled into the 

hospital stay, but are instead paid 

separately under Medicare Part B (as 

explained in more detail below). 

We also revised the DOS requirements 

for a chemotherapy sensitivity test 

performed on live tissue. As discussed 

in the MPFS final rule (71 FR 69706), 

we agreed with commenters that these 

tests, which are primarily used to 

determine post-hospital chemotherapy 

care for patients who also require 

hospital treatment for tumor removal or 

resection, appear to be unrelated to the 

hospital treatment in cases where it 

would be medically inappropriate to 

collect a test specimen other than at the 

time of surgery, especially when the 

specific drugs to be tested are ordered 

at least 14 days following hospital 

discharge. As a result, we revised the 

DOS policy for chemotherapy 

sensitivity tests, based on our 

understanding that the results of these 

tests, even if they were available 

immediately, would not typically affect 

the treatment regimen at the hospital. 

Specifically, we modified the DOS for 

chemotherapy sensitivity tests 

performed on live tissue in 

§ 414.510(b)(3) so that the DOS is the 

date the test was performed if the 

following conditions are met: 

• The decision regarding the specific 

chemotherapeutic agents to test is made 

at least 14 days after discharge; 

• The specimen was collected while 

the patient was undergoing a hospital 

surgical procedure; 

• It would be medically inappropriate 

to have collected the sample other than 

during the hospital procedure for which 

the patient was admitted; 

• The results of the test do not guide 

treatment provided during the hospital 

stay; and 

• The test was reasonable and 

medically necessary for the treatment of 

an illness. 

We explained in the MPFS final rule 

that, for chemotherapy sensitivity tests 

that meet this DOS policy, Medicare 

would allow separate payment under 

Medicare Part B, that is, separate from 

the payment for hospital services. 

3. Billing and Payment for Laboratory 

Services Under the OPPS 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33651), the 

DOS requirements at 42 CFR 414.510 

are used to determine whether a 

hospital bills Medicare for a clinical 

diagnostic laboratory test (CDLT) or 

whether the laboratory performing the 

test bills Medicare directly. This is 

because separate regulations at 42 CFR 


sradovich on DSK3GMQ082PROD with RULES2
59394 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

32Under section 1834A(d)(5)(A) of the Act, an 

ADLT is a CDLT covered under Medicare Part B 

that is offered and furnished only by a single 

laboratory and not sold for use by a laboratory other 

than the original developing laboratory (or a 

successor owner) and . . . ‘‘the test is an analysis 

of multiple biomarkers of DNA, RNA, or proteins 

combined with a unique algorithm to yield a single 

patient-specific result.’’ CMS has established a 

regulatory definition for this type of ADLT in 42 

CFR 414.502. 

410.42(a) and 411.15(m) generally 

provide that Medicare will not pay for 

a service furnished to a hospital patient 

during an encounter by an entity other 

than the hospital unless the hospital has 

an arrangement (as defined in 42 CFR 

409.3) with that entity to furnish that 

particular service to its patients, with 

certain exceptions and exclusions. 

These regulations, which we will call 

the ‘‘under arrangements’’ provisions in 

this discussion, require that if the DOS 

falls during an inpatient or outpatient 

stay, payment for the laboratory test is 

usually bundled with the hospital 

service. 

Under our current rules, if a test 

meets all DOS requirements in 

§ 414.510(b)(2)(i) or § 414.510(b)(3), the 

DOS is the date the test was performed, 

and the laboratory would bill Medicare 

directly for the test and would be paid 

under the Clinical Laboratory Fee 

Schedule (CLFS) directly by Medicare. 

However, if the test does not meet the 

DOS requirements in § 414.510(b)(2)(i) 

or § 414.510(b)(3), the DOS is the date 

the specimen was collected from the 

patient. In that case, the hospital would 

bill Medicare for the test and then 

would pay the laboratory that performed 

the test, if the laboratory provided the 

test under arrangement. 

In recent rulemakings, we have 

reviewed appropriate payment under 

the OPPS for certain diagnostic tests 

that are not commonly performed by 

hospitals. In CY 2014, we finalized a 

policy to package certain CDLTs under 

the OPPS (78 FR 74939 through 74942 

and 42 CFR 419.2(b)(17) and 419.22(l)). 

In CYs 2016 and 2017, we made some 

modifications to this policy (80 FR 

70348 through 70350; 81 FR 79592 

through 79594). Under our current 

policy, certain CDLTs that are listed on 

the CLFS are packaged as integral, 

ancillary, supportive, dependent, or 

adjunctive to the primary service or 

services provided in the hospital 

outpatient setting during the same 

outpatient encounter and billed on the 

same claim. Specifically, we 

conditionally package most CDLTs and 

only pay separately for a laboratory test 

when it is: (1) The only service provided 

to a beneficiary on a claim; (2) 

considered a preventive service; (3) a 

molecular pathology test; or (4) an 

advanced diagnostic laboratory test 

(ADLT) that meets the criteria of section 

1834A(d)(5)(A) of the Act (78 FR 74939 

through 74942; 80 FR 70348 through 

70350; and 81 FR 79592 through 79594). 

In the CY 2016 OPPS/ASC final rule 

with comment period, we excluded all 

molecular pathology laboratory tests 

from packaging because we believed 

these relatively new tests may have a 

different pattern of clinical use, which 

may make them generally less tied to a 

primary service in the hospital 

outpatient setting than the more 

common and routine laboratory tests 

that are packaged. 

For similar reasons, in the CY 2017 

OPPS/ASC final rule with comment 

period, we extended the exclusion to 

also apply to all ADLTs that meet the 

criteria of section 1834A(d)(5)(A) of the 

Act.32 We stated that we will assign 

status indicator ‘‘A’’ (Separate payment 

under the CLFS) to ADLTs once a 

laboratory test is designated an ADLT 

under the CLFS. Laboratory tests that 

are separately payable and are listed on 

the CLFS are paid at the CLFS payment 

rates outside the OPPS. 

4. ADLTs Under the New Private Payor 

Rate-Based CLFS 

Section 1834A of the Act, as 

established by section 216(a) of the 

Protecting Access to Medicare Act of 

2014 (PAMA), requires significant 

changes to how Medicare pays for 

CDLTs under the CLFS. Section 216(a) 

of PAMA also establishes a new 

subcategory of CDLTs known as ADLTs 

with separate reporting and payment 

requirements under section 1834A of 

the Act. In the CLFS final rule 

published in the Federal Register on 

June 23, 2016, entitled ‘‘Medicare 

Program; Medicare Clinical Diagnostic 

Laboratory Tests Payment System Final 

Rule’’ (CLFS final rule) (81 FR 41036), 

we implemented the requirements of 

section 1834A of the Act. 

As defined in § 414.502, an ADLT is 

a CLDT covered under Medicare Part B 

that is offered and furnished only by a 

single laboratory. In addition, an ADLT 

cannot be sold for use by a laboratory 

other than the single laboratory that 

designed the test or a successor owner. 

Also, an ADLT must meet either 

Criterion (A), which implements section 

1834A(d)(5)(A) of the Act, or Criterion 

(B), which implements section 

1834A(d)(5)(B) of the Act, as follows: 

• Criterion (A): The test is an analysis 

of multiple biomarkers of 

deoxyribonucleic acid (DNA), 

ribonucleic acid (RNA), or proteins; 

when combined with an empirically 

derived algorithm, yields a result that 

predicts the probability a specific 

individual patient will develop a certain 

condition(s) or respond to a particular 

therapy(ies); provides new clinical 

diagnostic information that cannot be 

obtained from any other test or 

combination of tests; and may include 

other assays. 

Or: 

• Criterion (B): The test is cleared or 

approved by the Food and Drug 

Administration. 

Generally, under the revised CLFS, 

ADLTs are paid using the same 

methodology based on the weighted 

median of private payor rates as other 

CDLTs. However, updates to ADLT 

payment rates occur annually instead of 

every 3 years. The payment 

methodology for ADLTs is detailed in 

the CLFS final rule (81 FR 41076 

through 41083). 

5. Discussion of Potential Revisions to 

the Laboratory DOS Policy in the CY 

2018 OPPS/ASC Proposed Rule 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33650 through 33653), we 

described the history of our laboratory 

DOS policy and discussed potentially 

modifying the DOS policy for certain 

ADLTs and molecular pathology tests. 

We explained that, recently, we have 

heard from certain laboratory 

stakeholders about operational issues 

the current laboratory DOS policy 

creates for hospitals and laboratories 

with regard to molecular pathology tests 

and laboratory tests they expect will be 

designated by CMS as ADLTs that meet 

the criteria of section 1834A(d)(5)(A) of 

the Act. These stakeholders have 

expressed that although these particular 

tests are not packaged under the OPPS, 

under current DOS policy, if the tests 

are ordered within 14 days of a patient’s 

discharge from the hospital, Medicare 

still treats the tests as though they were 

ordered and furnished by the hospital 

itself. Under those circumstances, 

laboratories cannot directly seek 

Medicare payment for the molecular 

pathology test or ADLT. The hospital 

must bill Medicare for the test, and the 

laboratory must seek payment from the 

hospital. Specifically, we noted that 

stakeholders representing laboratories 

have expressed the following concerns: 

• The current DOS policy permits 

hospitals to bill for tests they did not 

perform and that may have no 

relationship to or bearing on treatment 

received by the patient while in the 

hospital. 

• The DOS policy may create 

inconsistent billing for specialty 

laboratories. For example, if the hospital 

is located in a different jurisdiction than 

the MAC used by the laboratory, a 

different MAC may be billed. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59395 

• Hospitals may be discouraged from 

utilizing ADLTs because billing for such 

tests that are not performed by hospitals 

could create administrative and 

financial complexities. 

• The DOS policy is a potential 

barrier to CMS’ goal of promoting 

personalized medicine because the 

policy may disproportionately impact 

smaller laboratories performing 

innovative diagnostic tests. 

• Billing complexities may affect 

beneficiary access to needed laboratory 

tests and therapies. For example, orders 

might be delayed until at least 14 days 

after discharge or even canceled to 

avoid the DOS policy. This may restrict 

patient access to tests and reduce 

efficacy of treatment plans due to 

hospitals delaying or foregoing patient 

testing to avoid financial risk. 

• The DOS policy may limit access 

for Medicare beneficiaries under 

original Medicare fee-for-service (that is, 

Medicare Part A and Part B) due to the 

fact that Medicare Advantage Plans 

under Medicare Part C and private 

payors allow laboratories to bill directly 

for tests they perform. 

As we stated in the proposed rule (82 

FR 33652), we recognize that the current 

laboratory DOS rule may impose 

administrative difficulties for hospitals 

and laboratories that furnish laboratory 

tests that are excluded from OPPS 

packaging and therefore paid separately 

at CLFS payment rates. Hospitals may 

be reluctant to bill Medicare for 

laboratory tests they do not perform, 

which as noted by stakeholders, could 

lead to delays in patient access to care. 

In light of the concerns raised by 

stakeholders, we stated in the proposed 

rule that we were considering potential 

modifications to the DOS policy that 

would allow laboratories to bill 

Medicare directly for certain laboratory 

tests excluded from the OPPS packaging 

policy. We noted that one approach 

under consideration would create a new 

exception to the DOS policy for 

molecular pathology tests and ADLTs 

that meet the criteria of section 

1834A(5)(A) of the Act and have been 

granted ADLT status by CMS. As we 

stated in the CY 2017 OPPS/ASC final 

rule with comment period (81 FR 79592 

through 79594), we believe these tests 

are relatively new and may have a 

different pattern of clinical use than 

more conventional laboratory tests, 

which may make them generally less 

tied to a primary service in the hospital 

outpatient setting than more common 

and routine laboratory tests that are 

packaged. In the proposed rule, we 

sought public comment on whether 

these tests, by their nature, are 

appropriately separable from the 

hospital stay that preceded the test and 

therefore should have a DOS that is the 

date of performance rather than the date 

of collection. 

As an example, we stated that we 

would consider modifying 42 CFR 

414.510(b) by adding a new paragraph 

(5) to establish that in the case of a 

molecular pathology test or an ADLT 

that meets the criteria of section 

1834A(d)(5)(A) of the Act, the DOS must 

be the date the test was performed only 

if: 

• The physician orders the test 

following the date of a hospital 

outpatient’s discharge from the hospital 

outpatient department; 

• The specimen was collected from a 

hospital outpatient during an encounter 

(as both are defined 42 CFR 410.2); 

• It would be medically inappropriate 

to have collected the sample from the 

hospital outpatient other than during 

the hospital outpatient encounter; 

• The results of the test do not guide 

treatment provided during the hospital 

outpatient encounter; and 

• The test was reasonable and 

medically necessary for the treatment of 

an illness. 

We requested specific comments on 

this potential modification to the 

current laboratory DOS policy, which 

would allow laboratories to bill 

Medicare directly for molecular 

pathology tests and ADLTs that meet the 

criteria of section 1834A(d)(5)(A) of the 

Act and have been granted ADLT status 

by CMS, when the specimen is collected 

during a hospital outpatient procedure 

and the test is ordered after the patient 

is discharged from the hospital 

outpatient department. We also noted 

that we would consider finalizing this 

modification (82 FR 33653). 

Comment: Many commenters 

supported revising the laboratory DOS 

policy so that laboratories may bill 

Medicare and receive payment directly 

for ADLTs and molecular pathology 

tests performed on specimens collected 

from hospital outpatients, which are 

excluded from the OPPS packaging 

policy. The commenters indicated that 

revising the current laboratory DOS 

policy so that the performing laboratory 

can bill Medicare directly for molecular 

pathology tests and ADLTs is consistent 

with CMS’ policy of excluding 

‘‘precision diagnostics’’ performed on 

specimens collected in the hospital 

outpatient setting from the OPPS 

packaging policy. In general, 

commenters urged CMS to finalize a 

policy that focuses on whether the test 

was performed outside the hospital after 

the outpatient encounter, rather than on 

the date the specimen was collected or 

the date the test was initially ordered. 

These commenters stated that this 

approach would be consistent with how 

tests are ordered and billed for under 

Medicare Advantage plans and 

commercial insurers, which allow 

laboratories to bill directly for these 

tests. 

Commenters also reiterated previous 

concerns regarding administrative and 

billing complexities resulting from the 

current DOS policy that may affect 

timely beneficiary access to necessary 

molecular pathology tests. These 

commenters noted that hospitals may be 

reluctant to order a test that the hospital 

itself does not perform until at least 14 

days following the date the patient is 

discharged from the hospital outpatient 

department so that the laboratory 

performing the test may bill Medicare 

directly for the test. One commenter 

explained that, for molecular pathology 

tests performed by an independent 

laboratory that is not affiliated with the 

hospital, the administrative complexity 

of the current laboratory DOS policy 

frequently leads hospitals to delay 

ordering of these tests. 

In addition, several commenters 

recommended specific modifications to 

the potential revisions to laboratory 

DOS policy discussed in the CY 2018 

OPPS/ASC proposed rule. These 

suggested modifications are summarized 

below. 

• Expand the laboratory tests subject 

to the DOS exception. Commenters 

suggested that CMS expand the 

laboratory tests subject to the potential 

DOS exception to include all ADLTs 

(that is, both Criterion (A) and Criterion 

(B) ADLTs) and all Multi-Analyte 

Assays with Algorithmic Analysis 

(MAAA), Genomic Sequencing 

Procedures (GSP), and Proprietary 

Laboratory Analysis (PLA) test codes, 

even if they are not currently excluded 

from the OPPS packaging policy. The 

commenters argued that expanding the 

potential revision to the DOS policy to 

include the aforementioned laboratory 

tests would encompass all laboratory 

testing that has a different pattern of 

clinical use from routine testing and 

therefore is unconnected to the primary 

hospital outpatient service. 

• Remove the test order date 

requirement. Several commenters 

recommended that CMS not finalize a 

requirement that the physician must 

order the test following the date of a 

hospital outpatient’s discharge from the 

hospital outpatient department because 

testing on a ‘‘liquid-based’’ specimen is 

typically ordered before the specimen is 

collected. These commenters noted that 

requiring the physician to order the test 

at least 1 day following the date of a 

patient’s discharge from the hospital 


sradovich on DSK3GMQ082PROD with RULES2
59396 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

33Under section 1834A(d)(5)(B) of the Act, an 

ADLT is a CDLT covered under Medicare Part B 

that is offered and furnished only by a single 

laboratory and not sold for use by a laboratory other 

than the original developing laboratory (or a 

successor owner) and . . . ‘‘[t]he test is cleared or 

approved by the Food and Drug Administration.’’ 

CMS has established a regulatory definition for this 

type of ADLT in 42 CFR 414.502. 

outpatient department would exclude a 

blood-based molecular pathology test 

from an exception to the laboratory DOS 

policy. 

• Require that it be ‘‘medically 

appropriate’’ to have collected the 

sample during the hospital outpatient 

encounter. Several commenters noted 

that it would be medically appropriate 

for an independent laboratory that is not 

associated with the hospital to collect a 

liquid-based specimen. These 

commenters suggested that the potential 

revision to the laboratory DOS policy 

that specified it would be medically 

inappropriate to have collected the 

sample from the hospital outpatient 

other than during the hospital 

outpatient encounter, applies to tests 

performed on tissue-based samples, but 

could inadvertently create incentives for 

hospitals to require hospital outpatients 

to go elsewhere for liquid-based 

specimen collection. These commenters 

also stated that requiring a patient to 

travel to a different location for the 

specimen collection could present 

access issues for patients with limited 

mobility. Therefore, these commenters 

suggested a modification to the potential 

revised DOS policy to focus on what is 

medically appropriate rather than what 

is not medically appropriate. To that 

end, these commenters requested that 

CMS replace the term ‘‘medically 

inappropriate’’ with a requirement that 

it ‘‘was medically appropriate to have 

collected the sample from the hospital 

outpatient during the hospital 

outpatient encounter.’’ 

A few additional commenters 

suggested regulatory language to modify 

the existing laboratory DOS policy in 

accordance with the specific 

recommendations discussed previously. 

Specifically, these commenters 

suggested adding a new exception to the 

DOS policy so that, in the case of a 

molecular pathology test or an ADLT 

that meets the criteria of section 

1834A(d)(5) of the Act, or a test that is 

a MAAA, the date of service must be the 

date the test was performed only if: (1) 

The specimen was collected from a 

hospital outpatient during an encounter 

(as both are defined 42 CFR 410.2); (2) 

it was medically appropriate to have 

collected the sample from the hospital 

outpatient during the hospital 

outpatient encounter; (3) the results of 

the test do not guide treatment provided 

during the hospital outpatient 

encounter; and (4) the test was 

reasonable and medically necessary for 

the diagnosis or treatment of an illness 

or injury. 

Response: We appreciate the support 

from commenters for our potential 

revisions to the laboratory DOS policy. 

We agree that some of the potential 

revisions to the laboratory DOS policy 

that we described in the CY 2018 OPPS/ 

ASC proposed rule may not allow ADLT 

or molecular pathology testing 

performed on liquid-based samples to 

qualify for a DOS exception. In 

particular, we recognize that a 

requirement that it would be ‘‘medically 

inappropriate’’ to have collected the 

specimen from the hospital outpatient 

other than during the hospital 

outpatient encounter is primarily 

applicable to tissue-based specimens. It 

would not be applicable to liquid-based 

samples because it could be medically 

appropriate to collect a liquid-based 

specimen in settings outside of a 

hospital outpatient encounter, such as 

an independent laboratory not 

associated with the hospital. As such, 

we believe use of the term ‘‘medically 

inappropriate’’ would inappropriately 

exclude laboratory testing performed on 

liquid-based specimens from qualifying 

for the proposed exception to the 

laboratory DOS policy. Therefore, we 

believe the revision suggested by the 

commenters, that is, to specify that it 

‘‘was medically appropriate to have 

collected the sample from the hospital 

outpatient during the hospital 

outpatient encounter,’’ would address 

concerns that the DOS exception should 

encompass testing performed on liquidbased samples as well as testing 

performed on tissue-based samples. 

In addition, we agree with the 

commenters that requiring the physician 

to order the test following the date of a 

hospital outpatient’s discharge from the 

hospital outpatient department (as we 

described in the proposed rule) could 

also inappropriately exclude tests 

performed on liquid-based specimens 

from the DOS exception, because a 

blood test is typically ordered before the 

sample is collected. We proposed 

including the order date requirement for 

the same reason we included such a 

requirement in the 14-day rule: Because 

we believe it is more difficult to 

determine that a test ordered before 

discharge is appropriately separable 

from the hospital stay that preceded the 

test (71 FR 69706). However, as 

discussed more fully below, we believe 

the ADLTs and molecular pathology 

tests excluded from the OPPS packaging 

policy are, by their nature, tests that are 

used to determine posthospital care, and 

therefore can be legitimately 

distinguished from the care the patient 

receives in the hospital even if they are 

ordered prior to the patient’s discharge. 

Therefore, we do not believe it is 

necessary to include an order date 

requirement as part of this exception. 

However, to help ensure that only tests 

that are not related to the care provided 

in the hospital fall under this provision, 

we will specify that the tests must be 

performed following the hospital 

outpatient’s discharge. That is, in order 

for the DOS to be the date the test was 

performed, instead of the date the 

sample was collected, the test must be 

performed following a hospital 

outpatient’s discharge from the hospital 

outpatient department. We understand 

this is standard practice for these types 

of tests and, therefore, we would not 

expect this provision to change current 

laboratory practices or have any adverse 

effect on patient care. 

We note that some of the commenters’ 

suggested modifications to our potential 

DOS revisions are inconsistent with the 

current OPPS packaging policy and 

would result in allowing the laboratory 

to bill Medicare directly for a test that 

is not paid at the CLFS rate but paid 

under the hospital OPPS bundled rate. 

In the proposed rule (82 FR 33652), we 

specifically discussed creating an 

exception to the current DOS policy for 

ADLTs approved by CMS under section 

1834A(d)(5)(A) of the Act and molecular 

pathology tests because we have already 

recognized that these tests may have a 

different pattern of clinical use than 

more conventional laboratory tests, 

which may make them generally less 

tied to a primary service in the hospital 

outpatient setting than the more 

common and routine tests that are 

packaged. In addition, these tests are 

already paid separately outside of the 

OPPS at CLFS payment rates. We note 

that laboratory tests granted ADLT 

status under section 1834A(d)(5)(B) of 

the Act 33 currently are not excluded 

from the OPPS packaging policy. 

Likewise, GSP testing, PLA tests, and 

protein-based MAAAs that are not 

considered molecular pathology tests 

are also conditionally packaged under 

the OPPS at this time. In the proposed 

rule, we did not specifically discuss 

expanding the laboratory tests that may 

qualify for a DOS exception beyond the 

ADLTs and molecular pathology tests 

that are currently excluded from OPPS 

packaging, and therefore we are not 

including ADLTs under Criterion (B), 

GSP tests, PLA tests, or protein-based 

MAAAs in the revised DOS policy at 

this time. We intend to study this issue 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59397 

and, if warranted, consider proposing 

changes to the laboratory tests subject to 

a DOS exception in future rulemaking. 

As noted previously in this section, 

we believe the current laboratory DOS 

policy creates administrative 

complexities for hospitals and 

laboratories with regard to molecular 

pathology tests and laboratory tests 

expected to be designated by CMS as 

ADLTs that meet the criteria of section 

1834A(d)(5)(A) of the Act. Under the 

current laboratory DOS policy, if the 

tests are ordered less than 14 days 

following a hospital outpatient’s 

discharge from the hospital outpatient 

department, laboratories generally 

cannot bill Medicare directly for the 

molecular pathology test or ADLT. In 

those circumstances, the hospital must 

bill Medicare for the test, and the 

laboratory must seek payment from the 

hospital. We have heard from 

commenters that because ADLTs are 

performed by only a single laboratory 

and molecular pathology tests are often 

performed by only a few laboratories, 

and hospitals may not have the 

technical ability to perform these 

complex tests, the hospital may be 

reluctant to bill Medicare for a test it 

would not typically (or never) perform. 

As a result, the hospital might delay 

ordering the test until at least 14 days 

after the patient is discharged from the 

hospital outpatient department or even 

cancel the order to avoid the DOS 

policy, which may restrict a patient’s 

timely access to these tests. In addition, 

we have heard from commenters that 

the current laboratory DOS policy may 

disproportionately limit access for 

Medicare beneficiaries under original 

Medicare fee-for-service (that is, 

Medicare Part A and Part B) because 

Medicare Advantage plans under 

Medicare Part C and other private 

payors allow laboratories to bill directly 

for tests they perform. 

We also recognize that greater 

consistency between the laboratory DOS 

rules and the current OPPS packaging 

policy would be beneficial and would 

address some of the administrative and 

billing issues created by the current 

DOS policy. As noted previously, we 

exclude all molecular pathology tests 

and ADLTs under section 

1834A(d)(5)(A) of the Act from the 

OPPS packaging policy because we 

believe these tests may have a different 

pattern of clinical use, which may make 

them generally less tied to a primary 

service in the hospital outpatient setting 

than the more common and routine 

laboratory tests that are packaged. 

Under the current DOS policy, we have 

established exceptions that permit the 

DOS to be the date of performance for 

certain tests that we believe are not 

related to the hospital treatment and are 

used to determine posthospital care. We 

believe a similar exception is justified 

for the molecular pathology tests and 

ADLTs excluded from the OPPS 

packaging policy, which we understand 

are used to guide and manage the 

patient’s care after the patient is 

discharged from the hospital outpatient 

department. We believe that, like the 

other tests currently subject to DOS 

exceptions, these tests can legitimately 

be distinguished from the care the 

patient receives in the hospital, and 

thus we would not be unbundling 

services that are appropriately 

associated with hospital treatment. 

Moreover, as noted previously, these 

tests are already paid separately outside 

of the OPPS at CLFS payment rates. 

Therefore, we agree with the 

commenters that the laboratory 

performing the test should be permitted 

to bill Medicare directly for these tests, 

instead of relying on the hospital to bill 

Medicare on behalf of the laboratory 

under arrangements. 

For these reasons and in light of the 

commenters’ suggestions, we are 

revising the current laboratory DOS 

policy at 42 CFR 414.510(b) for tests 

granted ADLT status by CMS under 

section 1834A(d)(5)(A) of the Act and 

molecular pathology tests that are 

excluded from the OPPS packaging 

policy under 42 CFR 419.2(b), so that 

the performing laboratory may bill and 

be paid by Medicare directly for these 

tests under the circumstances described 

below. The revision will provide an 

exception to the general laboratory DOS 

rule—that is, the DOS is the date the 

specimen was collected—so that the 

DOS for these tests is the date the 

laboratory test was performed. This 

exception to the current laboratory DOS 

policy will only apply to tests granted 

ADLT status by CMS under paragraph 

(1) of the definition of ‘‘advanced 

diagnostic laboratory test’’ in 42 CFR 

414.502, which CMS promulgated to 

implement section 1834A(d)(5)(A) of the 

Act, and molecular pathology tests 

excluded from the OPPS packaging 

policy as defined in 42 CFR 419.2(b). By 

adding an exception to the current 

laboratory DOS policy at 42 CFR 

414.510(b) for molecular pathology tests 

and ADLTs that are excluded from the 

OPPS packaging policy under 42 CFR 

419.2(b), the performing laboratory will 

be required to bill Medicare directly for 

tests that meet this exception. The 

hospital will no longer bill Medicare for 

these tests, and the laboratory will no 

longer have to seek payment from the 

hospital for these tests, if all of the 

conditions are met. 

We note that this new exception to 

the laboratory DOS policy will not 

apply to tests granted ADLT status by 

CMS under section 1834A(d)(5)(A) of 

the Act and molecular pathology tests 

when performed on a specimen 

collected from a hospital inpatient. As 

discussed more fully below, we believe 

adding a laboratory DOS exception for 

hospital inpatients would have policy 

and ratesetting implications under the 

IPPS diagnosis related group (DRG) 

payment, and we did not solicit 

comments on potential revisions to our 

current laboratory DOS policy specific 

to the hospital inpatient setting. 

In order to allow a laboratory to bill 

Medicare directly for an ADLT or 

molecular pathology test excluded from 

the OPPS packaging policy, we are 

modifying 42 CFR 414.510(b) by adding 

a new paragraph (5) to establish that, in 

the case of a molecular pathology test or 

a test designated by CMS as an ADLT 

under paragraph (1) of the definition of 

advanced diagnostic laboratory test in 

42 CFR 414.502, the DOS of the test 

must be the date the test was performed 

only if— 

• The test was performed following a 

hospital outpatient’s discharge from the 

hospital outpatient department; 

• The specimen was collected from a 

hospital outpatient during an encounter 

(as both are defined in 42 CFR 410.2); 

• It was medically appropriate to 

have collected the sample from the 

hospital outpatient during the hospital 

outpatient encounter; 

• The results of the test do not guide 

treatment provided during the hospital 

outpatient encounter; and 

• The test was reasonable and 

medically necessary for the treatment of 

an illness. 

We intend to continue to study the 

laboratory DOS policy and determine 

whether any additional changes are 

warranted. In particular, we will 

consider whether there should be any 

changes to the current 14-day rule, 

including whether to address any 

inconsistencies with our new exception, 

and any changes to the ‘‘under 

arrangements’’ provisions, including 

with respect to the hospital inpatient 

setting. We expect to propose any future 

changes to the laboratory DOS policy 

through notice-and-comment 

rulemaking. 

Comment: A few commenters 

requested that any changes to the 

laboratory DOS policy apply to ADLTs 

and molecular pathology tests 

performed on specimens collected from 

both hospital inpatients and hospital 

outpatients. These commenters stated 


sradovich on DSK3GMQ082PROD with RULES2
59398 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

that it would be an administrative 

burden on hospitals that collect 

specimens, and laboratories that furnish 

and bill for ADLTs and molecular 

pathology tests, to track tests ordered for 

hospital outpatients in a way that is 

inconsistent with those performed on 

specimens obtained from hospital 

inpatients. 

One commenter stated that 

consistency between the DOS for 

hospital inpatients and hospital 

outpatients is important for evaluating 

data on patient outcomes. For example, 

the commenter noted that laboratory 

tests ordered for hospital inpatients do 

not have the tests’ HCPCS code(s) on the 

inpatient claim. As a result, CMS cannot 

track patients who have received these 

tests using claims data, or evaluate how 

advanced testing contributes to cancer 

care and other advanced treatments, or 

evaluate the total cost of care. To that 

end, a few commenters suggested that 

CMS use coding modifiers to identify 

ADLTs and molecular pathology tests 

that do not guide treatment during an 

inpatient hospital stay so that separate 

payment can be made at the HCPCS 

code level for these laboratory tests. 

In contrast to the commenters 

suggesting a laboratory DOS revision for 

both hospital outpatients and hospital 

inpatients, one commenter requested 

that CMS limit revisions to the 

laboratory DOS policy to outpatient 

laboratory tests that are excluded from 

the OPPS packaging policy and 

separately payable at CLFS rates 

because it would merely change which 

entity bills for the laboratory test. The 

commenter noted that because all 

laboratory testing ordered on specimens 

obtained from hospital inpatients less 

than 14 days after discharge are 

currently bundled into the hospital IPPS 

rates, a change in the laboratory DOS 

policy for hospital inpatients would 

entail many other policy changes. 

Response: As discussed previously, 

we believe an exception to the DOS 

policy that is limited to the hospital 

outpatient setting is warranted for 

Criterion (A) ADLTs and molecular 

pathology tests excluded from the OPPS 

packaging policy because these tests are 

already paid at CLFS rates and not paid 

under the OPPS, among other reasons. 

We did not discuss or propose an 

analogous DOS exception for tests 

performed on specimens collected from 

hospital inpatients in the CY 2018 

OPPS/ASC proposed rule, and we agree 

with the commenter who stated that 

such an exception would have broader 

policy implications for the IPPS that 

need to be carefully considered. We 

acknowledge that there could be an 

administrative burden for hospitals and 

laboratories to track the DOS for ADLTs 

and molecular pathology tests ordered 

for hospital outpatients in a way that is 

different from those ordered for hospital 

inpatients. However, because 

laboratories will no longer need to seek 

payment from the hospital outpatient 

department for these tests if all 

requirements in new § 414.510(b)(5) are 

met, we believe that some of the 

additional burden mentioned by the 

commenters is likely to be offset by the 

revised DOS policy. With regard to the 

comments on evaluating data on patient 

outcomes, we note that, in the CY 2018 

OPPS/ASC proposed rule, we focused 

only on potential revisions to the 

laboratory DOS policy for Criterion (A) 

ADLTs and molecular pathology tests 

excluded from the OPPS packaging 

policy that are performed on a specimen 

collected from a hospital outpatient 

during a hospital outpatient encounter 

to enable the laboratory to bill Medicare 

directly for those tests. We did not 

discuss revising the laboratory DOS 

policy to improve CMS’ ability to 

evaluate patient outcomes. As noted 

previously, we intend to continue 

studying this issue and, if warranted, 

consider changes to the laboratory DOS 

policy for laboratory tests performed on 

specimens collected during an inpatient 

hospital stay in future rulemaking. 

Comment: A few commenters 

suggested that any changes to the DOS 

rule also apply to ‘‘referred nonpatient 

specimens.’’ The commenters explained 

that hospitals receive tissue and/or 

blood samples for testing from 

physician’s offices or other locations in 

circumstances in which no hospital 

encounter occurs. The commenters 

recommended that CMS allow this type 

of testing to be billed separately and not 

be required to be billed with other 

outpatient hospital services. 

Response: In the situation described 

by the commenters, the laboratory 

would be performing the test as a 

hospital outreach laboratory. A hospital 

outreach laboratory is a hospital-based 

laboratory that furnishes laboratory tests 

to patients who are not admitted 

hospital inpatients or registered 

outpatients of the hospital. As discussed 

previously, the new exception to the 

laboratory DOS policy will apply to 

tests granted ADLT status under 

Criterion (A) by CMS and molecular 

pathology tests excluded from the OPPS 

packaging policy that are performed on 

a specimen collected from a hospital 

outpatient during a hospital outpatient 

encounter. Because hospital outreach 

laboratories perform laboratory tests on 

specimens collected from beneficiaries 

who are not patients of the hospital, a 

revision to the laboratory DOS policy is 

not necessary to allow a hospital 

outreach laboratory to bill Medicare 

separately for the test. 

Comment: One commenter requested 

clarification as to whether an exception 

to the laboratory DOS policy would 

allow a hospital to continue billing for 

ADLTs or molecular pathology tests 

excluded from the OPPS packaging 

policy or whether the policy change 

would require a laboratory to bill 

Medicare directly for these tests. 

Another commenter recommended that 

any change to laboratory DOS policy or 

the ‘‘under arrangements’’ provisions 

should allow either the hospital or the 

laboratory that performed the test to bill 

the Medicare program directly. The 

commenter indicated that, in some 

circumstances, other laboratory tests in 

addition to ADLTs and or molecular 

pathology tests are ordered following 

the patient’s discharge from the hospital 

outpatient department and that it may 

be less of a burden on the laboratory to 

allow the hospital to bill for all 

laboratory tests ordered rather than 

require some tests to be billed by the 

hospital and other tests to be billed by 

the laboratory. 

Response: If a test meets all 

requirements for the new exception to 

the DOS policy in § 414.510(b)(5), the 

DOS of the test must be the date the test 

was performed, which means the 

laboratory performing the test must bill 

Medicare for the test. The hospital 

would no longer be permitted to bill for 

these tests unless the hospital laboratory 

actually performed the test. That is, if 

the hospital laboratory performed the 

ADLT or molecular pathology test, the 

hospital laboratory would bill Medicare 

for the test. We believe the potential 

administrative burden on the laboratory 

to bill for some of the tests performed 

on a specimen collected from a hospital 

outpatient during a hospital outpatient 

encounter will be offset, to some degree, 

because the laboratory would no longer 

need to seek payment from the hospital 

outpatient department for those tests, if 

all requirements in § 414.510(b)(5) are 

met. 

Comment: A few commenters 

requested that CMS clarify that the date 

of performance is the date of a 

laboratory’s final report. They suggested 

this clarification would avoid any 

ambiguity regarding the date of 

performance of the test. One commenter 

urged CMS to define the DOS as the 

date of final report for all laboratory 

tests. 

Response: We considered the 

commenters’ suggestion to use the date 

of final report as the DOS for ADLTs 

and molecular pathology tests excluded 

from the OPPS packaging policy that are 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59399 

performed on a specimen collected from 

a hospital outpatient during a hospital 

outpatient encounter. However, we have 

concerns with this approach because we 

believe there is no clear and consistent 

definition of ‘‘final report’’ that applies 

to all laboratories and all types of 

specimens collected; that is, liquidbased, cellular, or tissue samples. 

Regarding the comment requesting a 

revision to the DOS policy for all 

laboratory tests, we note that we focused 

on potential revisions regarding 

Criterion (A) ADLTs and molecular 

pathology tests excluded from the OPPS 

packaging policy in the CY 2018 OPPS/ 

ASC proposed rule, and did not discuss 

potential revisions to the DOS policy for 

all laboratory tests. 

Comment: A few commenters 

requested that CMS modify the 14-day 

rule requirement for all laboratory tests 

because it is operationally complicated 

and may result in delays in testing until 

after the 14-day window has passed. 

Response: As discussed previously in 

this section, the discussion in the CY 

2018 OPPS/ASC proposed rule was 

primarily focused on potential 

modifications to the DOS policy for 

Criterion (A) ADLTs and molecular 

pathology tests excluded from the OPPS 

packaging policy. We did not address 

potential modifications to the DOS 

policy that would apply to all laboratory 

tests, so we will not make such changes 

in this rule. However, as noted 

previously, we intend to continue 

studying this issue and, if warranted, 

will consider proposing further changes 

to the DOS policy in future rulemaking. 

(a) Limiting the DOS Rule Exception to 

ADLTs 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33653), we also indicated 

that we were considering potentially 

revising the DOS rule to create an 

exception only for ADLTs that meet the 

criteria in section 1834A(d)(5)(A) of the 

Act. This exception would not cover 

molecular pathology tests. We stated 

that we were considering this approach 

because ADLTs approved by CMS under 

Criterion (A), like all ADLTs, are offered 

and furnished only by a single 

laboratory (as defined in 42 CFR 

414.502). The hospital, or another 

laboratory, that is not the single 

laboratory (as defined in 42 CFR 

414.502), cannot furnish the ADLT. 

Therefore, we noted in the proposed 

rule that there may be additional 

beneficiary access concerns for these 

ADLTs that may not apply to molecular 

pathology tests, and that could be 

addressed by allowing the laboratories 

to bill Medicare directly for these tests. 

For example, a hospital may not have an 

arrangement with the single laboratory 

that furnishes a particular ADLT, which 

could lead the hospital to delay the 

order for the ADLT until 14 days after 

the patient’s discharge to avoid financial 

risk and thus potentially delay 

medically necessary care for the 

beneficiary. 

We stated in the proposed rule that 

we believe the circumstances may be 

different for molecular pathology tests, 

which are not required to be furnished 

by a single laboratory. In particular, we 

understood there may be ‘‘kits’’ for 

certain molecular pathology tests that a 

hospital can purchase, allowing the 

hospital to perform the test. Therefore, 

we stated that molecular pathology tests 

may not present the same concerns of 

delayed access to medically necessary 

care as ADLTs, which must be 

performed by a single laboratory. 

Thus, in the proposed rule, we 

requested specific comments on 

potentially creating an exception to the 

DOS policy that is limited to ADLTs 

that meet the criteria in section 

1834A(d)(5)(A) of the Act and have been 

granted ADLT status by CMS. We also 

requested public comments on how the 

current laboratory DOS policy may 

affect billing for other separately 

payable laboratory test codes that are 

not packaged under the OPPS, such as 

a laboratory test that is the only service 

provided to a beneficiary on a claim or 

molecular pathology tests. 

Comment: Many commenters 

supported revising the current 

laboratory DOS policy for both Criterion 

(A) ADLTs and molecular pathology 

tests. They did not support an exception 

to the current laboratory DOS policy 

that would be limited only to ADLTs 

that meet the criteria in section 

1834A(d)(5)(A) of the Act and have been 

granted ADLT status by CMS (and 

therefore exclude molecular pathology 

tests from the DOS exception). Several 

commenters noted that creating an 

exception for only ADLTs would not be 

consistent with current OPPS packaging 

policy, which excludes both Criterion 

(A) ADLTs and molecular pathology 

tests. 

In addition, a few commenters 

indicated that beneficiary access issues 

similar to those for ADLTs, which are 

furnished by a single laboratory, may 

also exist for molecular pathology tests 

because molecular pathology testing is 

highly specialized and may be 

performed by only a few laboratories. 

The commenters also noted that a 

coverage policy for a given molecular 

pathology test may have only been 

issued by a MAC in the jurisdiction in 

which the laboratory is located. This 

could be problematic if the hospital that 

is billing for the test is located in a 

different MAC jurisdiction from the 

laboratory, and the MAC processing 

claims for the jurisdiction in which the 

hospital is located has not made a 

coverage determination for the test. 

A few other commenters explained 

that molecular pathology tests are 

important tools that guide patient 

treatment plans and that many hospitals 

currently lack the in-house technical 

expertise and Clinical Laboratory 

Improvement Amendments (CLIA) 

licensure to perform these tests and, 

therefore, send them out to a performing 

laboratory. The commenters noted that 

molecular pathology ‘‘kits’’ (as 

referenced by CMS in the CY 2018 

OPPS/ASC proposed rule) are different 

from those used for other CDLTs. For 

example, the commenters explained that 

molecular pathology test kits require the 

hospital to have the highest licensure 

level under CLIA, as well as obtain 

specialized training for correct use and 

interpretation of the results, and that 

most hospitals are unlikely to have 

either the expertise or the technology to 

use these kits. To ensure appropriate 

access to molecular pathology tests by 

rural and community hospitals, as well 

as academic and specialty hospitals, the 

commenters requested that the revisions 

to the current laboratory DOS policy 

apply to both ADLTs and molecular 

pathology tests. 

Response: We agree with commenters 

that limiting the new laboratory DOS 

exception to include only ADLTs (and 

not molecular pathology tests) would be 

inconsistent with the OPPS packaging 

policy, which currently excludes tests 

granted ADLT status by CMS under 

section 1834A(d)(5)(A) of the Act and 

molecular pathology tests. As noted by 

the commenters, relatively few 

laboratories may perform certain 

molecular pathology testing. We also 

acknowledge that hospitals may not 

have the technical expertise or 

certification requirements necessary to 

perform molecular pathology testing 

and therefore must rely on independent 

laboratories to perform the test. 

Therefore, we believe similar 

beneficiary access concerns that apply 

to ADLTs may also apply to molecular 

pathology tests. As indicated 

previously, after consideration of the 

public comments received on this issue, 

in this final rule with comment period, 

we are revising the current laboratory 

DOS policy to create a new exception 

for tests granted ADLT status by CMS 

under Criterion (A) and molecular 

pathology tests excluded from the OPPS 

packaging policy. 


sradovich on DSK3GMQ082PROD with RULES2
59400 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

(b) Other Alternative Approaches 

Finally, in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33653), we invited 

public comments on alternative 

approaches to addressing stakeholders’ 

concerns regarding the DOS policy, 

such as potentially modifying the 

‘‘under arrangements’’ provisions in 42 

CFR 410.42 and 411.15(m). Specifically, 

we requested comments on whether an 

exception should be added to 

§ 410.42(b) and/or § 411.15(m)(3) for 

molecular pathology tests and ADLTs 

that are excluded from the OPPS 

packaging policy under 42 CFR 419.2(b) 

and how such an exception should be 

framed. 

Comment: Several commenters 

preferred modifications to the ‘‘under 

arrangements’’ provisions to a 

laboratory DOS revision. They stated 

that modifying the ‘‘under 

arrangements’’ provisions could be a 

more direct approach for permitting a 

performing laboratory to bill Medicare 

directly for ADLTs and molecular 

pathology tests. Therefore, the 

commenters requested that CMS add 

another exception to the ‘‘under 

arrangements’’ provisions so that a 

revision to the laboratory DOS policy 

would not be necessary. They suggested 

that changes to the ‘‘under 

arrangements’’ provisions could be 

made in lieu of modifying the laboratory 

DOS rules and asserted that this 

approach would only revise the ‘‘billing 

regulation’’ for tests performed on 

hospital outpatient specimens to align 

with CMS’ existing exclusions from the 

OPPS packaging policy. 

In addition, a few commenters noted 

that certain practitioner services, such 

as physician services and nurse 

practitioner services, are not performed 

by the hospital outpatient department 

and paid under a separate fee schedule, 

and therefore, are currently excluded 

from the ‘‘under arrangements’’ 

provisions. They contended that adding 

an exception to the ‘‘under 

arrangements’’ provisions for 

nonpackaged laboratory tests which are 

paid at the CLFS rates would be 

consistent with the exceptions for other 

services (for example, physician 

services) paid separately from the 

hospital service. 

A few commenters also provided 

specific recommendations on how CMS 

should revise the ‘‘under arrangements’’ 

regulations at §§ 410.42(b) and 

411.15(m). Similar to their 

recommendations for revising the 

laboratory DOS policy, the commenters 

suggested adding an exception to the 

‘‘under arrangements’’ provisions for 

molecular pathology tests, all ADLTs, 

and all MAAAs, irrespective of whether 

these tests are currently excluded from 

the OPPS packaging policy. 

Response: We appreciate the feedback 

that commenters provided in response 

to our request for comments on 

potential modifications to the ‘‘under 

arrangements’’ provisions. As discussed 

previously, in this final rule with 

comment period, we are finalizing a 

revision to the current laboratory DOS 

policy so that laboratories performing 

Criterion (A) ADLTs and molecular 

pathology tests excluded from the OPPS 

packaging policy can bill Medicare 

directly for those tests, instead of 

seeking payment from the hospital 

outpatient department. We believe 

including this revision as part of 

§ 414.510 is more consistent with how 

we have historically addressed 

laboratory DOS issues and, at this stage, 

is the appropriate way to address 

stakeholders’ administrative and billing 

concerns regarding these tests. As noted 

previously, we intend to continue to 

study this issue and specifically 

consider whether further revisions to 

the ‘‘under arrangements’’ provisions 

are warranted. If we believe revisions to 

the ‘‘under arrangements’’ provisions 

may be warranted, we expect we would 

propose those changes through noticeand-comment rulemaking. 

In summary, after considering the 

public comments we received, we are 

adding an additional exception to our 

current laboratory DOS regulations at 

§ 414.510(b)(5) so that the DOS for 

molecular pathology tests and tests 

designated by CMS as Criterion (A) 

ADLTs is the date the test was 

performed only if: (1) The test was 

performed following a hospital 

outpatient’s discharge from the hospital 

outpatient department; (2) the specimen 

was collected from a hospital outpatient 

during an encounter (as both are defined 

in § 410.2); (3) it was medically 

appropriate to have collected the sample 

from the hospital outpatient during the 

hospital outpatient encounter; (4) the 

results of the test do not guide treatment 

provided during the hospital outpatient 

encounter; and (5) the test was 

reasonable and medically necessary for 

the treatment of an illness. This new 

exception to the laboratory DOS policy 

will enable laboratories performing 

Criterion (A) ADLTs and molecular 

pathology tests excluded from the OPPS 

packaging policy to bill Medicare 

directly for those tests, instead of 

requiring them to seek payment from 

the hospital outpatient department. 

XI. CY 2018 OPPS Payment Status and 

Comment Indicators 

A. CY 2018 OPPS Payment Status 

Indicator Definitions 

Payment status indicators (SIs) that 

we assign to HCPCS codes and APCs 

serve an important role in determining 

payment for services under the OPPS. 

They indicate whether a service 

represented by a HCPCS code is payable 

under the OPPS or another payment 

system and also whether particular 

OPPS policies apply to the code. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33653), for CY 2018, we did 

not propose to make any changes to the 

definitions of status indicators that were 

listed in Addendum D1 to the CY 2017 

OPPS/ASC final rule with comment 

period available on the CMS Web site at: 

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

Medicare-Fee-for-Service-Payment/ 

HospitalOutpatientPPS/HospitalOutpatient-Regulations-and-NoticesItems/CMS-1656-FC.html?DLPage=1&

DLEntries=10&DLSort=2&

DLSortDir=descending. 

We requested public comments on the 

proposed definitions of the OPPS status 

indicators for CY 2018. We did not 

receive any public comments. We 

believe that the existing CY 2017 

definitions of the OPPS status indicators 

continue to be appropriate for CY 2018. 

Therefore, we are finalizing our 

proposed CY 2018 definitions of the 

OPPS status indicators without 

modifications. 

The complete list of the payment 

status indicators and their definitions 

that apply for CY 2018 is displayed in 

Addendum D1 to this final rule with 

comment period, which is available on 

the CMS Web site at: https://

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

OutpatientPPS/index.html. 

The CY 2018 payment status indicator 

assignments for APCs and HCPCS codes 

are shown in Addendum A and 

Addendum B, respectively, to this final 

rule with comment period, which are 

available on the CMS Web site at: 

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

Medicare-Fee-for-Service-Payment/ 

HospitalOutpatientPPS/index.html. 

B. CY 2018 Comment Indicator 

Definitions 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33654), we proposed to use 

four comment indicators for the CY 

2018 OPPS. These comment indicators, 

‘‘CH’’, ‘‘NC’’, ‘‘NI’’, and ‘‘NP’’, are in 

effect for CY 2017 and we proposed to 

continue their use in CY 2018. The 

proposed CY 2018 OPPS comment 

indicators are as follows: 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59401 

• ‘‘CH’’—Active HCPCS code in 

current and next calendar year, status 

indicator and/or APC assignment has 

changed; or active HCPCS code that will 

be discontinued at the end of the 

current calendar year. 

• ‘‘NC’’—New code for the next 

calendar year or existing code with 

substantial revision to its code 

descriptor in the next calendar year as 

compared to current calendar year for 

which we requested comments in the 

proposed rule, final APC assignment; 

comments will not be accepted on the 

final APC assignment for the new code. 

• ‘‘NI’’—New code for the next 

calendar year or existing code with 

substantial revision to its code 

descriptor in the next calendar year as 

compared to current calendar year, 

interim APC assignment; comments will 

be accepted on the interim APC 

assignment for the new code. 

• ‘‘NP’’—New code for the next 

calendar year or existing code with 

substantial revision to its code 

descriptor in the next calendar year as 

compared to current calendar year, 

proposed APC assignment; comments 

will be accepted on the proposed APC 

assignment for the new code. 

We requested public comments on 

our proposed use of comment indicators 

for CY 2018. We did not receive any 

public comments. We believe that the 

CY 2017 definitions of the OPPS 

comment indicators continue to be 

appropriate for CY 2018. Therefore, we 

are continuing to use those definitions 

without modification for CY 2018. 

The definitions of the final OPPS 

comment indicators for CY 2018 are 

listed in Addendum D2 to this final rule 

with comment period, which is 

available on the CMS Web site at: 

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

Medicare-Fee-for-Service-Payment/ 

HospitalOutpatientPPS/index.html. 

XII. Updates to the Ambulatory 

Surgical Center (ASC) Payment System 

A. Background 

1. Legislative History, Statutory 

Authority, and Prior Rulemaking for the 

ASC Payment System 

For a detailed discussion of the 

legislative history and statutory 

authority related to payments to ASCs 

under Medicare, we refer readers to the 

CY 2012 OPPS/ASC final rule with 

comment period (76 FR 74377 through 

74378) and the June 12, 1998 proposed 

rule (63 FR 32291 through 32292). For 

a discussion of prior rulemaking on the 

ASC payment system, we refer readers 

to the CYs 2012, 2013, 2014, 2015, 2016, 

and 2017 OPPS/ASC final rules with 

comment period (76 FR 74378 through 

74379; 77 FR 68434 through 68467; 78 

FR 75064 through 75090; 79 FR 66915 

through 66940; 80 FR 70474 through 

70502; and 81 FR 79732 through 79753, 

respectively). 

2. Policies Governing Changes to the 

Lists of Codes and Payment Rates for 

ASC Covered Surgical Procedures and 

Covered Ancillary Services 

Under 42 CFR 416.2 and 416.166 of 

the Medicare regulations, subject to 

certain exclusions, covered surgical 

procedures in an ASC are surgical 

procedures that are separately paid 

under the OPPS, that would not be 

expected to pose a significant risk to 

beneficiary safety when performed in an 

ASC, and for which standard medical 

practice dictates that the beneficiary 

would not typically be expected to 

require active medical monitoring and 

care at midnight following the 

procedure (‘‘overnight stay’’). We 

adopted this standard for defining 

which surgical procedures are covered 

under the ASC payment system as an 

indicator of the complexity of the 

procedure and its appropriateness for 

Medicare payment in ASCs. We use this 

standard only for purposes of evaluating 

procedures to determine whether or not 

they are appropriate to be furnished to 

Medicare beneficiaries in ASCs. We 

define surgical procedures as those 

described by Category I CPT codes in 

the surgical range from 10000 through 

69999 as well as those Category III CPT 

codes and Level II HCPCS codes that 

directly crosswalk or are clinically 

similar to procedures in the CPT 

surgical range that we have determined 

do not pose a significant safety risk, that 

we would not expect to require an 

overnight stay when performed in ASCs, 

and that are separately paid under the 

OPPS (72 FR 42478). 

In the August 2, 2007 final rule (72 FR 

42495), we also established our policy 

to make separate ASC payments for the 

following ancillary items and services 

when they are provided integral to ASC 

covered surgical procedures: (1) 

Brachytherapy sources; (2) certain 

implantable items that have passthrough payment status under the 

OPPS; (3) certain items and services that 

we designate as contractor-priced, 

including, but not limited to, 

procurement of corneal tissue; (4) 

certain drugs and biologicals for which 

separate payment is allowed under the 

OPPS; and (5) certain radiology services 

for which separate payment is allowed 

under the OPPS. In the CY 2015 OPPS/ 

ASC final rule with comment period (79 

FR 66932 through 66934), we expanded 

the scope of ASC covered ancillary 

services to include certain diagnostic 

tests within the medicine range of CPT 

codes for which separate payment is 

allowed under the OPPS when they are 

provided integral to an ASC covered 

surgical procedure. Covered ancillary 

services are specified in § 416.164(b) 

and, as stated previously, are eligible for 

separate ASC payment. Payment for 

ancillary items and services that are not 

paid separately under the ASC payment 

system is packaged into the ASC 

payment for the covered surgical 

procedure. 

We update the lists of, and payment 

rates for, covered surgical procedures 

and covered ancillary services in ASCs 

in conjunction with the annual 

proposed and final rulemaking process 

to update the OPPS and the ASC 

payment system (§ 416.173; 72 FR 

42535). We base ASC payment and 

policies for most covered surgical 

procedures, drugs, biologicals, and 

certain other covered ancillary services 

on the OPPS payment policies, and we 

use quarterly change requests (CRs) to 

update services covered under the 

OPPS. We also provide quarterly update 

CRs for ASC covered surgical 

procedures and covered ancillary 

services throughout the year (January, 

April, July, and October). We release 

new and revised Level II HCPCS codes 

and recognize the release of new and 

revised CPT codes by the AMA and 

make these codes effective (that is, the 

codes are recognized on Medicare 

claims) via these ASC quarterly update 

CRs. We recognize the release of new 

and revised Category III CPT codes in 

the July and January CRs. These updates 

implement newly created and revised 

Level II HCPCS and Category III CPT 

codes for ASC payments and update the 

payment rates for separately paid drugs 

and biologicals based on the most 

recently submitted ASP data. New and 

revised Category I CPT codes, except 

vaccine codes, are released only once a 

year, and are implemented only through 

the January quarterly CR update. New 

and revised Category I CPT vaccine 

codes are released twice a year and are 

implemented through the January and 

July quarterly CR updates. We refer 

readers to Table 41 in the CY 2012 

OPPS/ASC proposed rule for an 

example of how this process, which we 

finalized in the CY 2012 OPPS/ASC 

final rule with comment period, is used 

to update HCPCS and CPT codes (76 FR 

42291; 76 FR 74380 through 74381). 

In our annual updates to the ASC list 

of, and payment rates for, covered 

surgical procedures and covered 

ancillary services, we undertake a 

review of excluded surgical procedures 

(including all procedures newly 

proposed for removal from the OPPS 


sradovich on DSK3GMQ082PROD with RULES2
59402 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

inpatient list), new codes, and codes 

with revised descriptors, to identify any 

that we believe meet the criteria for 

designation as ASC covered surgical 

procedures or covered ancillary 

services. Updating the lists of ASC 

covered surgical procedures and 

covered ancillary services, as well as 

their payment rates, in association with 

the annual OPPS rulemaking cycle is 

particularly important because the 

OPPS relative payment weights and, in 

some cases, payment rates, are used as 

the basis for the payment of many 

covered surgical procedures and 

covered ancillary services under the 

revised ASC payment system. This joint 

update process ensures that the ASC 

updates occur in a regular, predictable, 

and timely manner. 

3. Definition of ASC Covered Surgical 

Procedures 

Since the implementation of the ASC 

prospective payment system, we have 

defined a ‘‘surgical’’ procedure under 

the payment system as any procedure 

described within the range of Category 

I CPT codes that the CPT Editorial Panel 

of the American Medical Association 

(AMA) defines as ‘‘surgery’’ (CPT codes 

10000 through 69999) (72 FR 42478). 

We also have included as ‘‘surgical,’’ 

procedures that are described by Level 

II HCPCS codes or by Category III CPT 

codes that directly crosswalk or are 

clinically similar to procedures in the 

CPT surgical range that we have 

determined do not pose a significant 

safety risk, would not expect to require 

an overnight stay when performed in an 

ASC, and are separately paid under the 

OPPS (72 FR 42478). 

As we noted in the CY 2008 final rule 

that implemented the revised ASC 

payment system, using this definition of 

surgery would exclude from ASC 

payment certain invasive, ‘‘surgery-like’’ 

procedures, such as cardiac 

catheterization or certain radiation 

treatment services that are assigned 

codes outside the CPT surgical range (72 

FR 42477). We stated in that final rule 

that we believed continuing to rely on 

the CPT definition of surgery is 

administratively straightforward, is 

logically related to the categorization of 

services by physician experts who both 

establish the codes and perform the 

procedures, and is consistent with a 

policy to allow ASC payment for all 

outpatient surgical procedures (72 FR 

42477). 

Recently, some stakeholders have 

suggested that certain procedures that 

are outside the CPT surgical range but 

that are similar to surgical procedures 

currently covered in an ASC setting 

should be ASC covered surgical 

procedures. For example, these 

stakeholders stated that certain cardiac 

catheterization services, cardiac device 

programming services, and 

electrophysiology services should be 

added to the covered surgical 

procedures list. While we continue to 

believe that using the CPT code range to 

define surgery represents a logical, 

appropriate, and straightforward 

approach to defining a surgical 

procedure, we also believe it may be 

appropriate for us to use the CPT 

surgical range as a guide rather than a 

requirement as to whether a procedure 

is surgical, which would give us more 

flexibility to include ‘‘surgery-like’’ 

procedures on the ASC Covered 

Procedures List (CPL). We are cognizant 

of the dynamic nature of ambulatory 

surgery and the continued shift of 

services from the inpatient setting to the 

outpatient setting over the past decade. 

Therefore, in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33655), we 

solicited public comments regarding 

services that are described by Category 

I CPT codes outside of the surgical 

range, or Level II HCPCS codes or 

Category III CPT codes that do not 

directly crosswalk and are not clinically 

similar to procedures in the CPT 

surgical range, but that nonetheless may 

be appropriate to include as covered 

surgical procedures that are payable 

when furnished in the ASC setting. In 

particular, we stated our interest in the 

public’s views regarding additional 

criteria we might use to consider when 

a procedure that is surgery-like could be 

included on the ASC CPL. We requested 

that commenters on this issue take into 

consideration whether each individual 

procedure can be safely and 

appropriately performed in an ASC, as 

required by the regulations at 42 CFR 

416.166 (including that standard 

medical practice dictates that the 

beneficiary would not typically be 

expected to require active medical 

monitoring and care at midnight 

following the procedure), and whether 

the procedure requires the resources, 

staff, and equipment typical of an ASC. 

We also indicated that we were 

interested in the public’s views on 

whether and how, if we were to include 

such services as ASC covered surgical 

procedures, we would need to revise 

our definition of ASC covered surgical 

procedures. 

Comment: Some commenters 

suggested that revising the definition of 

ASC covered surgical procedures would 

inappropriately move procedures from a 

hospital setting to an ASC setting and 

place Medicare patients in greater risk. 

Some commenters also suggested that 

revising the definition could further 

stress hospitals in isolated rural care 

settings because many ASCs are located 

in rural areas. 

Other commenters suggested that 

CMS develop and solicit comments on 

a clear definition and criteria for 

surgical site selection. Commenters also 

suggested patient selection and risk 

stratification protocols that would 

harmonize the different criteria of 

hospital outpatient departments and 

ASCs. In addition, they recommended 

that further clinical evaluation of the 

consequences to the Medicare 

population be performed before revising 

the definition of ASC covered surgical 

procedures. 

Many commenters supported revising 

the definition of ASC covered surgical 

procedures. Commenters supporting the 

revision of the definition of ASC 

covered surgical procedures suggested 

that the CPT surgical code range 

(10000–69999) has not properly 

accounted for technical advances in 

treatment and does not include invasive 

procedures that do not pose a significant 

safety risk, do not require an overnight 

stay for Medicare patients, and would 

otherwise be appropriate procedures to 

be added to the ASC list of covered 

surgical procedures. For example, some 

commenters believed that several 

catheter-based procedures would be 

appropriately performed in the ASC 

setting. Further, commenters stated that 

CMS has relied on alternative 

definitions of a surgical procedure in 

other operations of the Medicare 

program that are broader than the 

current definition of an ASC covered 

surgical procedure. 

Response: We appreciate the feedback 

we received from commenters. We 

acknowledge the importance of having 

clear criteria for covered surgical 

procedures that account for advances in 

surgical treatment in an ASC setting that 

also do not expose Medicare patients to 

significant safety risks. In the CY 2018 

OPPS/ASC proposed rule (82 FR 33654 

through 33655), we did not propose any 

revisions to our current definition of 

ASC covered surgical procedures. For 

CY 2018, we will continue to define 

‘‘surgical’’ procedures under the 

payment system as those procedures 

described by Category I CPT codes 

within the range the CPT Editorial Panel 

of the AMA defines as ‘‘surgery’’ (CPT 

codes 10000 through 69999), or Level II 

HCPCS codes or Category III CPT codes 

that directly crosswalk or are clinically 

similar to procedures in the CPT 

surgical range that we have determined 

do not pose a significant safety risk, 

would not be expected to require an 

overnight stay when performed in an 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59403 

ASC, and are separately paid under the 

OPPS. However, we will take these 

comments into consideration in future 

rulemaking. 

B. Treatment of New and Revised Codes 

1. Background on Current Process for 

Recognizing New and Revised Category 

I and Category III CPT Codes and Level 

II HCPCS Codes 

Category I CPT, Category III CPT, and 

Level II HCPCS codes are used to report 

procedures, services, items, and 

supplies under the ASC payment 

system. Specifically, we recognize the 

following codes on ASC claims: 

• Category I CPT codes, which 

describe surgical procedures and 

vaccine codes; 

• Category III CPT codes, which 

describe new and emerging 

technologies, services, and procedures; 

and 

• Level II HCPCS codes, which are 

used primarily to identify items, 

supplies, temporary procedures, and 

services not described by CPT codes. 

We finalized a policy in the August 2, 

2007 final rule (72 FR 42533 through 

42535) to evaluate each year all new and 

revised Category I and Category III CPT 

codes and Level II HCPCS codes that 

describe surgical procedures, and to 

make preliminary determinations 

during the annual OPPS/ASC 

rulemaking process regarding whether 

or not they meet the criteria for payment 

in the ASC setting as covered surgical 

procedures and, if so, whether or not 

they are office-based procedures. In 

addition, we identify new and revised 

codes as ASC covered ancillary services 

based upon the final payment policies 

of the revised ASC payment system. In 

prior rulemakings, we refer to this 

process as recognizing new codes. 

However, this process has always 

involved the recognition of new and 

revised codes. We consider revised 

codes to be new when they have 

substantial revision to their code 

descriptors that necessitate a change in 

the current ASC payment indicator. To 

clarify, we refer to these codes as new 

and revised in this CY 2018 OPPS/ASC 

final rule with comment period. 

We have separated our discussion 

below based on when the codes are 

released and whether we propose to 

solicit public comments in the CY 2018 

OPPS/ASC proposed rule (and respond 

to those comments in the CY 2018 

OPPS/ASC final rule with comment 

period) or whether we are soliciting 

public comments in this CY 2018 OPPS/ 

ASC final rule with comment period 

(and responding to those comments in 

the CY 2019 OPPS/ASC final rule with 

comment period). 

We note that we sought public 

comments in the CY 2017 OPPS/ASC 

final rule with comment period (81 FR 

79735 through 79736) on the new and 

revised Level II HCPCS codes effective 

October 1, 2016, or January 1, 2017. 

These new and revised codes, with an 

effective date of October 1, 2016, or 

January 1, 2017, were flagged with 

comment indicator ‘‘NI’’ in Addenda 

AA and BB to the CY 2017 OPPS/ASC 

final rule with comment period to 

indicate that we were assigning them an 

interim payment status and payment 

rate, if applicable, which were subject to 

public comment following publication 

of the CY 2017 OPPS/ASC final rule 

with comment period. We are 

responding to public comments and 

finalize the treatment of these codes 

under the ASC payment system in this 

CY 2018 OPPS/ASC final rule with 

comment period. 

In Table 79 below, we summarize our 

process for updating codes through our 

ASC quarterly update CRs, seeking 

public comments, and finalizing the 

treatment of these new codes under the 

OPPS. 

TABLE 79—COMMENT AND FINALIZATION TIMEFRAMES FOR NEW OR REVISED HCPCS CODES 

ASC quarterly 

update CR Type of code Effective date Comments sought When finalized 

April 1, 2017 .. Level II HCPCS Codes .................. April 1, 2017 .. CY 2018 OPPS/ASC proposed 

rule.

CY 2018 OPPS/ASC final rule with 

comment period. 

July 1, 2017 ... Level II HCPCS Codes .................. July 1, 2017 ... CY 2018 OPPS/ASC proposed 

rule.

CY 2018 OPPS/ASC final rule with 

comment perio. 

Category I (certain vaccine codes) 

and III CPT codes.

July 1, 2017 ... CY 2018 OPPS/ASC proposed 

rule.

CY 2018 OPPS/ASC final rule with 

comment period. 

October 1, 

2017.

Level II HCPCS Codes .................. October 1, 

2017.

CY 2018 OPPS/ASC final rule with 

comment period.

CY 2019 OPPS/ASC final rule with 

comment period. 

January 1, 

2018.

Level II HCPCS Codes .................. January 1, 

2018.

CY 2018 OPPS/ASC final rule with 

comment period.

CY 2019 OPPS/ASC final rule with 

comment period. 

Category I and III CPT Codes ....... January 1, 

2018.

CY 2018 OPPS/ASC proposed 

rule.

CY 2018 OPPS/ASC final rule with 

comment period. 

Note: In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66841 through 66844), we finalized a revised process of assigning

APC and status indicators for new and revised Category I and III CPT codes that would be effective January 1. We refer readers to section 

III.A.3. of this CY 2018 OPPS/ASC final rule with comment period for further discussion of this issue. 

2. Treatment of New and Revised Level 

II HCPCS Codes Implemented in April 

2017 for Which We Solicited Public 

Comments in the CY 2018 OPPS/ASC 

Proposed Rule 

In the April 2017 ASC quarterly 

update (Transmittal 3726, CR 9998, 

dated March 03, 2017), we added six 

new drug and biological Level II HCPCS 

codes to the list of covered ancillary 

services. Table 31 of the proposed rule 

listed the new Level II HCPCS codes 

that were implemented April 1, 2017, 

along with their payment indicators for 

CY 2018. 

We invited public comments on these 

proposed payment indicators and the 

proposed payment rates for the new 

Level II HCPCS codes that were 

recognized as ASC covered ancillary 

services in April 2017 through the 

quarterly update CRs, as listed in Table 

31 of the proposed rule. We proposed to 

finalize their payment indicators and 

their payment rates in the CY 2018 

OPPS/ASC final rule with comment 

period. 

We did not receive any public 

comments regarding the proposed ASC 

payment indicators and payment rates. 

Therefore, we are adopting as final the 

CY 2018 proposed payment indicators 

for these codes, as indicated in Table 80. 

We note that several of the HCPCS Ccodes have been replaced with HCPCS 

J-codes, effective January 1, 2018. Their 

replacement codes are listed in Table 

80. The final payment rates for these 

codes can be found in Addendum BB to 

this final rule with comment period 

(which is available via the Internet on 


sradovich on DSK3GMQ082PROD with RULES2
59404 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

the CMS Web site). In addition, the 

payment indicator meanings can be 

found in Addendum DD1 to this final 

rule with comment period (which is 

available via the Internet on the CMS 

Web site). 

TABLE 80—NEW LEVEL II HCPCS CODES FOR COVERED ANCILLARY SERVICES EFFECTIVE ON APRIL 1, 2017 

CY 2017 

HCPCS code 

CY 2018 

HCPCS code CY 2018 long descriptor 

CY 2018 

payment 

indicator 

C9484 ............ J1428 ............. Injection, eteplirsen, 10 mg ................................................................................................................. K2 

C9485 ............ J9285 ............. Injection, olaratumab, 10 mg .............................................................................................................. K2 

C9486 ............ J1627 ............. Injection, granisetron extended release, 0.1 mg ................................................................................ K2 

C9487 * .......... J3358 ............. Ustekinumab, for intravenous injection, 1 mg .................................................................................... K2 

C9488 ............ C9488 ............ Injection, conivaptan hydrochloride, 1 mg .......................................................................................... K2 

J7328 ............. J7328 ............. Hyaluronan or derivative, gelsyn-3, for intra-articular injection, 0.1 mg ............................................. K2 

* HCPCS code C9487, which was effective April 1, 2017, was deleted June 30, 2017 and replaced with HCPCS code Q9989 (Ustekinumab, for 

intravenous injection, 1 mg) effective July 1, 2017 through December 31, 2017. 

3. Treatment of New and Revised Level 

II HCPCS Codes Implemented in July 

2017 for Which We Solicited Public 

Comments in the CY 2018 OPPS/ASC 

Proposed Rule 

In the July 2017 ASC quarterly update 

(Transmittal 3792, CR 10138, dated June 

9, 2017), we added seven new Level II 

HCPCS codes to the list of covered 

surgical procedures and ancillary 

services. Table 32 of the proposed rule 

listed the new Level II HCPCS codes 

that are effective July 1, 2017. The 

proposed payment rates, where 

applicable, for these July codes were 

included in Addendum BB to the 

proposed rule (which is available via 

the Internet on the CMS Web site). 

Through the July 2017 quarterly 

update CR, we also implemented ASC 

payment for one new Category III CPT 

code as an ASC covered surgical 

procedure, effective July 1, 2017. This 

code was listed in Table 33 of the 

proposed rule, along with its proposed 

payment indicator. The proposed 

payment rate for this new Category III 

CPT code was included in Addendum 

AA to the proposed rule (which is 

available via the Internet on the CMS 

Web site). 

We invited public comments on these 

proposed payment indicators and the 

proposed payment rates for the new 

Category III CPT code and Level II 

HCPCS codes that were or are expected 

to be newly recognized as ASC covered 

surgical procedures or covered ancillary 

services in July 2017 through the 

quarterly update CRs, as listed in Tables 

32 and 33 of the proposed rule. We 

proposed to finalize their payment 

indicators and their payment rates in 

the CY 2018 OPPS/ASC final rule with 

comment period. 

Comment: One commenter supported 

the assignment of HCPCS code Q9986 

(Injection, hydroxyprogesterone 

caproate (Makena), 10 mg) to payment 

indicator ‘‘K2’’. However, the 

commenter requested that CMS review 

the calculated payment rate for the new 

HCPCS code Q9986, as it appeared to 

the commenter to be inaccurate. The 

commenter pointed out the following: 

The July 2017 OPPS and ASC Update 

indicates that this new HCPCS code is 

‘‘per 10 mg’’ with a payment rate of 

$2.72 (as indicated in the July 2017 

Addendum B/BB and in Addendum B 

and Addendum BB to the CY 2018 

OPPS/ASC proposed rule). Prior to July 

1, 2017, Makena® (NDC #64011–0247– 

02 and NDC #64011–0243–01) was 

reported under HCPCS code J1725, 

which had a dose and measure of ‘‘per 

1 mg’’ and a payment rate of $2.74 

(April 2017 Addendum B/BB). Makena®

also has a WAC price of $30.57 per 10 

mg. The commenter believed that when 

the new HCPCS code was added with a 

description of 10 mg instead of the prior 

1 mg, the payment rate was not 

appropriately adjusted to reflect the 

dosage change. 

Response: We agree with the 

commenter. The July 2017 and October 

2017 OPPS and ASC addenda 

incorrectly reflected a price for HCPCS 

code Q9986 based on a 1 mg dose rather 

than the revised 10 mg dose descriptor. 

We intend to correct the price for 

HCPCS code Q9986 retroactive to July 1, 

2017, in the respective January 2018 

updates to the OPPS and ASC payment 

systems. Applicable program 

instructions will be posted to the CMS 

Web site at: https://www.cms.gov/ 

Regulations-and-Guidance/Guidance/ 

Transmittals/2017-Transmittals.html. 

After consideration of the public 

comment we received, we are finalizing 

the proposed payment indicators for the 

new Category III CPT code and Level II 

HCPCS codes that were newly 

recognized as ASC covered surgical 

procedures or covered ancillary services 

in July 2017 through the quarterly 

update CRs, as indicated in Table 81 

below. We note that several of the 

HCPCS C- and Q-codes have been 

replaced with HCPCS J-codes, effective 

January 1, 2018. Their replacement 

codes are listed in Table 81 below. The 

CY 2018 final payment rates, where 

applicable, for these July codes can be 

found in Addendum BB to this final 

rule with comment period rule (which 

is available via the Internet on the CMS 

Web site). Table 82 below lists Category 

III CPT code 0474T, along with its final 

payment indicator. The CY 2018 final 

payment rate for this new Category III 

CPT code can be found in Addendum 

AA to the final rule with comment 

period (which is available via the 

Internet on the CMS Web site). 

TABLE 81—NEW LEVEL II HCPCS CODES FOR COVERED SURGICAL PROCEDURES AND ANCILLARY SERVICES EFFECTIVE

ON JULY 1, 2017 

CY 2017 

HCPCS code 

CY 2018 

CPCS code CY 2018 long descriptor 

CY 2018 

payment 

indicator 

C9489 ............ J2326 ............. Injection, nusinersen, 0.1 mg .............................................................................................................. K2 

C9490 ............ J0565 ............. Injection, bezlotoxumab, 10 mg .......................................................................................................... K2 

C9745 ............ C9745 ............ Nasal endoscopy, surgical; balloon dilation of eustachian tube ......................................................... J8 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59405 

TABLE 81—NEW LEVEL II HCPCS CODES FOR COVERED SURGICAL PROCEDURES AND ANCILLARY SERVICES EFFECTIVE

ON JULY 1, 2017—Continued 

CY 2017 

HCPCS code 

CY 2018 

CPCS code CY 2018 long descriptor 

CY 2018 

payment 

indicator 

C9746 ............ C9746 ............ Transperineal implantation of permanent adjustable balloon continence device, with 

cystourethroscopy, when performed and/or fluoroscopy, when performed.

J8 

C9747 ............ C9747 ............ Ablation of prostate, transrectal, high intensity focused ultrasound (HIFU), including imaging guidance.J8 

Q9986 ............ J1726 ............. Injection, hydroxyprogesterone caproate (Makena), 10 mg ............................................................... K2 

Q9989 * .......... J3358 ............. Ustekinumab, for intravenous injection, 1 mg .................................................................................... K2 

* HCPCS code C9487, which was effective April 1, 2017, was replaced with HCPCS code Q9989 (Ustekinumab, for intravenous injection, 1 

mg) effective July 1, 2017. 

TABLE 82—NEW CATEGORY III CPT CODE FOR COVERED SURGICAL PROCEDURE EFFECTIVE ON JULY 1, 2017 

CY 2017 

CPT code 

CY 2018 

CPT code CY 2018 long descriptor 

CY 2018 

payment 

indicator 

0474T ............. 0474T ............. Insertion of anterior segment aqueous drainage device, with creation of intraocular reservoir, internal approach, into the supraciliary space.J8 

4. Process for New and Revised Level II 

HCPCS Codes That Are Effective 

October 1, 2017 and January 1, 2018 for 

Which We Are Soliciting Public 

Comments in This CY 2018 OPPS/ASC 

Final Rule With Comment Period 

As has been our practice in the past, 

we incorporate those new and revised 

Level II HCPCS codes that are effective 

January 1 in the final rule with 

comment period, thereby updating the 

OPPS and the ASC payment system for 

the following calendar year. These 

codes are released to the public via the 

CMS HCPCS Web site, and also through 

the January OPPS quarterly update CRs. 

In the past, we also released new and 

revised Level II HCPCS codes that are 

effective October 1 through the October 

OPPS quarterly update CRs and 

incorporated these new codes in the 

final rule with comment period. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33657), for CY 2018, 

consistent with our established policy, 

we proposed that the Level II HCPCS 

codes that will be effective October 1, 

2017, and January 1, 2018, would be 

flagged with comment indicator ‘‘NI’’ in 

Addendum B to the CY 2018 OPPS/ASC 

final rule with comment period to 

indicate that we have assigned the codes 

an interim OPPS payment status for CY 

2018. We did not receive any public 

comments on our proposal. As we stated 

we would do in the proposed rule, we 

are inviting public comments in this CY 

2018 OPPS/ASC final rule with 

comment period on the interim payment 

indicators and payment rates for these 

codes that will be finalized in the CY 

2019 OPPS/ASC final rule with 

comment period. 

5. Process for Recognizing New and 

Revised Category I and Category III CPT 

Codes That Are Effective January 1, 

2018 for Which We Are Soliciting 

Public Comments in This CY 2018 

OPPS/ASC Final Rule With Comment 

Period 

For new and revised CPT codes 

effective January 1, 2018, that were 

received in time to be included in the 

CY 2018 OPPS/ASC proposed rule, we 

proposed APC and status indicator 

assignments (82 FR 33657). We stated in 

the proposed rule that we would accept 

comments and finalize the APC and 

status indicator assignments in the CY 

2018 OPPS/ASC final rule with 

comment period. For those new/revised 

CPT codes that were received too late 

for inclusion in the CY 2018 OPPS/ASC 

proposed rule, we stated that we may 

either make interim final assignments in 

the final rule with comment period or 

possibly use HCPCS G-codes that mirror 

the predecessor CPT codes and retain 

the current APC and status indicator 

assignments for a year until we can 

propose APC and status indicator 

assignments in the following year’s 

rulemaking cycle. 

We stated in the proposed rule that, 

for the CY 2018 ASC update, the new 

and revised CY 2018 Category I and III 

CPT codes will be effective on January 

1, 2018, and were included in ASC 

Addendum AA and Addendum BB to 

the proposed rule (which are available 

via the Internet on the CMS Web site). 

The new and revised CY 2018 Category 

I and III CPT codes were assigned to 

comment indicator ‘‘NP’’ to indicate 

that the code is new for the next 

calendar year or the code is an existing 

code with substantial revision to its 

code descriptor in the next calendar 

year, as compared to the current 

calendar year, and that comments will 

be accepted on the proposed payment 

indicator. Further, in the proposed rule, 

we reminded readers that the CPT code 

descriptors that appear in Addendum 

AA and Addendum BB are short 

descriptors and do not fully describe the 

complete procedure, service, or item 

described by the CPT code. Therefore, 

we included the 5-digit placeholder 

codes and their long descriptors for the 

new and revised CY 2018 CPT codes in 

Addendum O to the proposed rule 

(which is available via the Internet on 

the CMS Web site) so that the public can 

have time to adequately comment on 

our proposed payment indicator 

assignments. We stated in the proposed 

rule that the 5-digit placeholder codes 

can be found in Addendum O, 

specifically under the column labeled 

‘‘CY 2018 OPPS/ASC Proposed Rule 5- 

Digit Placeholder Code,’’ to the 

proposed rule. We stated that the final 

CPT code numbers would be included 

in the CY 2018 OPPS/ASC final rule 

with comment period. We noted that 

not every code listed in Addendum O is 

subject to comment. For the new/ 

revised Category I and III CPT codes, we 

requested comments on only those 

codes that are assigned to comment 

indicator ‘‘NP’’. 

In summary, we solicited public 

comments on the proposed CY 2018 

payment indicators for the new and 

revised Category I and III CPT codes that 

will be effective January 1, 2018. The 

CPT codes were listed in Addendum 

AA and Addendum BB to the proposed 

rule with short descriptors only. We 


sradovich on DSK3GMQ082PROD with RULES2
59406 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

listed them again in Addendum O to the 

proposed rule with long descriptors. We 

also proposed to finalize the payment 

indicator for these codes (with their 

final CPT code numbers) in the CY 2018 

OPPS/ASC final rule with comment 

period. The proposed payment 

indicators for these codes were included 

in Addendum AA and Addendum BB to 

the proposed rule (which are available 

via the Internet on the CMS Web site). 

Comment: Some commenters 

addressed the proposed establishment 

of HCPCS G-codes under the MPFS to 

report the insertion and removal of 

buprenorphine hydrochloride, 

formulated as a 4-rod, 80 mg, longacting subdermal drug implant for the 

treatment of opioid addiction (82 FR 

34011 through 34012). Specifically, the 

commenters requested that the MPFS 

proposal also apply to the OPPS and 

ASC payment systems. In addition, the 

commenters recommended that CMS 

assign the HCPCS G-codes to payment 

indicator ‘‘P3’’ (Office-based surgical 

procedure added to ASC list in CY 2008 

or later with MPFS nonfacility Practice 

Expense Relative Value Units (PE 

RVUs); payment based on MPFS 

nonfacility PE RVUs). 

Response: As discussed in section 

III.D. (OPPS APC-Specific Policies) of 

this final rule with comment period, we 

are establishing these HCPCS G-codes in 

the OPPS, effective January 1, 2018, 

with status indicator ‘‘Q1’’ (Packaged 

APC payment if billed on the same 

claim as a HCPCS code assigned status 

indicator ‘‘S’’, ‘‘T’’, or ‘‘V’’). However, 

because these services are conditionally 

packaged under the OPPS, they are 

unconditionally packaged under the 

ASC payment system (payment 

indicator ‘‘N1’’). Therefore, we are not 

accepting the commenters’ request to 

assign payment indicator ‘‘P3’’ to these 

HCPCS G-codes. 

Comment: One commenter disagreed 

with the proposed payment rate for four 

new CPT codes (31XX2, 31XX3, 31XX4, 

and 31XX5) that describe endoscopic 

sinus surgery services. The commenter 

noted that the multiple procedure 

reduction applies to these procedures 

when performed in an ASC which 

results in payment at 100 percent for the 

highest ranking procedure and 50 

percent for each subsequent procedure 

when performed in the same encounter. 

Because the commenter believed that 

these payment rates are inadequate, the 

commenter requested that CMS consider 

an ASC payment rate that more closely 

aligns with ASCs’ costs. 

Response: The national unadjusted 

ASC payment rates are calculated using 

our standard ASC ratesetting 

methodology of multiplying the ASC 

relative payment weight for the 

procedure by the ASC conversion factor 

for that same year. We have no cost data 

or information to assess whether ASC 

payments rates calculated using the 

standard ratesetting methodology align 

with ASC costs. Therefore, we are not 

accepting the commenter’s 

recommendation and we are finalizing 

payment for proposed CPT codes 

31XX2, 31XX3, 31XX4, and 31XX5, as 

replaced by CPT codes 31253, 31257, 

31259, and 31298, respectively, 

according to our standard ASC 

ratesetting methodology for CY 2018. 

We note the OPPS cost data informs 

ASC payment rates, and as data become 

available from hospitals paid under the 

OPPS, we will reassess the APC 

assignments for these codes. 

After consideration of the public 

comments we received, we are 

finalizing, without modification, the 

proposed CY 2018 ASC payment 

indicator assignments for new and 

revised CPT codes, effective January 1, 

2018. The final CY 2018 payment 

indicators for the new and revised 

Category I and III CPT codes (with their 

final CPT code numbers) that will be 

effective January 1, 2018 are listed in 

Addendum AA and Addendum BB to 

this final rule with comment period 

with short descriptors only. We list 

them again in Addendum O to the final 

rule with comment period with long 

descriptors. 

C. Update to the List of ASC Covered 

Surgical Procedures and Covered 

Ancillary Services 

1. Covered Surgical Procedures 

a. Covered Surgical Procedures 

Designated as Office-Based 

(1) Background 

In the August 2, 2007 ASC final rule, 

we finalized our policy to designate as 

‘‘office-based’’ those procedures that are 

added to the ASC list of covered 

surgical procedures in CY 2008 or later 

years that we determine are performed 

predominantly (more than 50 percent of 

the time) in physicians’ offices based on 

consideration of the most recent 

available volume and utilization data for 

each individual procedure code and/or, 

if appropriate, the clinical 

characteristics, utilization, and volume 

of related codes. In that rule, we also 

finalized our policy to exempt all 

procedures on the CY 2007 ASC list 

from application of the office-based 

classification (72 FR 42512). The 

procedures that were added to the ASC 

list of covered surgical procedures 

beginning in CY 2008 that we 

determined were office-based were 

identified in Addendum AA to that rule 

by payment indicator ‘‘P2’’ (Officebased surgical procedure added to ASC 

list in CY 2008 or later with MPFS 

nonfacility PE RVUs; payment based on 

OPPS relative payment weight); ‘‘P3’’ 

(Office-based surgical procedures added 

to ASC list in CY 2008 or later with 

MPFS nonfacility PE RVUs; payment 

based on MPFS nonfacility PE RVUs); or 

‘‘R2’’ (Office-based surgical procedure 

added to ASC list in CY 2008 or later 

without MPFS nonfacility PE RVUs; 

payment based on OPPS relative 

payment weight), depending on whether 

we estimated the procedure would be 

paid according to the standard ASC 

payment methodology based on its 

OPPS relative payment weight or at the 

MPFS nonfacility PE RVU-based 

amount. 

Consistent with our final policy to 

annually review and update the list of 

covered surgical procedures eligible for 

payment in ASCs, each year we identify 

covered surgical procedures as either 

temporarily office-based (these are new 

procedure codes with little or no 

utilization data that we have determined 

are clinically similar to other 

procedures that are permanently officebased), permanently office-based, or 

nonoffice-based, after taking into 

account updated volume and utilization 

data. 

(2) Changes for CY 2018 to Covered 

Surgical Procedures Designated as 

Office-Based 

In developing the CY 2018 OPPS/ASC 

proposed rule and this final rule with 

comment period, we followed our 

policy to annually review and update 

the covered surgical procedures for 

which ASC payment is made and to 

identify new procedures that may be 

appropriate for ASC payment, including 

their potential designation as officebased. We reviewed CY 2016 volume 

and utilization data and the clinical 

characteristics for all covered surgical 

procedures that are assigned payment 

indicator ‘‘G2’’ (Nonoffice-based 

surgical procedure added in CY 2008 or 

later; payment based on OPPS relative 

payment weight) in CY 2016, as well as 

for those procedures assigned one of the 

temporary office-based payment 

indicators, specifically ‘‘P2’’, ‘‘P3’’, or 

‘‘R2’’ in the CY 2017 OPPS/ASC final 

rule with comment period (81 FR 79736 

through 79738). 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule, our review of the 

CY 2016 volume and utilization data 

resulted in our identification of two 

covered surgical procedures, CPT code 

37241 (Vascular embolize/occlude 

venous) and CPT code 67227 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59407 

(Destruction extensive retinopathy), that 

we believe meet the criteria for 

designation as office-based. The data 

indicate that these procedures are 

performed more than 50 percent of the 

time in physicians’ offices, and we 

believe that the services are of a level of 

complexity consistent with other 

procedures performed routinely in 

physicians’ offices. The CPT codes that 

we proposed to permanently designate 

as office-based for CY 2018 were listed 

in Table 34 of the proposed rule. 

TABLE 83—ASC COVERED SURGICAL PROCEDURES NEWLY DESIGNATED AS PERMANENTLY OFFICE-BASED FOR CY 2018 

CY 2018 

CPT code CY 2018 long descriptor 

CY 2017 

ASC 

payment 

indicator 

CY 2018 

ASC 

payment 

indicator * 

37241 .............. Vascular embolization or occlusion, inclusive of all radiological supervision and interpretation, 

intraprocedural roadmapping, and imaging guidance necessary to complete the intervention; 

venous, other than hemorrhage (eg, congenital or acquired venous malformations, venous and 

capillary hemangiomas, varices, varioceles).

G2 P3 

67227 .............. Destruction of extensive or progressive retinopathy (eg, diabetic retinopathy), cryotherapy, diathermy.G2 P3 

* Payment indicators are based on a comparison of the final rates according to the ASC standard ratesetting methodology and the MPFS final 

rates. Current law specifies a 0.5 percent update to the MPFS payment rates for CY 2018. For a discussion of the MPFS rates, we refer readers 

to the CY 2018 MPFS final rule with comment period. 

We also reviewed CY 2016 volume 

and utilization data and other 

information for 10 procedures 

designated as temporary office-based in 

Tables 48 and 49 in the CY 2017 OPPS/ 

ASC final rule with comment period (81 

FR 79736 through 79738). Of these 10 

procedures, there were very few claims 

in our data and no claims data for 8 

procedures: CPT code 0402T (Collagen 

cross-linking of cornea (including 

removal of the corneal epithelium and 

intraoperative pachymetry when 

performed)); CPT code 10030 (Imageguided fluid collection drainage by 

catheter (eg, abscess, hematoma, seroma, 

lymphocele, cyst), soft tissue (eg, 

extremity, abdominal wall, neck), 

percutaneous); CPT code 36473 

(Endovenous ablation therapy of 

incompetent vein, extremity, inclusive 

of all imaging guidance and monitoring, 

percutaneous, mechanochemical; first 

vein treated); CPT code 36901 

(Introduction of needle(s) and/or 

catheter(s), dialysis circuit, with 

diagnostic angiography of the dialysis 

circuit, including all direct puncture(s) 

and catheter placement(s), injection(s) 

of contrast, all necessary imaging from 

the arterial anastomosis and adjacent 

artery through entire venous outflow 

including the inferior or superior vena 

cava, fluoroscopic guidance, 

radiological supervision and 

interpretation and image documentation 

and report); CPT code 64461 

(Paravertebral block (PVB) (paraspinous 

block), thoracic; single injection site 

(includes imaging guidance, when 

performed); CPT code 64463 

(Paravertebral block (PVB) (paraspinous 

block), thoracic; continuous infusion by 

catheter (includes imaging guidance, 

when performed)); CPT code 65785 

(Implantation of intrastromal corneal 

ring segments); and CPT code 67229 

(Treatment of extensive or progressive 

retinopathy, one or more sessions; 

preterm infant (less than 37 weeks 

gestation at birth), performed from birth 

up to 1 year of age (for example, 

retinopathy of prematurity), 

photocoagulation or cryotherapy). 

Consequently, we proposed to maintain 

the temporary office-based designations 

for these eight codes for CY 2018. We 

listed all of these codes for which we 

proposed to maintain the temporary 

office-based designations for CY 2018 in 

Table 35 of the proposed rule. The 

procedures for which the proposed 

office-based designations for CY 2018 

are temporary also were indicated by 

asterisks in Addendum AA to the 

proposed rule (which is available via 

the Internet on the CMS Web site). 

The volume and utilization data for 

one procedure that has a temporary 

office-based designation for CY 2017, 

HCPCS code G0429 (Dermal injection 

procedure(s) for facial lipodystrophy 

syndrome (LDS) and provision of 

Radiesse or Sculptra dermal filler, 

including all items and supplies), is 

sufficient to indicate that this procedure 

is performed predominantly in 

physicians’ offices and, therefore, 

should be assigned an office-based 

payment indicator in CY 2018. 

Consequently, we proposed to assign 

payment indicator ‘‘P2/P3’’ to this 

covered surgical procedure code in CY 

2018. 

HCPCS code 0299T (Extracorporeal 

shock wave for integumentary wound 

healing, high energy, including topical 

application and dressing care; initial 

wound) was finalized for temporary 

office-based status in the CY 2017 

OPPS/ASC final rule with comment 

period. However, this code will be 

deleted by the AMA, effective December 

31, 2017. 

We invited public comment on our 

proposals. 

Comment: One commenter objected to 

the proposal to designate CPT codes 

10030, 36473, and 36901 as temporarily 

office-based procedures for CY 2018. 

The commenter did not provide a 

clinical rationale but stated that, in the 

absence of data to examine site of 

service, it is premature to designate 

these CPT codes as temporarily officebased. 

Response: In consultation with our 

medical advisors, we reviewed the 

clinical characteristics, utilization, and 

volume of related codes and determined 

that the procedures described by CPT 

codes 10030, 36473, and 36901 would 

be predominantly performed in 

physicians’ offices. However, because 

we do not have utilization data for these 

CPT codes, we made the office-based 

designation temporary rather than 

permanent for CY 2018. We will 

reevaluate office-based status for CPT 

codes 10030, 36473, and 36901 in the 

CY 2019 rulemaking. 

After consideration of the public 

comment we received, for CY 2018 we 

are finalizing our proposal, without 

modification, to designate the 

procedures listed in Table 84 below as 

temporary office-based. 


sradovich on DSK3GMQ082PROD with RULES2
59408 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 84—CY 2018 PAYMENT INDICATORS FOR ASC COVERED SURGICAL PROCEDURES DESIGNATED AS TEMPORARY

OFFICE-BASED IN THE CY 2018 OPPS/ASC FINAL RULE WITH COMMENT PERIOD

CY 2018 

CPT code CY 2018 long descriptor 

CY 2017 

ASC 

payment 

indicator * 

CY 2018 

ASC 

payment 

indicator ** 

0299T ............. Extracorporeal shock wave for integumentary wound healing, high energy, including topical 

application and dressing care; initial wound.

R2 * NA 

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

intraoperative pachymetry when performed).

R2 * R2 ** 

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

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

P2 * P2 ** 

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

36901 ............. Introduction of needle(s) and/or catheter(s), dialysis circuit, with diagnostic angiography of 

the dialysis circuit, including all direct puncture(s) and catheter placement(s), injection(s) of 

contrast, all necessary imaging from the arterial anastomosis and adjacent artery through 

entire venous outflow, including the inferior or superior vena cava, fluoroscopic guidance, 

radiological supervision and interpretation and image documentation and report.

P2 * P2 ** 

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

64463 ............. Continuous infusion by catheter (includes imaging guidance, when performed) ....................... P3 * P3 ** 

65785 ............. Implantation of intrastromal corneal ring segments .................................................................... R2 * P2 ** 

67229 ............. Treatment of extensive or progressive retinopathy, one or more sessions; preterm infant 

(less than 37 weeks gestation at birth), performed from birth up to 1 year of age (e.g., retinopathy of prematurity), photocoagulation or cryotherapy.

R2 * R2 ** 

G0429 ............ Dermal injection procedure(s) for facial lipodystrophy syndrome (LDS) and provision of 

Radiesse or Sculptra dermal filler, including all items and supplies.

P3 * P3 ** 

* If designation is temporary. 

** Payment indicators are based on a comparison of the final rates according to the ASC standard ratesetting methodology and the MPFS final 

rates. Current law specifies a 0.5 percent update to the MPFS payment rates for CY 2018. For a discussion of the MPFS rates, we refer readers 

to the CY 2018 MPFS final rule with comment period. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33660), for CY 2018, we 

proposed to designate one new CY 2018 

CPT code for ASC covered surgical 

procedures as temporary office-based, as 

displayed in Table 36 of the proposed 

rule. After reviewing the clinical 

characteristics, utilization, and volume 

of related procedure codes, we 

determined that the procedure 

described by this new CPT code would 

be predominantly performed in 

physicians’ offices. However, because 

we had no utilization data for the 

procedure specifically described by this 

new CPT code, we proposed to make the 

office-based designation temporary 

rather than permanent, and we stated 

that we will reevaluate the procedure 

when data become available. The 

procedure for which the proposed 

office-based designation for CY 2018 is 

temporary was indicated by asterisks in 

Addendum AA to the proposed rule 

(which is available via the Internet on 

the CMS Web site). 

We did not receive any public 

comments on our proposal. Therefore, 

for CY 2018, we are finalizing our 

proposal, without modification, to 

designate CPT code 38222 as temporary 

office-based for CY 2018 as displayed in 

Table 85 of this final rule with comment 

period. The procedure for which the 

office-based designation for CY 2018 is 

temporary is indicated by asterisks in 

Addendum AA to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site). 

TABLE 85—CY 2018 PAYMENT INDICATORS FOR NEW CY 2018 CPT CODES FOR ASC COVERED SURGICAL

PROCEDURES DESIGNATED AS TEMPORARY OFFICE-BASED

CY 2017 

OPPS/ASC 

proposed 

rule 5-digit 

CMS 

placeholder 

code 

CY 2018 

CPT code CY 2018 long descriptor 

CY 2018 

ASC 

payment 

indicator ** 

382X3 ............. 38222 ............. Diagnostic bone marrow; biopsy(ies) and aspiration(s) ............................................................. P3 * 

* If designation is temporary. 

** Payment indicators are based on a comparison of the final rates according to the ASC standard ratesetting methodology and the MPFS final 

rates. Current law specifies a 0.5 percent update to the MPFS payment rates for CY 2018. For a discussion of the MPFS rates, we refer readers 

to the CY 2018 MPFS final rule with comment period. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59409 

b. ASC Covered Surgical Procedures To 

Be Designated as Device-Intensive 

(1) Background 

As discussed in the CY 2017 OPPS/ 

ASC final rule with comment period (81 

FR 79739 through 79740), we 

implemented a payment methodology 

for calculating the ASC payment rates 

for covered surgical procedures that are 

designated as device-intensive. Under 

§ 416.171(b)(2) of the regulations, we 

define an ASC device-intensive 

procedure as a procedure with a HCPCS 

code-level device offset of greater than 

40 percent when calculated according to 

the standard OPPS APC ratesetting 

methodology. 

According to this ASC payment 

methodology, we apply the device offset 

percentage based on the standard OPPS 

APC ratesetting methodology to the 

OPPS national unadjusted payment to 

determine the device cost included in 

the OPPS payment rate for a deviceintensive ASC covered surgical 

procedure, which we then set as equal 

to the device portion of the national 

unadjusted ASC payment rate for the 

procedure. We calculate the service 

portion of the ASC payment for deviceintensive procedures by applying the 

uniform ASC conversion factor to the 

service (non-device) portion of the 

OPPS relative payment weight for the 

device-intensive procedure. Finally, we 

sum the ASC device portion and ASC 

service portion to establish the full 

payment for the device-intensive 

procedure under the revised ASC 

payment system. 

We also finalized that deviceintensive procedures will be subject to 

all of the payment policies applicable to 

procedures designated as an ASC 

device-intensive procedure under our 

established methodology, including our 

policies on device credits and 

discontinued procedures. 

In addition, in the CY 2017 OPPS/ 

ASC final rule with comment period, we 

adopted a policy for new HCPCS codes 

describing procedures involving the 

implantation of medical devices that do 

not yet have associated claims data, to 

designate these procedures as deviceintensive with a default device offset set 

at 41 percent until claims data are 

available to establish the HCPCS codelevel device offset for the procedures (81 

FR 79739 through 79740). This default 

device offset amount of 41 percent 

would not be calculated from claims 

data; instead, it would be applied as a 

default until claims data are available 

upon which to calculate an actual 

device offset for the new code. The 

purpose of applying the 41-percent 

default device offset to new codes that 

describe procedures that involve the 

implantation of medical devices would 

be to ensure ASC access for new 

procedures until claims data become 

available. However, in certain rare 

instances, for example, in the case of a 

very expensive implantable device, we 

may temporarily assign a higher offset 

percentage if warranted by additional 

information, such as pricing data from 

a device manufacturer. Once claims data 

are available for a new procedure 

involving the implantation of a medical 

device, the device-intensive designation 

will be applied to the code if the HCPCS 

code device offset is greater than 40 

percent, according to our policy of 

determining device-intensive status, by 

calculating the HCPCS code-level device 

offset. 

(2) Changes to List of ASC Covered 

Surgical Procedures Designated as 

Device-Intensive for CY 2018 

In the CY 2018 OPPS/ASC proposed 

rule, for CY 2018, we proposed to 

update the ASC list of covered surgical 

procedures that are eligible for payment 

according to our device-intensive 

procedure payment methodology, 

reflecting the proposed individual 

HCPCS code device-offset percentages 

based on CY 2016 OPPS claims and cost 

report data available for the proposed 

rule (82 FR 33660). 

The ASC covered surgical procedures 

that we proposed to designate as deviceintensive, and therefore subject to the 

device-intensive procedure payment 

methodology for CY 2018, are assigned 

payment indicator ‘‘J8’’ and were 

included in Addendum AA to the 

proposed rule (which is available on the 

CMS Web site). The CPT code, the CPT 

code short descriptor, the proposed CY 

2018 ASC payment indicator, and an 

indication of whether the full credit/ 

partial credit (FB/FC) device adjustment 

policy would apply also were included 

in Addendum AA to the proposed rule. 

We invited public comments on the 

proposed list of ASC device-intensive 

procedures. 

Comment: A few commenters 

requested that CMS lower the ASC 

device offset threshold to 30 percent to 

qualify a larger number of ASC 

procedures as device-intensive. 

Response: We did not propose to 

change to lower the ASC device offset 

threshold and, therefore, are not 

accepting this request. We note that we 

addressed a similar comment in the CY 

2017 OPPS/ASC final rule with 

comment period, and we refer readers to 

our response (81 FR 79739). 

Comment: One commenter requested 

that CMS designate CPT code 55X87 

(which is replaced by CPT code 55874 

in this final rule with comment period 

and effective January 1, 2018) as a 

device-intensive procedure in the ASC. 

The commenter stated that the 

procedure described by CPT code 55874 

requires the implantation of an 

expensive device which represents an 

approximate range of 80 to 87 percent 

of the procedure cost. 

Response: When claims data are 

available for a new procedure requiring 

the implantation of a medical device, 

device-intensive status will be applied 

to the code if the HCPCS code level 

device offset is greater than 40 percent, 

according to our finalized policy of 

determining device-intensive status by 

calculating the HCPCS code-level device 

offset (81 FR 79658). With respect to 

CPT code 55874, although the CPT code 

is new, the procedure itself was 

previously described by two 

predecessor codes, HCPCS code C9743 

and CPT code 0438T, for which we have 

claims data. Therefore, based on our 

analysis of the OPPS claims data used 

to determine the packaged device costs 

attributed to the predecessor HCPCS 

codes, CPT code 55874 is not eligible for 

device-intensive status because the 

device offset for its predecessor codes 

are below the 40 percent threshold. For 

more information on how codes are 

designated as device-intensive status, 

we refer readers to section IV.B. (DeviceIntensive Procedures) of this final rule 

with comment period. 

Comment: Commenters requested that 

CMS designate CPT code 0275T, a 

procedure described as percutaneous 

image guided lumbar decompression 

(PILD) for lumbar spinal stenosis, as a 

device-intensive procedure until claims 

data become available. Commenters 

stated that, beginning in CY 2017, PILD 

is the only procedure reported with CPT 

code 0275T. In addition, to ensure CMS 

collects robust data on the cost of the 

device, one commenter requested that 

CMS establish a specific device code. 

Response: As discussed in section 

IV.B.2 of this final rule with comment 

period, claims data for CPT code 0275T 

shows that the percentage of packaged 

device cost is below the 40 percent 

threshold; therefore, it is not eligible for 

designation as a device-intensive 

procedure. CPT code 0275T was 

implemented as a payable code in the 

OPPS and ASC settings on July 1, 2011 

(July 2011 OPPS Update, Transmittal 

2234, Change Request 7443). We are 

unclear why a separate device code is 

needed if PILD is the only procedure 

reported with CPT code 0275T. 

Comment: One commenter requested 

that CMS designate CPT code 67027 

(Implant eye drug system) as a deviceintensive procedure in the ASC. 


sradovich on DSK3GMQ082PROD with RULES2
59410 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

Response: CPT code 67027 does not 

have a device offset that is greater than 

40 percent. Accordingly, it is not 

device-intensive under current policy. 

After consideration of the public 

comments we received, we are 

designating the ASC covered surgical 

procedures displayed in Addendum AA 

as device-intensive and subject to the 

device-intensive procedure payment 

methodology for CY 2018. The CPT 

code, the CPT code short descriptor, the 

final CY 2018 ASC payment indicator, 

and an indication of whether the full 

credit/partial credit (FB/FC) device 

adjustment policy will apply are 

included in the ASC policy file labeled 

‘‘CY 2018 ASC Procedures to which the 

No Cost/Full Credit and Partial Credit 

Device Adjustment Policy Applies,’’’ 

which is available via the Internet on 

the CMS Web site at: https://

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ASCPayment/ASCPolicy-Files.html. 

c. Adjustment to ASC Payments for No 

Cost/Full Credit and Partial Credit 

Devices 

Our ASC payment policy for costly 

devices implanted in ASCs at no cost/ 

full credit or partial credit, as set forth 

in § 416.179 of our regulations, is 

consistent with the OPPS policy that 

was in effect until CY 2014. 

Specifically, the OPPS policy that was 

in effect through CY 2013 provided a 

reduction in OPPS payment by 100 

percent of the device offset amount 

when a hospital furnishes a specified 

device without cost or with a full credit 

and by 50 percent of the device offset 

amount when the hospital receives 

partial credit in the amount of 50 

percent or more of the cost for the 

specified device (77 FR 68356 through 

68358). The established ASC policy 

reduces payment to ASCs when a 

specified device is furnished without 

cost or with full credit or partial credit 

for the cost of the device for those ASC 

covered surgical procedures that are 

assigned to APCs under the OPPS to 

which this policy applies. We refer 

readers to the CY 2009 OPPS/ASC final 

rule with comment period for a full 

discussion of the ASC payment 

adjustment policy for no cost/full credit 

and partial credit devices (73 FR 68742 

through 68744). 

As discussed in section IV.B. of the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75005 through 

75006), we finalized our proposal to 

modify our former policy of reducing 

OPPS payment for specified APCs when 

a hospital furnishes a specified device 

without cost or with a full or partial 

credit. Formerly, under the OPPS, our 

policy was to reduce OPPS payment by 

100 percent of the device offset amount 

when a hospital furnished a specified 

device without cost or with a full credit 

and by 50 percent of the device offset 

amount when the hospital received 

partial credit in the amount of 50 

percent or more (but less than 100 

percent) of the cost for the specified 

device. For CY 2014, we finalized our 

proposal to reduce OPPS payment for 

applicable APCs by the full or partial 

credit a provider receives for a replaced 

device, capped at the device offset 

amount. 

Although we finalized our proposal to 

modify the policy of reducing payments 

when a hospital furnishes a specified 

device without cost or with full or 

partial credit under the OPPS, in that 

final rule with comment period (78 FR 

75076 through 75080), we finalized our 

proposal to maintain our ASC policy for 

reducing payments to ASCs for 

specified device-intensive procedures 

when the ASC furnishes a device 

without cost or with full or partial 

credit. Unlike the OPPS, there is 

currently no mechanism within the ASC 

claims processing system for ASCs to 

submit to CMS the actual amount 

received when furnishing a specified 

device at full or partial credit. 

Therefore, under the ASC payment 

system, we finalized our proposal for 

CY 2014 to continue to reduce ASC 

payments by 100 percent or 50 percent 

of the device offset amount when an 

ASC furnishes a device without cost or 

with full or partial credit, respectively. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33661), we proposed to 

update the list of ASC covered deviceintensive procedures that would be 

subject to the no cost/full credit and 

partial credit device adjustment policy 

for CY 2018. Specifically, when a 

device-intensive procedure is subject to 

the no cost/full credit or partial credit 

device adjustment policy and is 

performed to implant a device that is 

furnished at no cost or with full credit 

from the manufacturer, the ASC would 

append the HCPCS ‘‘FB’’ modifier on 

the line in the claim with the procedure 

to implant the device. The contractor 

would reduce payment to the ASC by 

the device offset amount that we 

estimate represents the cost of the 

device when the necessary device is 

furnished without cost or with full 

credit to the ASC. We continue to 

believe that the reduction of ASC 

payment in these circumstances is 

necessary to pay appropriately for the 

covered surgical procedure furnished by 

the ASC. 

For partial credit, we proposed to 

reduce the payment for implantation 

procedures that are subject to the no 

cost/full credit or partial credit device 

adjustment policy by one-half of the 

device offset amount that would be 

applied if a device was provided at no 

cost or with full credit, if the credit to 

the ASC is 50 percent or more (but less 

than 100 percent) of the cost of the new 

device. The ASC would append the 

HCPCS ‘‘FC’’ modifier to the HCPCS 

code for a device-intensive surgical 

procedure that is subject to the no cost/ 

full credit or partial credit device 

adjustment policy, when the facility 

receives a partial credit of 50 percent or 

more (but less than 100 percent) of the 

cost of a device. To report that the ASC 

received a partial credit of 50 percent or 

more (but less than 100 percent) of the 

cost of a new device, ASCs would have 

the option of either: (1) Submitting the 

claim for the device replacement 

procedure to their Medicare contractor 

after the procedure’s performance, but 

prior to manufacturer acknowledgment 

of credit for the device, and 

subsequently contacting the contractor 

regarding a claim adjustment, once the 

credit determination is made; or (2) 

holding the claim for the device 

implantation procedure until a 

determination is made by the 

manufacturer on the partial credit and 

submitting the claim with the ‘‘FC’’ 

modifier appended to the implantation 

procedure HCPCS code if the partial 

credit is 50 percent or more (but less 

than 100 percent) of the cost of the 

replacement device. Beneficiary 

coinsurance would be based on the 

reduced payment amount. As finalized 

in the CY 2015 OPPS/ASC final rule 

with comment period (79 FR 66926), to 

ensure our policy covers any situation 

involving a device-intensive procedure 

where an ASC may receive a device at 

no cost/full credit or partial credit, we 

apply our FB/FC policy to all deviceintensive procedures. 

We invited public comments on our 

proposals to adjust ASC payments for 

no cost/full credit and partial credit 

devices. 

We did not receive any public 

comment on these proposals. Therefore, 

we are finalizing these proposals 

without modification. Specifically, we 

will apply the HCPCS ‘‘FB’’/‘‘FC’’ 

modifier policy to all device-intensive 

procedures in CY 2018. For CY 2018, we 

will reduce the payment for the 

procedures listed in the ASC device 

adjustment file by the full device offset 

amount if a device is furnished without 

cost or with full credit. ASCs must 

append the HCPCS modifier ‘‘FB’’ to the 

HCPCS code for a surgical procedure 

listed in the ASC device adjustment file 

previously mentioned when the device 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59411 

is furnished without cost or with full 

credit. In addition, for CY 2018, we will 

reduce the payment for the procedures 

listed in the ASC device adjustment file 

by one-half of the device offset amount 

if a device is provided with partial 

credit, if the credit to the ASC is 50 

percent or more (but less than 100 

percent) of the device cost. The ASC 

must append the HCPCS ‘‘FC’’ modifier 

to the HCPCS code for a surgical 

procedure listed in the ASC device 

adjustment file when the facility 

receives a partial credit of 50 percent or 

more (but less than 100 percent) of the 

cost of a device. 

d. Additions to the List of ASC Covered 

Surgical Procedures 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33661), we 

conducted a review of HCPCS codes 

that currently are paid under the OPPS, 

but not included on the ASC list of 

covered surgical procedures, to 

determine if changes in technology and/ 

or medical practice affected the clinical 

appropriateness of these procedures for 

the ASC setting. Based on this review, 

we proposed to update the list of ASC 

covered surgical procedures by adding 

three procedures to the list for CY 2018. 

These procedures included procedures 

described by CPT codes 22856, 22858, 

and 58572. We determined that these 

three procedures are separately paid 

under the OPPS, would not be expected 

to pose a significant risk to beneficiary 

safety when performed in an ASC, and 

would not be expected to require active 

medical monitoring and care of the 

beneficiary at midnight following the 

procedure. Therefore, we proposed to 

include these three procedures on the 

list of ASC covered surgical procedures 

for CY 2018. 

The procedures that we proposed to 

add to the ASC list of covered surgical 

procedures, including the HCPCS code 

long descriptors and the proposed CY 

2018 payment indicators, were 

displayed in Table 37 of the proposed 

rule. We invited public comments on 

our proposals. 

Comment: Some commenters 

supported adding the three procedures 

described by CPT codes 22856, 22858, 

and 58572 to the ASC list of covered 

surgical procedures. These commenters 

believed that all three procedures met 

the criteria to be added to the ASC list 

of covered surgical procedures. 

Response: We appreciate the 

commenters’ support. As indicated later 

in this section, we are finalizing our 

proposal to add these procedures to the 

ASC list of covered surgical procedures. 

Comment: One commenter suggested 

that including the procedures described 

by CPT codes 22856, 22858, and 58572 

on the ASC list of covered surgical 

procedures would allow physicians to 

inappropriately direct patients to 

receive these procedures in an ASC 

setting with which they have a financial 

relationship rather than an inpatient 

hospital setting, and thereby jeopardize 

patient access to these procedures in an 

inpatient setting. 

Response: We do not believe that 

including the procedures described by 

CPT codes 22856, 22858, and 58572 on 

the ASC list of covered surgical 

procedures would lead to inappropriate 

shifting of patients to the ASC setting or 

jeopardize access to these procedures in 

an inpatient hospital setting. We believe 

the decision regarding the most 

appropriate care setting for a given 

surgical procedure is made by the 

physician based on the beneficiary’s 

individual clinical needs and 

preferences. In addition, as discussed in 

the CY 2012 OPPS/ASC final rule with 

comment period (76 FR 74377 and 

74378), section 1832(a)(2)(F)(i) of the 

Act provides that benefits under 

Medicare Part B include payment for 

facility services furnished in connection 

with surgical procedures specified by 

the Secretary that are performed in an 

ASC. Under 42 CFR 416.2 and 416.166 

of the Medicare regulations, subject to 

certain exclusions, we define covered 

surgical procedures as those procedures 

which are separately paid under the 

OPPS, would not be expected to pose a 

significant risk to beneficiary safety 

when performed in an ASC, and for 

which standard medical practice 

dictates that the beneficiary would not 

typically be expected to require active 

medical monitoring and care at 

midnight following the procedure. We 

believe it is appropriate and necessary 

to include procedures that meet these 

criteria on the list of ASC covered 

surgical procedures for Medicare 

patients who may be suitable candidates 

to undergo these procedures in an ASC 

setting. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to add the three 

procedures described by CPT codes 

22856, 22858, and 58572 to the ASC list 

of covered surgical procedures. The 

procedures that we are adding to the 

ASC list of covered surgical procedures, 

including the code long descriptors and 

the final CY 2018 payment indicators, 

are displayed in Table 86 below. 

TABLE 86—ADDITIONS TO THE LIST OF ASC COVERED SURGICAL PROCEDURES FOR CY 2018 

CY 2018 

CPT code CY 2018 long descriptor 

CY 2018 

ASC 

payment 

indicator 

22856 ............. Total disc arthroplasty (artificial disc), anterior approach, including discectomy with end plate preparation (includes osteophytectomy for nerve root or spinal cord decompression and microdissection); single interspace, cervical.J8 

22858 ............. Total disc arthroplasty (artificial disc), anterior approach, including discectomy with end plate preparation (includes osteophytectomy for nerve root or spinal cord decompression and microdissection); second level, 

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

N1 

58572 ............. Laparoscopy, surgical, with total hysterectomy, for uterus greater than 250g ....................................................... G2 

e. Discussion of Comment Solicitation 

on Adding Additional Procedures to the 

ASC Covered Procedures List 

As we discussed in the CY 2009 

OPPS/ASC final rule with comment 

period (73 FR 68724), we adopted a 

policy to include, in our annual 

evaluation of the ASC list of covered 

surgical procedures, a review of the 

procedures that are being proposed for 

removal from the OPPS IPO list for 

possible inclusion on the ASC list of 

covered surgical procedures. 

In the CY 2017 OPPS/ASC proposed 

rule (81 FR 45679 through 45681), we 

solicited comments regarding whether 

the TKA procedure described by CPT 

code 27447 should be removed from the 

OPPS IPO list. During the comment 

period, some stakeholders requested 

that CMS also add the TKA procedure 

to the list of surgical procedures covered 

in an ASC setting. In the CY 2017 OPPS/ 

ASC proposed rule, we solicited public 


sradovich on DSK3GMQ082PROD with RULES2
59412 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

comments on removing the TKA 

procedure from the OPPS IPO list for CY 

2017. However, in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33643 

through 33644), we proposed to remove 

the TKA procedure from the OPPS IPO 

list for CY 2018, as discussed in section 

IX. of both the proposed rule and this 

final rule with comment period. In light 

of the public comments we received on 

the CY 2017 OPPS/ASC proposed rule 

(81 FR 79697 through 79699) and our 

proposal to remove the TKA procedure 

from the OPPS IPO list for CY 2018, in 

the CY 2018 OPPS/ASC proposed rule, 

we solicited public comments on 

whether the TKA procedure should also 

be added to the ASC list of covered 

surgical procedures. We also invited 

public comments on our proposed 

continued exclusion of CPT code 55866 

(Laparoscopy, surgical prostatectomy, 

retropubic radical, including nerve 

sparing, includes robotic assistance, 

when performed) from the list of ASC 

covered surgical procedures. 

In considering whether or not the 

TKA procedure should be added to the 

ASC list of covered surgical procedures, 

we requested that commenters take into 

consideration the regulations at 42 CFR 

416.2 and 416.166. We indicated that 

commenters should assess, for example, 

whether this procedure would be 

expected to pose a significant risk to 

beneficiary safety when performed in an 

ASC, whether standard medical practice 

dictates that the beneficiary would 

typically be expected to require active 

medical monitoring and care at 

midnight following the procedure 

(‘‘overnight stay’’), and whether this 

procedure would fall under our general 

exclusions for covered surgical 

procedures at 42 CFR 416.166(c) (for 

example, would it generally result in 

extensive blood loss, require major or 

prolonged invasion of body cavities, 

directly involve major blood vessels, 

among others). 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule, we evaluated each 

of the procedures described by CPT 

codes 27447 and 55866 that we 

proposed to remove from the OPPS IPO 

list for CY 2018 according to the criteria 

for inclusion on the list of ASC covered 

surgical procedures, and considered 

whether they should be added to the list 

of ASC covered surgical procedures for 

CY 2018. We stated that, because our 

understanding is that these procedures 

typically require more than 24 hours of 

active medical care following the 

procedure, we believed they should 

continue to be excluded from the list of 

ASC covered surgical procedures. 

In addition, in the CY 2018 OPPS/ 

ASC proposed rule, we solicited 

comments on whether CPT codes 27125 

(Hemiarthroplasty, hip, partial (eg, 

femoral stem prosthesis, bipolar 

arthroplasty)) and 27130 (Arthroplasty, 

acetabular and proximal femoral 

prosthetic replacement (total hip 

arthroplasty), with or without autograft 

or allograft) meet the criteria to be 

removed from the OPPS IPO list, as 

discussed in section IX. of the proposed 

rule. As noted in that section, we also 

solicited comments on whether these 

two procedures meet the criteria to be 

added to the ASC covered surgical 

procedures list. 

Comment: In addition to the 

comments CMS received as to whether 

CPT codes 27447, 27125, 27130, and 

55866 should be removed from the 

OPPS IPO list, several commenters 

suggested that these procedures should 

be added to the ASC covered surgical 

procedures list. The commenters argued 

that many ASCs are equipped to 

perform these procedures and 

orthopedic surgeons in ASCs are 

increasingly performing these 

procedures safely and effectively on 

non-Medicare patients and appropriate 

Medicare patients. They also noted that 

CPT code 27446 (Arthroplasty, knee, 

condyle and plateau; medial or lateral 

compartment) is a similar procedure 

that is currently included on the list of 

ASC covered surgical procedures. In 

addition, the commenters also stated 

that adding TKA and partial and total 

hip arthroplasty procedures to the ASC 

covered surgical procedures list allows 

for greater choices in care settings for 

Medicare patients and would provide a 

more patient-centered approach to joint 

arthroplasty procedures. Further, 

commenters stated that, in some cases, 

it may be safer to have joint arthroplasty 

procedures performed in an outpatient 

setting to prevent certain hospitalacquired infections. 

Some commenters suggested a 

stepwise approach to transitioning TKA 

to the ASC setting and recommended 

allowing performance of 1 to 2 years in 

the hospital outpatient department 

setting before adding TKA to the ASC 

covered surgical procedures list. Other 

commenters recommended that ASCs 

obtain enhanced certification from a 

national accrediting organization that 

certifies an ASC meets higher quality 

standards to safely perform joint 

arthroplasty procedures. 

Some commenters opposed adding 

procedures described by CPT codes 

27447, 27125, 27130, and 55866 to the 

ASC covered surgical procedures list. 

These commenters believed that the vast 

majority of ASCs are not equipped to 

safely perform these procedures on 

patients and that the vast majority of 

Medicare patients are not suitable 

candidates to receive ‘‘overnight’’ joint 

arthroplasty procedures in an ASC 

setting. 

Response: We appreciate the feedback 

we received as to whether TKA, partial 

and total hip replacement procedures 

meet the criteria to be added to the ASC 

covered surgical procedures list. For CY 

2018, we are not removing CPT codes 

27125 and 27130 from the OPPS IPO 

list. While we are finalizing our 

proposal to remove CPT codes 27447 

and 55866 from the OPPS IPO list for 

CY 2018, we are not adding these 

procedures to the ASC covered surgical 

procedures list for CY 2018. We 

solicited comments on whether to add 

these procedures to the ASC list of 

covered surgical procedures, and we 

will take the suggestions and 

recommendations into consideration for 

future rulemaking. 

Comment: Many commenters 

requested that CMS add certain CPT 

codes that are outside of the 10000– 

69999 CPT code surgical range. These 

codes are shown in Table 87 below and 

included gastrointestinal diagnostic 

procedures, chemotherapy, cardiac 

catheterization procedures, and cardiac 

diagnostic procedures, as well as other 

cardiology procedures. 

TABLE 87—PROCEDURES REQUESTED

BY COMMENTERS FOR ADDITION TO

THE CY 2018 LIST OF ASDC COVERED SURGICAL PROCEDURES

CY 2018 

CPT/ 

HCPCS 

code 

CY 2018 short descriptor 

23470 ..... Reconstruct shoulder joint. 

23472 ..... Reconstruct shoulder joint. 

27702 ..... Reconstruct ankle joint. 

27703 ..... Reconstruction ankle joint. 

91010 ..... Esophagus motility study. 

91013 ..... Esophgl motil w/stim/perfus. 

91020 ..... Gastric motility studies. 

91022 ..... Duodenal motility study. 

91030 ..... Acid perfusion of esophagus. 

91034 ..... Gastroesophageal reflux test. 

91035 ..... G-esoph reflx tst w/electrod. 

91037 ..... Esoph imped function test. 

91038 ..... Esoph imped funct test > 1hr. 

91040 ..... Esoph balloon distension tst. 

91110 ..... Gi tract capsule endoscopy. 

91111 ..... Esophageal capsule endoscopy. 

91112 ..... Gi wireless capsule measure. 

91117 ..... Colon motility 6 hr study. 

91120 ..... Rectal sensation test. 

91122 ..... Anal pressure record. 

92920 ..... Prq cardiac angioplast 1 art. 

92921 ..... Prq cardiac angio addl art. 

92924 ..... Prq card angio/athrect 1 art. 

92925 ..... Prq card angio/athrect addl. 

92928 ..... Prq card stent w/angio 1 vsl. 

92929 ..... Prq card stent w/angio addl. 

92937 ..... Prq revasc byp graft 1 vsl. 

92938 ..... Prq revasc byp graft addl. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59413 

TABLE 87—PROCEDURES REQUESTED

BY COMMENTERS FOR ADDITION TO

THE CY 2018 LIST OF ASDC COVERED SURGICAL PROCEDURES— 

Continued 

CY 2018 

CPT/ 

HCPCS 

code 

CY 2018 short descriptor 

92960 ..... Cardioversion electric ext. 

92973 ..... Prq coronary mech thrombect. 

92978 ..... Endoluminl ivus oct c 1st. 

92979 ..... Endoluminl ivus oct c ea. 

93312 ..... Echo transesophageal. 

93313 ..... Echo transesophageal. 

93315 ..... Echo transesophageal. 

93316 ..... Echo transesophageal. 

93451 ..... Right heart cath. 

93452 ..... Left hrt cath w/ventrclgrphy. 

93453 ..... R&l hrt cath w/ventriclgrphy. 

93454 ..... Coronary artery angio s&i. 

93455 ..... Coronary art/grft angio s&i. 

93456 ..... R hrt coronary artery angio. 

93457 ..... R hrt art/grft angio. 

93458 ..... L hrt artery/ventricle angio. 

93459 ..... L hrt art/grft angio. 

93460 ..... R&l hrt art/ventricle angio. 

93461 ..... R&l hrt art/ventricle angio. 

93462 ..... L hrt cath trnsptl puncture. 

93463 ..... Drug admin & hemodynmic meas. 

93505 ..... Biopsy of heart lining. 

93530 ..... Rt heart cath congenital. 

93531 ..... R & l heart cath congenital. 

93532 ..... R & l heart cath congenital. 

93533 ..... R & l heart cath congenital. 

93563 ..... Inject congenital card cath. 

93564 ..... Inject hrt congntl art/grft. 

93565 ..... Inject l ventr/atrial angio. 

93566 ..... Inject r ventr/atrial angio. 

93567 ..... Inject suprvlv aortography. 

93568 ..... Inject pulm art hrt cath. 

93600 ..... Bundle of his recording. 

93602 ..... Intra-atrial recording. 

93603 ..... Right ventricular recording. 

93612 ..... Intraventricular pacing. 

93613 ..... Electrophys map 3d add-on. 

93620 ..... Electrophysiology evaluation. 

93621 ..... Electrophysiology evaluation. 

93622 ..... Electrophysiology evaluation. 

93623 ..... Stimulation pacing heart. 

93624 ..... Electrophysiologic study. 

93650 ..... Ablate heart dysrhythm focus. 

93653 ..... Ep & ablate supravent arrhyt. 

93654 ..... Ep & ablate ventric tachy. 

93655 ..... Ablate arrhythmia add on. 

93656 ..... Tx atrial fib pulm vein isol. 

93657 ..... Tx l/r atrial fib addl. 

96413 ..... Chemo iv infusion 1 hr. 

96415 ..... Chemo iv infusion addl hr. 

0237T ..... Trluml perip athrc brchiocph. 

0398T ..... Mrgfus strtctc les abltj. 

C9600 .... Perc drug-el cor stent sing. 

C9601 .... Perc drug-el cor stent bran. 

C9602 .... Perc d-e cor stent ather s. 

C9603 .... Perc d-e cor stent ather br. 

C9604 .... Perc d-e cor revasc t cabg s. 

C9605 .... Perc d-e cor revasc t cabg b. 

Response: We reviewed all of the 

codes that commenters requested for 

addition to the ASC list of covered 

surgical procedures. Of the codes 

requested for addition to the ASC list, 

we did not consider procedures that are 

reported by CPT codes that are on the 

OPPS IPO list. Codes that are on the 

OPPS IPO list for CY 2018 are not 

eligible for addition to the ASC list of 

covered surgical procedures. 

As we discussed in section XII.A.3. of 

this final rule with comment period, we 

solicited public comments regarding our 

definition of a surgical procedures and 

whether services described by Category 

I CPT codes outside of the surgical range 

(10000–69999), or Level II HCPCS codes 

or Category III CPT codes that do not 

directly crosswalk and are not clinically 

similar to procedures in the CPT 

surgical range, may nonetheless be 

appropriate to include as covered 

surgical procedures that are payable 

when furnished in the ASC setting. We 

did not propose any revisions to our 

definition of covered surgical 

procedures, and, for CY 2018, we 

continue to use the current definition of 

surgical procedure. 

We appreciate the commenters’ 

recommendations for procedures that 

may be suitable candidates to include 

on the list of ASC covered surgical 

procedures. We acknowledge that some 

of the procedures may be ‘‘surgery-like.’’ 

However, we remain concerned that 

these procedures may impose a 

significant safety risk to the Medicare 

population in an ASC setting. For CY 

2018, we continue to rely on defining 

surgical procedures as those that are 

described by Category I CPT codes 

within the surgical range, or Level II 

HCPCS codes or Category III CPT codes 

that directly crosswalk or are clinically 

similar to procedures in the CPT 

surgical range. Therefore, we do not 

believe that the remaining codes should 

be added to the list of ASC covered 

surgical procedures for CY 2018 because 

they do not meet our criteria for 

inclusion on the list. However, we will 

take these comments into consideration 

in future rulemakings. 

D. ASC Payment for Covered Surgical 

Procedures and Covered Ancillary 

Services 

1. ASC Payment for Covered Surgical 

Procedures 

a. Background 

Our ASC payment policies for 

covered surgical procedures under the 

revised ASC payment system are fully 

described in the CY 2008 OPPS/ASC 

final rule with comment period (72 FR 

66828 through 66831). Under our 

established policy, we use the ASC 

standard ratesetting methodology of 

multiplying the ASC relative payment 

weight for the procedure by the ASC 

conversion factor for that same year to 

calculate the national unadjusted 

payment rates for procedures with 

payment indicators ‘‘G2’’ and ‘‘A2’’. 

Payment indicator ‘‘A2’’ was developed 

to identify procedures that were 

included on the list of ASC covered 

surgical procedures in CY 2007 and, 

therefore, were subject to transitional 

payment prior to CY 2011. Although the 

4-year transitional period has ended and 

payment indicator ‘‘A2’’ is no longer 

required to identify surgical procedures 

subject to transitional payment, we 

retained payment indicator ‘‘A2’’ 

because it is used to identify procedures 

that are exempted from the application 

of the office-based designation. 

The rate calculation established for 

device-intensive procedures (payment 

indicator ‘‘J8’’) is structured so that the 

packaged device payment amount is the 

same as under the OPPS, and only the 

service portion of the rate is subject to 

the ASC standard ratesetting 

methodology. In the CY 2017 OPPS/ 

ASC final rule with comment period (81 

FR 79732 through 79753), we updated 

the CY 2016 ASC payment rates for ASC 

covered surgical procedures with 

payment indicators of ‘‘A2’’, ‘‘G2’’, and 

‘‘J8’’ using CY 2015 data, consistent 

with the CY 2017 OPPS update. We also 

updated payment rates for deviceintensive procedures to incorporate the 

CY 2017 OPPS device offset percentages 

calculated under the standard APC 

ratesetting methodology, as discussed 

earlier in this section. 

Payment rates for office-based 

procedures (payment indicators ‘‘P2’’, 

‘‘P3’’, and ‘‘R2’’) are the lower of the 

MPFS nonfacility PE RVU-based 

amount (we refer readers to the CY 2018 

MPFS proposed and final rules) or the 

amount calculated using the ASC 

standard rate setting methodology for 

the procedure. In the CY 2017 OPPS/ 

ASC final rule with comment period, we 

updated the payment amounts for 

office-based procedures (payment 

indicators ‘‘P2’’, ‘‘P3’’, and ‘‘R2’’) using 

the most recent available MPFS and 

OPPS data. We compared the estimated 

CY 2017 rate for each of the office-based 

procedures, calculated according to the 

ASC standard rate setting methodology, 

to the MPFS nonfacility PE RVU-based 

amount to determine which was lower 

and, therefore, would be the CY 2017 

payment rate for the procedure under 

our final policy for the revised ASC 

payment system (§ 416.171(d)). 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75081), we 

finalized our proposal to calculate the 

CY 2014 payment rates for ASC covered 

surgical procedures according to our 

established methodologies, with the 

exception of device removal procedures. 


sradovich on DSK3GMQ082PROD with RULES2
59414 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

For CY 2014, we finalized a policy to 

conditionally package payment for 

device removal codes under the OPPS. 

Under the OPPS, a conditionally 

packaged code (status indicators ‘‘Q1’’ 

and ‘‘Q2’’) describes a HCPCS code 

where the payment is packaged when it 

is provided with a significant procedure 

but is separately paid when the service 

appears on the claim without a 

significant procedure. Because ASC 

services always include a covered 

surgical procedure, HCPCS codes that 

are conditionally packaged under the 

OPPS are always packaged (payment 

indicator ‘‘N1’’) under the ASC payment 

system. Under the OPPS, device 

removal procedures are conditionally 

packaged and, therefore, would be 

packaged under the ASC payment 

system. There would be no Medicare 

payment made when a device removal 

procedure is performed in an ASC 

without another surgical procedure 

included on the claim; therefore, no 

Medicare payment would be made if a 

device was removed but not replaced. 

To address this concern, for the device 

removal procedures that are 

conditionally packaged in the OPPS 

(status indicator ‘‘Q2’’), we assigned the 

current ASC payment indicators 

associated with these procedures and 

continued to provide separate payment 

since CY 2014. 

b. Update to ASC Covered Surgical 

Procedure Payment Rates for CY 2018 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33663), we proposed to 

update ASC payment rates for CY 2018 

and subsequent years using the 

established rate calculation 

methodologies under § 416.171 and 

using our definition of device-intensive 

procedures, as discussed in section 

XII.C.1.b. of the proposed rule. Because 

the proposed OPPS relative payment 

weights are based on geometric mean 

costs, the ASC system would use 

geometric means to determine proposed 

relative payment weights under the ASC 

standard methodology. We proposed to 

continue to use the amount calculated 

under the ASC standard ratesetting 

methodology for procedures assigned 

payment indicators ‘‘A2’’ and ‘‘G2’’. 

We proposed to calculate payment 

rates for office-based procedures 

(payment indicators ‘‘P2’’, ‘‘P3’’, and 

‘‘R2’’) and device-intensive procedures 

(payment indicator ‘‘J8’’) according to 

our established policies and, for deviceintensive procedures, using our 

modified definition of device-intensive 

procedures, as discussed in section 

XII.C.1.b. of the proposed rule. 

Therefore, we proposed to update the 

payment amount for the service portion 

of the device-intensive procedures using 

the ASC standard rate setting 

methodology and the payment amount 

for the device portion based on the 

proposed CY 2018 OPPS device offset 

percentages that have been calculated 

using the standard OPPS APC 

ratesetting methodology. Payment for 

office-based procedures would be at the 

lesser of the proposed CY 2018 MPFS 

nonfacility PE RVU-based amount or the 

proposed CY 2018 ASC payment 

amount calculated according to the ASC 

standard ratesetting methodology. 

As we did for CYs 2014 through 2017, 

for CY 2018, we proposed to continue 

our policy for device removal 

procedures, such that device removal 

procedures that are conditionally 

packaged in the OPPS (status indicators 

‘‘Q1’’ and ‘‘Q2’’) would be assigned the 

current ASC payment indicators 

associated with these procedures and 

would continue to be paid separately 

under the ASC payment system. 

We invited public comments on these 

proposals. 

Comment: A few commenters 

objected to the proposed payment 

indicator of ‘‘G2’’ (Non-office-based 

surgical procedure) for CPT code 0465T 

(Suprachoroidal injection of a 

pharmacologic agent (does not include 

supply of medication)) and requested 

that CMS designate it an office-based 

procedure. The commenters noted CMS’ 

recognition of CPT code 0465T as an 

office-based procedure in the CY 2017 

OPPS/ASC final rule with comment 

period (81 FR 79735). 

Response: We agree with the 

commenters that CPT code 0465T is an 

office-based procedure. Therefore, we 

are modifying our proposal to assign 

CPT code 0465T to payment indicator 

‘‘R2’’ for CY 2018. 

Comment: One commenter requested 

that CMS use the CY 2016 ASC payment 

rates for six procedures to set the CY 

2018 ASC payment rate for the same 

procedures. The specific procedures 

include: 

• CPT 62321 (Cervicothoracic 

epidural); 

• CPT 62323 (Lumbosacral epidural); 

• CPT 64490 (Cervicothoracic facet 

joint injection); 

• CPT 64493 (Lumbosacral facet joint 

injection); 

• CPT G0620 (Sacroiliac joint 

injection); and 

• CPT 62264 (Percutaneous 

adhesiolysis). 

Response: We are required by law to 

review and update the data on which 

we establish payment rates on an annual 

basis. The ASC payment is dependent 

upon the APC assignment for the 

procedure. Based on our analysis of the 

latest hospital outpatient and ASC 

claims data used for this final rule with 

comment period, we are updating ASC 

payment rates for CY 2018 using the 

established rate calculation 

methodologies under § 416.171 and 

using our finalized modified definition 

of device-intensive procedures, as 

discussed in section XII.C.1.b. of this 

final rule with comment period. We do 

not generally make additional payment 

adjustments to specific procedures. 

After consideration of the public 

comments we received, we are 

finalizing our proposed policies, 

without modification, to calculate the 

CY 2018 payment rates for ASC covered 

surgical procedures according to our 

established methodologies using the 

modified definition of device-intensive 

procedures. For those covered officebased surgical procedures where the 

payment rate is the lower of the final 

rates under the ASC standard ratesetting 

methodology and the MPFS nonfacility 

PE RVU-based amount, the final 

payment indicators and rates set forth in 

this final rule with comment period are 

based on a comparison using the MPFS 

PE RVUs and conversion factor effective 

January 1, 2018. For a discussion of the 

MPFS rates, we refer readers to the CY 

2018 MPFS final rule with comment 

period. 

2. Payment for Covered Ancillary 

Services 

a. Background 

Our payment policies under the ASC 

payment system for covered ancillary 

services vary according to the particular 

type of service and its payment policy 

under the OPPS. Our overall policy 

provides separate ASC payment for 

certain ancillary items and services 

integrally related to the provision of 

ASC covered surgical procedures that 

are paid separately under the OPPS and 

provides packaged ASC payment for 

other ancillary items and services that 

are packaged or conditionally packaged 

(status indicators ‘‘N’’, ‘‘Q1’’, and ‘‘Q2’’) 

under the OPPS. In the CY 2013 OPPS/ 

ASC rulemaking (77 FR 45169 and 77 

FR 68457 through 68458), we further 

clarified our policy regarding the 

payment indicator assignment of codes 

that are conditionally packaged in the 

OPPS (status indicators ‘‘Q1’’ and 

‘‘Q2’’). Under the OPPS, a conditionally 

packaged code describes a HCPCS code 

where the payment is packaged when it 

is provided with a significant procedure 

but is separately paid when the service 

appears on the claim without a 

significant procedure. Because ASC 

services always include a surgical 

procedure, HCPCS codes that are 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59415 

conditionally packaged under the OPPS 

are always packaged (payment indictor 

‘‘N1’’) under the ASC payment system 

(except for device removal codes, as 

discussed in section IV. of the CY 2018 

OPPS/ASC proposed rule). Thus, our 

policy generally aligns ASC payment 

bundles with those under the OPPS (72 

FR 42495). In all cases, in order for 

those ancillary services also to be paid, 

ancillary items and services must be 

provided integral to the performance of 

ASC covered surgical procedures for 

which the ASC bills Medicare. 

Our ASC payment policies provide 

separate payment for drugs and 

biologicals that are separately paid 

under the OPPS at the OPPS rates. We 

generally pay for separately payable 

radiology services at the lower of the 

MPFS nonfacility PE RVU-based (or 

technical component) amount or the 

rate calculated according to the ASC 

standard ratesetting methodology (72 FR 

42497). However, as finalized in the CY 

2011 OPPS/ASC final rule with 

comment period (75 FR 72050), 

payment indicators for all nuclear 

medicine procedures (defined as CPT 

codes in the range of 78000 through 

78999) that are designated as radiology 

services that are paid separately when 

provided integral to a surgical 

procedure on the ASC list are set to 

‘‘Z2’’ so that payment is made based on 

the ASC standard ratesetting 

methodology rather than the MPFS 

nonfacility PE RVU amount (‘‘Z3’’), 

regardless of which is lower. 

Similarly, we also finalized our policy 

to set the payment indicator to ‘‘Z2’’ for 

radiology services that use contrast 

agents so that payment for these 

procedures will be based on the OPPS 

relative payment weight using the ASC 

standard ratesetting methodology and, 

therefore, will include the cost for the 

contrast agent (42 CFR 416.171(d)(2)). 

ASC payment policy for 

brachytherapy sources mirrors the 

payment policy under the OPPS. ASCs 

are paid for brachytherapy sources 

provided integral to ASC covered 

surgical procedures at prospective rates 

adopted under the OPPS or, if OPPS 

rates are unavailable, at contractorpriced rates (72 FR 42499). Since 

December 31, 2009, ASCs have been 

paid for brachytherapy sources provided 

integral to ASC covered surgical 

procedures at prospective rates adopted 

under the OPPS. 

Our ASC policies also provide 

separate payment for: (1) Certain items 

and services that CMS designates as 

contractor-priced, including, but not 

limited to, the procurement of corneal 

tissue; and (2) certain implantable items 

that have pass-through payment status 

under the OPPS. These categories do not 

have prospectively established ASC 

payment rates according to ASC 

payment system policies (72 FR 42502 

and 42508 through 42509; 42 CFR 

416.164(b)). Under the ASC payment 

system, we have designated corneal 

tissue acquisition and hepatitis B 

vaccines as contractor-priced. Corneal 

tissue acquisition is contractor-priced 

based on the invoiced costs for 

acquiring the corneal tissue for 

transplantation. Hepatitis B vaccines are 

contractor-priced based on invoiced 

costs for the vaccine. 

Devices that are eligible for passthrough payment under the OPPS are 

separately paid under the ASC payment 

system and are contractor-priced. Under 

the revised ASC payment system (72 FR 

42502), payment for the surgical 

procedure associated with the passthrough device is made according to our 

standard methodology for the ASC 

payment system, based on only the 

service (non-device) portion of the 

procedure’s OPPS relative payment 

weight if the APC weight for the 

procedure includes other packaged 

device costs. We also refer to this 

methodology as applying a ‘‘device 

offset’’ to the ASC payment for the 

associated surgical procedure. This 

ensures that duplicate payment is not 

provided for any portion of an 

implanted device with OPPS passthrough payment status. 

In the CY 2015 OPPS/ASC final rule 

with comment period (79 FR 66933 

through 66934), we finalized that, 

beginning in CY 2015, certain diagnostic 

tests within the medicine range of CPT 

codes for which separate payment is 

allowed under the OPPS are covered 

ancillary services when they are integral 

to an ASC covered surgical procedure. 

We finalized that diagnostic tests within 

the medicine range of CPT codes 

include all Category I CPT codes in the 

medicine range established by CPT, 

from 90000 to 99999, and Category III 

CPT codes and Level II HCPCS codes 

that describe diagnostic tests that 

crosswalk or are clinically similar to 

procedures in the medicine range 

established by CPT. In the CY 2015 

OPPS/ASC final rule with comment 

period, we also finalized our policy to 

pay for these tests at the lower of the 

MPFS nonfacility PE RVU-based (or 

technical component) amount or the 

rate calculated according to the ASC 

standard ratesetting methodology (79 FR 

66933 through 66934). We finalized that 

the diagnostic tests for which the 

payment is based on the ASC standard 

ratesetting methodology be assigned to 

payment indicator ‘‘Z2’’ and revised the 

definition of payment indicator ‘‘Z2’’ to 

include a reference to diagnostic 

services and those for which the 

payment is based on the MPFS 

nonfacility PE RVU-based amount be 

assigned payment indicator ‘‘Z3,’’ and 

revised the definition of payment 

indicator ‘‘Z3’’ to include a reference to 

diagnostic services. 

b. Payment for Covered Ancillary 

Services for CY 2018 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33663), for CY 2018 and 

subsequent years, we proposed to 

update the ASC payment rates and to 

make changes to ASC payment 

indicators, as necessary, to maintain 

consistency between the OPPS and ASC 

payment system regarding the packaged 

or separately payable status of services 

and the proposed CY 2018 OPPS and 

ASC payment rates and subsequent year 

payment rates. We also proposed to 

continue to set the CY 2018 ASC 

payment rates and subsequent year 

payment rates for brachytherapy sources 

and separately payable drugs and 

biologicals equal to the OPPS payment 

rates for CY 2018 and subsequent year 

payment rates. 

Covered ancillary services and their 

proposed payment indicators for CY 

2018 were listed in Addendum BB to 

the proposed rule (which is available 

via the Internet on the CMS Web site). 

For those covered ancillary services 

where the payment rate is the lower of 

the proposed rates under the ASC 

standard rate setting methodology and 

the MPFS proposed rates, the proposed 

payment indicators and rates set forth in 

the proposed rule were based on a 

comparison using the proposed MPFS 

rates effective January 1, 2018. For a 

discussion of the MPFS rates, we 

referred readers to the CY 2018 MPFS 

proposed rule that is available on the 

CMS Web site at: https://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/PhysicianFeeSched/PFSFederal-Regulation-Notices.html. 

We did not receive public comments 

on our proposals regarding payment for 

covered ancillary services. Therefore, 

we are finalizing these policies as 

proposed for CY 2018. 

E. New Technology Intraocular Lenses 

(NTIOLs) 

1. NTIOL Application Cycle 

Our process for reviewing 

applications to establish new classes of 

NTIOLs is as follows: 

• Applicants submit their NTIOL 

requests for review to CMS by the 

annual deadline. For a request to be 

considered complete, we require 

submission of the information that is 


sradovich on DSK3GMQ082PROD with RULES2
59416 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

found in the guidance document 

entitled ‘‘Application Process and 

Information Requirements for Requests 

for a New Class of New Technology 

Intraocular Lenses (NTIOLs) or 

Inclusion of an IOL in an Existing 

NTIOL Class’’ posted on the CMS Web 

site at: http://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

ASCPayment/NTIOLs.html. 

• We announce annually, in the 

proposed rule updating the ASC and 

OPPS payment rates for the following 

calendar year, a list of all requests to 

establish new NTIOL classes accepted 

for review during the calendar year in 

which the proposal is published. In 

accordance with section 141(b)(3) of 

Public Law 103–432 and our regulations 

at 42 CFR 416.185(b), the deadline for 

receipt of public comments is 30 days 

following publication of the list of 

requests in the proposed rule. 

• In the final rule updating the ASC 

and OPPS payment rates for the 

following calendar year, we— 

++ Provide a list of determinations 

made as a result of our review of all new 

NTIOL class requests and public 

comments; 

++ When a new NTIOL class is 

created, identify the predominant 

characteristic of NTIOLs in that class 

that sets them apart from other IOLs 

(including those previously approved as 

members of other expired or active 

NTIOL classes) and that is associated 

with an improved clinical outcome. 

++ Set the date of implementation of 

a payment adjustment in the case of 

approval of an IOL as a member of a 

new NTIOL class prospectively as of 30 

days after publication of the ASC 

payment update final rule, consistent 

with the statutory requirement. 

++ Announce the deadline for 

submitting requests for review of an 

application for a new NTIOL class for 

the following calendar year. 

2. Requests To Establish New NTIOL 

Classes for CY 2018 

We did not receive any requests for 

review to establish a new NTIOL class 

for CY 2018 by March 1, 2017, the due 

date published in the CY 2017 OPPS/ 

ASC final rule with comment period (81 

FR 79748). 

3. Payment Adjustment 

The current payment adjustment for a 

5-year period from the implementation 

date of a new NTIOL class is $50 per 

lens. Since implementation of the 

process for adjustment of payment 

amounts for NTIOLs in 1999, we have 

not revised the payment adjustment 

amount, and we did not propose to 

revise the payment adjustment amount 

for CY 2018. The final ASC payment 

adjustment amount for NTIOLs for CY 

2018 is $50. 

4. Announcement of CY 2019 Deadline 

for Submitting Requests for CMS 

Review of Applications for a New Class 

of NTIOLs 

In accordance with § 416.185(a) of our 

regulations, CMS announces that in 

order to be considered for payment 

effective beginning in CY 2019, requests 

for review of applications for a new 

class of new technology IOLs must be 

received at CMS by 5:00 p.m. EST, on 

March 1, 2018. Send requests to ASC/ 

NTIOL, Division of Outpatient Care, 

Mailstop C4–05–17, Centers for 

Medicare and Medicaid Services, 7500 

Security Boulevard, Baltimore, MD 

21244–1850. To be considered, requests 

for NTIOL reviews must include the 

information requested on the CMS Web 

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

Medicare-Fee-for-Service-Payment/ 

ASCPayment/NTIOLs.html. 

F. ASC Payment and Comment 

Indicators 

1. Background 

In addition to the payment indicators 

that we introduced in the August 2, 

2007 final rule, we created final 

comment indicators for the ASC 

payment system in the CY 2008 OPPS/ 

ASC final rule with comment period (72 

FR 66855). We created Addendum DD1 

to define ASC payment indicators that 

we use in Addenda AA and BB to 

provide payment information regarding 

covered surgical procedures and 

covered ancillary services, respectively, 

under the revised ASC payment system. 

The ASC payment indicators in 

Addendum DD1 are intended to capture 

policy-relevant characteristics of HCPCS 

codes that may receive packaged or 

separate payment in ASCs, such as 

whether they were on the ASC list of 

covered services prior to CY 2008; 

payment designation, such as deviceintensive or office-based, and the 

corresponding ASC payment 

methodology; and their classification as 

separately payable ancillary services, 

including radiology services, 

brachytherapy sources, OPPS passthrough devices, corneal tissue 

acquisition services, drugs or 

biologicals, or NTIOLs. 

We also created Addendum DD2 that 

lists the ASC comment indicators. The 

ASC comment indicators used in 

Addenda AA and BB to the proposed 

rules and final rules with comment 

period serve to identify, for the revised 

ASC payment system, the status of a 

specific HCPCS code and its payment 

indicator with respect to the timeframe 

when comments will be accepted. The 

comment indicator ‘‘NP’’ is used in the 

OPPS/ASC proposed rule to indicate 

new codes for the next calendar year for 

which the interim payment indicator 

assigned is subject to comment. The 

comment indicator ‘‘NP’’ also is 

assigned to existing codes with 

substantial revisions to their 

descriptors, such that we consider them 

to be describing new services, as 

discussed in the CY 2010 OPPS/ASC 

final rule with comment period (74 FR 

60622). In the CY 2017 OPPS/ASC final 

rule with comment period, we 

responded to public comments and 

finalized the ASC treatment of all codes 

that were labeled with comment 

indicator ‘‘NP’’ in Addenda AA and BB 

to the CY 2016 OPPS/ASC final rule 

with comment period (80 FR 70497). 

The ‘‘CH’’ comment indicator is used 

in Addenda AA and BB to the proposed 

rule (which are available via the Internet 

on the CMS Web site) to indicate that 

the payment indicator assignment has 

changed for an active HCPCS code in 

the current year and the next calendar 

year; an active HCPCS code is newly 

recognized as payable in ASCs; or an 

active HCPCS code is discontinued at 

the end of the current calendar year. 

The ‘‘CH’’ comment indicators that are 

published in the final rule with 

comment period are provided to alert 

readers that a change has been made 

from one calendar year to the next, but 

do not indicate that the change is 

subject to comment. 

In the CY 2017 OPPS/ASC final rule 

with comment period (81 FR 79748 

through 79749), for CY 2017 and 

subsequent years, we finalized our 

policy to continue using the current 

comment indicators of ‘‘NP’’ and ‘‘CH’’. 

2. ASC Payment and Comment 

Indicators 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33665), for 

CY 2018, there are proposed new and 

revised Category I and III CPT codes as 

well as new and revised Level II HCPCS 

codes. Therefore, proposed Category I 

and III CPT codes that are new and 

revised for CY 2017 and any new and 

existing Level II HCPCS codes with 

substantial revisions to the code 

descriptors for CY 2018 compared to the 

CY 2017 descriptors that were included 

in ASC Addenda AA and BB to the 

proposed rule are labeled with proposed 

new comment indicator ‘‘NP’’ to 

indicate that these CPT and Level II 

HCPCS codes were open for comment as 

part of the proposed rule. Comment 

indicator ‘‘NP’’ in the proposed rule 

meant a new code for the next calendar 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59417 

year or an existing code with substantial 

revision to its code descriptor in the 

next calendar year, as compared to 

current calendar year; and denotes that 

comments will be accepted on the 

proposed ASC payment indicator for the 

new code. 

We stated in the proposed rule that 

we will respond to public comments on 

ASC payment and comment indicators 

and finalize their ASC assignment in the 

CY 2018 OPPS/ASC final rule with 

comment period. We referred readers to 

Addenda DD1 and DD2 to the proposed 

rule (which are available via the Internet 

on the CMS Web site) for the complete 

list of ASC payment and comment 

indicators proposed for the CY 2018 

update. 

We did not receive any public 

comments on the ASC payment and 

comment indicators. Therefore, we are 

finalizing their use as proposed without 

modification. Addenda DD1 and DD2 to 

this final rule with comment period 

(which are available via the Internet on 

the CMS Web site) contain the complete 

list of ASC payment and comment 

indicators for the CY 2018 update. 

G. Calculation of the ASC Conversion 

Factor and the ASC Payment Rates 

1. Background 

In the August 2, 2007 final rule (72 FR 

42493), we established our policy to 

base ASC relative payment weights and 

payment rates under the revised ASC 

payment system on APC groups and the 

OPPS relative payment weights. 

Consistent with that policy and the 

requirement at section 1833(i)(2)(D)(ii) 

of the Act that the revised payment 

system be implemented so that it would 

be budget neutral, the initial ASC 

conversion factor (CY 2008) was 

calculated so that estimated total 

Medicare payments under the revised 

ASC payment system in the first year 

would be budget neutral to estimated 

total Medicare payments under the prior 

(CY 2007) ASC payment system (the 

ASC conversion factor is multiplied by 

the relative payment weights calculated 

for many ASC services in order to 

establish payment rates). That is, 

application of the ASC conversion factor 

was designed to result in aggregate 

Medicare expenditures under the 

revised ASC payment system in CY 

2008 being equal to aggregate Medicare 

expenditures that would have occurred 

in CY 2008 in the absence of the revised 

system, taking into consideration the 

cap on ASC payments in CY 2007, as 

required under section 1833(i)(2)(E) of 

the Act (72 FR 42522). We adopted a 

policy to make the system budget 

neutral in subsequent calendar years (72 

FR 42532 through 42533; 42 CFR 

416.171(e)). 

We note that we consider the term 

‘‘expenditures’’ in the context of the 

budget neutrality requirement under 

section 1833(i)(2)(D)(ii) of the Act to 

mean expenditures from the Medicare 

Part B Trust Fund. We do not consider 

expenditures to include beneficiary 

coinsurance and copayments. This 

distinction was important for the CY 

2008 ASC budget neutrality model that 

considered payments across the OPPS, 

ASC, and MPFS payment systems. 

However, because coinsurance is almost 

always 20 percent for ASC services, this 

interpretation of expenditures has 

minimal impact for subsequent budget 

neutrality adjustments calculated within 

the revised ASC payment system. 

In the CY 2008 OPPS/ASC final rule 

with comment period (72 FR 66857 

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

neutrality adjustment calculation based 

on the methodology finalized in the 

August 2, 2007 final rule (72 FR 42521 

through 42531) and as applied to 

updated data available for the CY 2008 

OPPS/ASC final rule with comment 

period. The application of that 

methodology to the data available for 

the CY 2008 OPPS/ASC final rule with 

comment period resulted in a budget 

neutrality adjustment of 0.65. 

For CY 2008, we adopted the OPPS 

relative payment weights as the ASC 

relative payment weights for most 

services and, consistent with the final 

policy, we calculated the CY 2008 ASC 

payment rates by multiplying the ASC 

relative payment weights by the final 

CY 2008 ASC conversion factor of 

$41.401. For covered office-based 

surgical procedures, covered ancillary 

radiology services (excluding covered 

ancillary radiology services involving 

certain nuclear medicine procedures or 

involving the use of contrast agents, as 

discussed in section XII.D.2. of this final 

rule with comment period), and certain 

diagnostic tests within the medicine 

range that are covered ancillary services, 

the established policy is to set the 

payment rate at the lower of the MPFS 

unadjusted nonfacility PE RVU-based 

amount or the amount calculated using 

the ASC standard ratesetting 

methodology. Further, as discussed in 

the CY 2008 OPPS/ASC final rule with 

comment period (72 FR 66841 through 

66843), we also adopted alternative 

ratesetting methodologies for specific 

types of services (for example, deviceintensive procedures). 

As discussed in the August 2, 2007 

final rule (72 FR 42517 through 42518) 

and as codified at § 416.172(c) of the 

regulations, the revised ASC payment 

system accounts for geographic wage 

variation when calculating individual 

ASC payments by applying the pre-floor 

and pre-reclassified IPPS hospital wage 

indexes to the labor-related share, 

which is 50 percent of the ASC payment 

amount based on a GAO report of ASC 

costs using 2004 survey data. Beginning 

in CY 2008, CMS accounted for 

geographic wage variation in labor costs 

when calculating individual ASC 

payments by applying the pre-floor and 

pre-reclassified hospital wage index 

values that CMS calculates for payment 

under the IPPS, using updated Core 

Based Statistical Areas (CBSAs) issued 

by OMB in June 2003. 

The reclassification provision in 

section 1886(d)(10) of the Act is specific 

to hospitals. We believe that using the 

most recently available pre-floor and 

pre-reclassified IPPS hospital wage 

indexes results in the most appropriate 

adjustment to the labor portion of ASC 

costs. We continue to believe that the 

unadjusted hospital wage indexes, 

which are updated yearly and are used 

by many other Medicare payment 

systems, appropriately account for 

geographic variation in labor costs for 

ASCs. Therefore, the wage index for an 

ASC is the pre-floor and pre-reclassified 

hospital wage index under the IPPS of 

the CBSA that maps to the CBSA where 

the ASC is located. 

On February 28, 2013, OMB issued 

OMB Bulletin No. 13–01, which 

provides the delineations of all 

Metropolitan Statistical Areas, 

Metropolitan Divisions, Micropolitan 

Statistical Areas, Combined Statistical 

Areas, and New England City and Town 

Areas in the United States and Puerto 

Rico based on the standards published 

on June 28, 2010 in the Federal Register 

(75 FR 37246 through 37252) and 2010 

Census Bureau data. (A copy of this 

bulletin may be obtained at: https://

www.whitehouse.gov/sites/ 

whitehouse.gov/files/omb/bulletins/ 

2013/b13-01.pdf). In the FY 2015 IPPS/ 

LTCH PPS final rule (79 FR 49951 

through 49963), we implemented the 

use of the CBSA delineations issued by 

OMB in OMB Bulletin 13–01 for the 

IPPS hospital wage index beginning in 

FY 2015. In the CY 2015 OPPS/ASC 

final rule with comment period (79 FR 

66937), we finalized a 1-year transition 

policy that we applied in CY 2015 for 

all ASCs that experienced any decrease 

in their actual wage index exclusively 

due to the implementation of the new 

OMB delineations. This transition does 

not apply in CY 2018. 

Generally, OMB issues major 

revisions to statistical areas every 10 

years, based on the results of the 

decennial census. However, OMB 


sradovich on DSK3GMQ082PROD with RULES2
59418 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

occasionally issues minor updates and 

revisions to statistical areas in the years 

between the decennial censuses. On 

July 15, 2015, OMB issued OMB 

Bulletin No. 15–01, which provides 

updates to and supersedes OMB 

Bulletin No. 13–01 that was issued on 

February 28, 2013. The attachment to 

OMB Bulletin No. 15–01 provides 

detailed information on the update to 

statistical areas since February 28, 2013. 

The updates provided in OMB Bulletin 

No. 15–01 are based on the application 

of the 2010 Standards for Delineating 

Metropolitan and Micropolitan 

Statistical Areas to Census Bureau 

population estimates for July 1, 2012 

and July 1, 2013. The complete list of 

statistical areas incorporating these 

changes is provided in the attachment to 

OMB Bulletin No. 15–01. According to 

OMB, ‘‘[t]his bulletin establishes revised 

delineations for the Nation’s 

Metropolitan Statistical Areas, 

Micropolitan Statistical Areas, and 

Combined Statistical Areas. The bulletin 

also provides delineations of 

Metropolitan Divisions as well as 

delineations of New England City and 

Town Areas.’’ A copy of this bulletin 

may be obtained on the Web site at: 

https://www.whitehouse.gov/sites/ 

whitehouse.gov/files/omb/bulletins/ 

2015/15-01.pdf. 

OMB Bulletin No. 15–01 made 

changes that are relevant to the IPPS 

and ASC wage index. We refer readers 

to the CY 2017 OPPS/ASC final rule 

with comment period (81 FR 79750) for 

a discussion of these changes and our 

implementation of these revisions. 

As discussed in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33667), for 

CY 2018, the proposed CY 2018 ASC 

wage indexes fully reflect the OMB 

labor market area delineations 

(including the revisions to the OMB 

labor market delineations discussed 

above, as set forth in OMB Bulletin No. 

15–01). 

We note that, in certain instances, 

there might be urban or rural areas for 

which there is no IPPS hospital that has 

wage index data that could be used to 

set the wage index for that area. For 

these areas, our policy has been to use 

the average of the wage indexes for 

CBSAs (or metropolitan divisions as 

applicable) that are contiguous to the 

area that has no wage index (where 

‘‘contiguous’’ is defined as sharing a 

border). For example, for CY 2014, we 

applied a proxy wage index based on 

this methodology to ASCs located in 

CBSA 25980 (Hinesville-Fort Stewart, 

GA) and CBSA 08 (Rural Delaware). 

When all of the areas contiguous to 

the urban CBSA of interest are rural and 

there is no IPPS hospital that has wage 

index data that could be used to set the 

wage index for that area, we determine 

the ASC wage index by calculating the 

average of all wage indexes for urban 

areas in the State (75 FR 72058 through 

72059). (In other situations, where there 

are no IPPS hospitals located in a 

relevant labor market area, we continue 

our current policy of calculating an 

urban or rural area’s wage index by 

calculating the average of the wage 

indexes for CBSAs (or metropolitan 

divisions where applicable) that are 

contiguous to the area with no wage 

index.) 

Comment: A few commenters made 

the same recommendation that was 

made in the CY 2010 (74 FR 60625), CY 

2011 (75 FR 72059), CY 2012 (76 FR 

74446), CY 2013 (77 FR 68463), CY 2014 

(78 FR 75086), CY 2015 (79 FR 66937), 

CY 2016 (80 FR 70499), and CY 2017 

(81 FR 79750) OPPS/ASC rulemakings— 

that is, that CMS adopt for the ASC 

payment system the same wage index 

values used for hospital payment under 

the OPPS. 

Response: We have responded to this 

comment in the prior OPPS/ASC rules 

mentioned above, and believe our prior 

rationale for using unadjusted wage 

indexes is still sound. We continue to 

believe that the unadjusted hospital 

wage indexes, which are updated yearly 

and are used by almost all Medicare 

payment systems, appropriately account 

for geographic variance in labor costs for 

ASCs. We refer readers to our response 

to this comment in the CY 2011 OPPS/ 

ASC final rule with comment period (75 

FR 72059). 

2. Calculation of the ASC Payment Rates 

a. Updating the ASC Relative Payment 

Weights for CY 2018 and Future Years 

We update the ASC relative payment 

weights each year using the national 

OPPS relative payment weights (and 

MPFS nonfacility PE RVU-based 

amounts, as applicable) for that same 

calendar year and uniformly scale the 

ASC relative payment weights for each 

update year to make them budget 

neutral (72 FR 42533). Consistent with 

our established policy, in the CY 2018 

OPPS/ASC proposed rule (82 FR 33667), 

we proposed to scale the CY 2018 

relative payment weights for ASCs 

according to the following method. 

Holding ASC utilization, the ASC 

conversion factor, and the mix of 

services constant from CY 2016, we 

proposed to compare the total payment 

using the CY 2017 ASC relative 

payment weights with the total payment 

using the CY 2018 ASC relative 

payment weights to take into account 

the changes in the OPPS relative 

payment weights between CY 2017 and 

CY 2018. We proposed to use the ratio 

of CY 2017 to CY 2018 total payments 

(the weight scalar) to scale the ASC 

relative payment weights for CY 2018. 

The proposed CY 2018 ASC weight 

scalar was 0.8995 and scaling would 

apply to the ASC relative payment 

weights of the covered surgical 

procedures, covered ancillary radiology 

services, and certain diagnostic tests 

within the medicine range of CPT codes, 

which are covered ancillary services for 

which the ASC payment rates are based 

on OPPS relative payment weights. 

Scaling would not apply in the case 

of ASC payment for separately payable 

covered ancillary services that have a 

predetermined national payment 

amount (that is, their national ASC 

payment amounts are not based on 

OPPS relative payment weights), such 

as drugs and biologicals that are 

separately paid or services that are 

contractor-priced or paid at reasonable 

cost in ASCs. Any service with a 

predetermined national payment 

amount would be included in the ASC 

budget neutrality comparison, but 

scaling of the ASC relative payment 

weights would not apply to those 

services. The ASC payment weights for 

those services without predetermined 

national payment amounts (that is, 

those services with national payment 

amounts that would be based on OPPS 

relative payment weights) would be 

scaled to eliminate any difference in the 

total payment between the current year 

and the update year. 

For any given year’s ratesetting, we 

typically use the most recent full 

calendar year of claims data to model 

budget neutrality adjustments. At the 

time of the proposed rule, we had 

available 98 percent of CY 2016 ASC 

claims data. 

To create an analytic file to support 

calculation of the weight scalar and 

budget neutrality adjustment for the 

wage index (discussed below), we 

summarized available CY 2016 ASC 

claims by ASC and by HCPCS code. We 

used the National Provider Identifier for 

the purpose of identifying unique ASCs 

within the CY 2016 claims data. We 

used the supplier zip code reported on 

the claim to associate State, county, and 

CBSA with each ASC. This file, 

available to the public as a supporting 

data file for the proposed rule, is posted 

on the CMS Web site at: http://

www.cms.gov/Research-Statistics-Dataand-Systems/Files-for-Order/Limited

DataSets/ASCPaymentSystem.html. 

Comment: Several commenters 

requested that CMS not scale the ASC 

relative payment weights when 

calculating the final CY 2018 ASC 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59419 

payment rates. Some commenters 

requested that if CMS must apply a 

weight scalar, as an alternative, CMS 

make a one-time adjustment to restore 

the historical relativity between the 

OPPS and ASC setting at 65 percent. 

Response: We note that applying the 

weight scalar in calculation of ASC 

payment rates ensures that the ASC 

payment system remains budget neutral. 

For a more detailed discussion on why 

we apply a budget neutrality adjustment 

to the ASC ratesetting methodology, we 

refer readers to the August 2, 2007 final 

rule (72 FR 42531 through 42533). We 

refer the commenters to that discussion 

for our detailed response in 

promulgating the scaling policy that was 

initially applied in CY 2009 to maintain 

budget neutrality of the ASC payment 

system. The ASC weight scaling 

methodology is consistent with the 

OPPS methodology for scaling the 

relative payment weights and the 

increased payment differentials between 

the ASC and OPPS payments for the 

same services are not, for the most part, 

attributable to scaling ASC relative 

payment weights. With respect to the 

relativity between the OPPS and the 

ASC payment system, we recognize that 

the relativity has declined from 65 

percent in 2008 to 56 percent in 2017. 

We believe this change in relativity is 

based on a number of factors, including 

the addition of new surgical procedures 

in both payment settings, packaged 

payment policies, device-intensive 

policies, and the advent of the C–APC 

policy, which was implemented under 

the OPPS effective January 1, 2015, but 

could not be implemented in the ASC 

system, given systems limitations in 

ASC claims processing because ASC 

claims are submitted on the professional 

claim and are not processed by the same 

system as hospital claims. Further, the 

absence of cost data from ASCs makes 

it difficult to determine what an 

appropriate relativity between the two 

payment systems would be. That is, 

without cost data from ASCs, we are 

unable to determine precisely how ASC 

costs compare to those of hospitals paid 

under the OPPS. We note that the 

commenters did not provide any 

empirical evidence to support 

increasing ASC payment rates relative to 

OPPS payment rates. 

b. Updating the ASC Conversion Factor 

Under the OPPS, we typically apply 

a budget neutrality adjustment for 

provider level changes, most notably a 

change in the wage index values for the 

upcoming year, to the conversion factor. 

Consistent with our final ASC payment 

policy, for the CY 2017 ASC payment 

system and subsequent years, in the CY 

2017 OPPS/ASC final rule with 

comment period (81 FR 79751 through 

79753), we finalized our policy to 

calculate and apply a budget neutrality 

adjustment to the ASC conversion factor 

for supplier level changes in wage index 

values for the upcoming year, just as the 

OPPS wage index budget neutrality 

adjustment is calculated and applied to 

the OPPS conversion factor. For CY 

2018, we calculated the proposed 

adjustment for the ASC payment system 

by using the most recent CY 2016 claims 

data available and estimating the 

difference in total payment that would 

be created by introducing the proposed 

CY 2018 ASC wage indexes. 

Specifically, holding CY 2016 ASC 

utilization, service-mix, and the 

proposed CY 2018 national payment 

rates after application of the weight 

scalar constant, we calculated the total 

adjusted payment using the CY 2017 

ASC wage indexes (which would fully 

reflect the new OMB delineations) and 

the total adjusted payment using the 

proposed CY 2018 ASC wage indexes. 

We used the 50-percent labor-related 

share for both total adjusted payment 

calculations. We then compared the 

total adjusted payment calculated with 

the CY 2017 ASC wage indexes to the 

total adjusted payment calculated with 

the proposed CY 2018 ASC wage 

indexes and applied the resulting ratio 

of 1.0004 (the proposed CY 2018 ASC 

wage index budget neutrality 

adjustment) to the CY 2017 ASC 

conversion factor to calculate the 

proposed CY 2018 ASC conversion 

factor. 

Section 1833(i)(2)(C)(i) of the Act 

requires that, if the Secretary has not 

updated amounts established under the 

revised ASC payment system in a 

calendar year, the payment amounts 

shall be increased by the percentage 

increase in the Consumer Price Index 

for all urban consumers (CPI–U), U.S. 

city average, as estimated by the 

Secretary for the 12-month period 

ending with the midpoint of the year 

involved. Therefore, the statute does not 

mandate the adoption of any particular 

update mechanism, but it requires the 

payment amounts to be increased by the 

CPI–U in the absence of any update. 

Because the Secretary updates the ASC 

payment amounts annually, we adopted 

a policy, which we codified at 42 CFR 

416.171(a)(2)(ii), to update the ASC 

conversion factor using the CPI–U for 

CY 2010 and subsequent calendar years. 

Therefore, the annual update to the ASC 

payment system is the CPI–U (referred 

to as the CPI–U update factor). 

Section 3401(k) of the Affordable Care 

Act amended section 1833(i)(2)(D) of the 

Act by adding a new clause (v), which 

requires that any annual update under 

the ASC payment system for the year, 

after application of clause (iv), shall be 

reduced by the productivity adjustment 

described in section 1886(b)(3)(B)(xi)(II) 

of the Act, effective with the calendar 

year beginning January 1, 2011. The 

statute defines the productivity 

adjustment to be equal to the 10-year 

moving average of changes in annual 

economy-wide private nonfarm business 

multifactor productivity (MFP) (as 

projected by the Secretary for the 10- 

year period ending with the applicable 

fiscal year, year, cost reporting period, 

or other annual period) (the ‘‘MFP 

adjustment’’). Clause (iv) of section 

1833(i)(2)(D) of the Act authorizes the 

Secretary to provide for a reduction in 

any annual update for failure to report 

on quality measures. Clause (v) of 

section 1833(i)(2)(D) of the Act states 

that application of the MFP adjustment 

to the ASC payment system may result 

in the update to the ASC payment 

system being less than zero for a year 

and may result in payment rates under 

the ASC payment system for a year 

being less than such payment rates for 

the preceding year. 

In the CY 2012 OPPS/ASC final rule 

with comment period (76 FR 74516), we 

finalized a policy that ASCs begin 

submitting data on quality measures for 

services beginning on October 1, 2012 

for the CY 2014 payment determination 

under the ASC Quality Reporting 

(ASCQR) Program. In the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68499 through 68500), we 

finalized a methodology to calculate 

reduced national unadjusted payment 

rates using the ASCQR Program reduced 

update conversion factor that would 

apply to ASCs that fail to meet their 

quality reporting requirements for the 

CY 2014 payment determination and 

subsequent years. The application of the 

2.0 percentage point reduction to the 

annual update factor, which currently is 

the CPI–U, may result in the update to 

the ASC payment system being less than 

zero for a year for ASCs that fail to meet 

the ASCQR Program requirements. We 

amended §§ 416.160(a)(1) and 416.171 

to reflect these policies. 

In accordance with section 

1833(i)(2)(C)(i) of the Act, before 

applying the MFP adjustment, the 

Secretary first determines the 

‘‘percentage increase’’ in the CPI–U, 

which we interpret cannot be a negative 

percentage. Thus, in the instance where 

the percentage change in the CPI–U for 

a year is negative, we would hold the 

CPI–U update factor for the ASC 

payment system to zero. For the CY 

2014 payment determination and 

subsequent years, under section 


sradovich on DSK3GMQ082PROD with RULES2
59420 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

34ASCA. Medicare Cost Savings Tied to 

Ambulatory Surgery Centers with Cost Analysis 

done by Nicholas C. Petris University of CaliforniaBerkeley Center on Health Care Markets and 

Consumer Welfare. September 2013. Available at: 

http://www.ascassociation.org/HigherLogic/System/ 

DownloadDocumentFile.ashx?DocumentFileKey=

7b33b916-f3f1-42e5-a646-35cc2f38fe4d&

forceDialog=0. 

1833(i)(2)(D)(iv) of the Act, we would 

reduce the annual update by 2.0 

percentage points for an ASC that fails 

to submit quality information under the 

rules established by the Secretary in 

accordance with section 1833(i)(7) of 

the Act. Section 1833(i)(2)(D)(v) of the 

Act, as added by section 3401(k) of the 

Affordable Care Act, requires that the 

Secretary reduce the annual update 

factor, after application of any quality 

reporting reduction, by the MFP 

adjustment, and states that application 

of the MFP adjustment to the annual 

update factor after application of any 

quality reporting reduction may result 

in the update being less than zero for a 

year. If the application of the MFP 

adjustment to the annual update factor 

after application of any quality reporting 

reduction would result in an MFPadjusted update factor that is less than 

zero, the resulting update to the ASC 

payment rates would be negative and 

payments would decrease relative to the 

prior year. We refer readers to the CY 

2011 OPPS/ASC final rule with 

comment period (75 FR 72062 through 

72064) for examples of how the MFP 

adjustment is applied to the ASC 

payment system. 

For the proposed rule, based on IHS 

Global Inc.’s (IGI’s) 2017 first quarter 

forecast with historical data through the 

fourth quarter of 2016, for the 12-month 

period ending with the midpoint of CY 

2018, the CPI–U update was projected to 

be 2.3 percent. Also, based on IGI’s 2017 

first quarter forecast, the MFP 

adjustment for the period ending with 

the midpoint of CY 2018 was projected 

to be 0.4 percent. We finalized the 

methodology for calculating the MFP 

adjustment in the CY 2011 MPFS final 

rule with comment period (75 FR 73394 

through 73396) and revised it in the CY 

2012 MPFS final rule with comment 

period (76 FR 73300 through 73301) and 

the CY 2016 OPPS/ASC final rule with 

comment period (80 FR 70500 through 

70501). 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33668), for CY 2018, we 

proposed to reduce the CPI–U update of 

2.3 percent by the MFP adjustment of 

0.4 percentage point, resulting in an 

MFP-adjusted CPI–U update factor of 

1.9 percent for ASCs meeting the quality 

reporting requirements. Therefore, we 

proposed to apply a 1.9 percent MFPadjusted CPI–U update factor to the CY 

2017 ASC conversion factor for ASCs 

meeting the quality reporting 

requirements. The ASCQR Program 

affected payment rates beginning in CY 

2014 and, under this program, there is 

a 2.0 percentage point reduction to the 

CPI–U for ASCs that fail to meet the 

ASCQR Program requirements. We 

proposed to reduce the CPI–U update of 

2.3 percent by 2.0 percentage points for 

ASCs that do not meet the quality 

reporting requirements and then apply 

the 0.4 percentage point MFP 

adjustment. Therefore, we proposed to 

apply a ¥0.1 percent MFP-adjusted 

CPI–U update factor to the CY 2017 ASC 

conversion factor for ASCs not meeting 

the quality reporting requirements. We 

also proposed that if more recent data 

are subsequently available (for example, 

a more recent estimate of the CY 2018 

CPI–U update and MFP adjustment), we 

would use such data, if appropriate, to 

determine the CY 2018 ASC update for 

the final rule with comment period. 

For CY 2018, we proposed to adjust 

the CY 2017 ASC conversion factor 

($45.003) by the proposed wage index 

budget neutrality factor of 1.0004 in 

addition to the MFP-adjusted CPI–U 

update factor of 1.9 percent discussed 

above, which resulted in a proposed CY 

2018 ASC conversion factor of $45.876 

for ASCs meeting the quality reporting 

requirements. For ASCs not meeting the 

quality reporting requirements, we 

proposed to adjust the CY 2017 ASC 

conversion factor ($45.003) by the 

proposed wage index budget neutrality 

factor of 1.0004 in addition to the 

quality reporting/MFP-adjusted CPI–U 

update factor of ¥0.1 percent discussed 

above, which resulted in a proposed CY 

2018 ASC conversion factor of $44.976. 

We invited public comments on these 

proposals. 

Comment: Numerous commenters 

urged CMS to update ASC payment 

rates using the same update factor as 

hospital outpatient departments, which 

is the IPPS hospital market basket. 

Commenters argued that because the 

ASC relative weights are derived from 

the OPPS weights, the same annual 

update factor that is used for the OPPS 

should also be used for ASCs. 

Commenters stated that the use of 

different update indices has contributed 

to the divergence in payments between 

the HOPD and ASC setting. Several 

commenters cited findings from a 2013 

Ambulatory Surgery Center Association 

(ASCA) study (with cost savings 

analysis produced by the University of 

California-Berkeley) that found ASCs 

saved the Medicare program and its 

beneficiaries $7.5 billion during the 4- 

year period from 2008 to 2011 over what 

would have been paid if care had been 

provided in other settings. The study 

also projected that ASCs have the 

potential to save the Medicare system an 

additional $57.6 billion over the next 

decade ‘‘if policymakers take steps to 

encourage the use of these innovative 

healthcare facilities within the Medicare 

system.’’ 34

One commenter, a trade association 

representing several ASCs noted that 

surgical care in too many markets 

continues to be provided predominantly 

in hospitals, which the commenter 

attributed to Medicare’s failure to pay 

competitive rates to ASCs. The 

commenter asserted that this lack of 

migration comes at a high price to the 

Medicare program, the taxpayers who 

fund it, and the beneficiaries who 

needlessly incur higher out-of-pocket 

expenses. This commenter also noted 

that the hospital market basket is 

comprised of data that reflects the cost 

of items and services necessary to 

furnish an outpatient surgical 

procedure, such as compensation, 

utilities, labor-related services and nonlabor related services. In addition, in 

response to the comment solicitation on 

ASC payment reform (including the 

collection of cost data), described later 

in this section, this commenter stated its 

willingness to work with the Secretary 

to collaborate on ideas and asserted its 

belief that that the same types of costs 

that apply to the hospital outpatient 

department are also present in the ASC, 

but that it did not know if they are 

weighted the same. This commenter 

welcomed the opportunity to discuss 

how ASCs might potentially use a 

simple, cost-effective survey, perhaps 

voluntary in nature, that calculates 

expense categories as a percentage of 

total expenses to help determine the 

appropriate weights and price proxies 

for the ASC setting. The commenter 

noted that ‘‘a complicating factor, 

however, remains the heterogeneity of 

the ASC model—the range of size and 

specialty care varies greatly from one 

ASC to the next.’’ 

Commenters also made the following 

arguments in support of replacing the 

CPI–U with the hospital market basket: 

• The CPI–U does not accurately 

represent the costs borne by ASC 

facilities to furnish surgical services. 

Approximately 8.5 percent of the CPI– 

U inputs are directly related to health 

care, yet the CPI–U is based on 

consumer experience purchasing health 

care rather than a provider’s experience 

necessary to furnish a health care 

service. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59421 

35Available at: https://www.gpo.gov/fdsys/pkg/ 

FR-2017-10-17/pdf/2017-22677.pdf. 

• ASCs are one of few remaining 

Medicare payment systems tied to the 

CPI–U. Most other systems use indices 

derived from the basket of goods those 

providers purchase (for example, ESRD 

PPS uses ESRD bundled market basket; 

FQHC PPS uses Medicare Economic 

Index; IPPS and OPPS uses the hospital 

market basket). 

• The hospital market basket is a 

more accurate reflection of ASC costs 

because it is comprised of data that 

reflects the cost of items and services 

necessary to furnish an outpatient 

surgical procedure, such as 

compensation, utilities, labor-related 

services and nonlabor-related services. 

MedPAC objected to the proposed 1.9 

percent update based on CPI–U and 

recommended that CMS not update 

payments to ASCs in 2018, consistent 

with its recommendation to Congress in 

the March 2017 Report to the Congress. 

MedPAC contended that, because 

indicators of payment adequacy for 

ASCs—capacity and supply of 

providers, volume of services, access to 

capital, payment to providers per feefor-service beneficiary—are positive, 

and in light of the importance of 

maintaining financial pressure on 

providers to constrain costs, the 

proposed 1.9 percent update is 

unnecessarily high. While MedPAC 

acknowledged that the CPI–U likely 

does not reflect ASC’s cost structure 

because the CPI–U is heavily weighted 

for factors that have a relatively small 

effect on ASCs such as housing and 

transportation, it commented that it 

understood that the method for arriving 

at the proposed 1.9 percent CPI–U 

update is mandated by law. MedPAC 

strongly urged CMS to collect cost data 

from ASCs to better assess payment 

adequacy to ASCs. 

Response: As we have stated in 

response to similar comments in the 

past (for example, 77 FR 68465; 78 FR 

75088 through 75089; 79 FR 66939; 80 

FR 70501; and 81 FR 79752), we 

continue to believe that, while 

commenters believed that the items 

included in the CPI–U index may not 

adequately measure inflation for the 

goods and services provided by ASCs, 

the hospital market basket may also not 

be well aligned with the cost structures 

of ASCs. While there are some 

similarities between the cost structure of 

hospitals and ASCs, hospitals provide a 

wider range of services, such as room 

and board and emergency services, and 

the costs associated with providing 

these services do not appear to be part 

of the ASC cost structure. Therefore, at 

this time, we do not believe that it is 

appropriate to use the hospital market 

basket for the ASC annual update. 

Nonetheless, we recognize that ASCs 

may incur some of the same costs that 

hospitals incur and share the 

commenters’ concern that the disparity 

in payments between the OPPS and 

ASC payment systems may affect 

migration from the HOPD setting to the 

less costly ASC setting. To the extent 

that it is clinically appropriate for a 

beneficiary to receive services in a lower 

cost setting, we believe it would be 

appropriate to continue to develop 

payment incentives and remove 

payment disincentives to facilitate this 

choice. We will continue to monitor 

access to services, such as by reviewing 

utilization in different settings and 

soliciting stakeholder input, to ascertain 

the degree to which choices are 

available. While there are several factors 

that contribute to the divergence in 

payment between the two systems, 

certain of which are identified in the 

comment solicitation on ASC payment 

reform, we believe that an alternative 

update factor could be a mitigating step 

to address the differential between 

OPPS and ASC payment. In other 

words, to the extent that the CPI–U has 

been lower than the hospital market 

basket, we believe this difference or gap 

has contributed to the difference 

between payments for services when 

they are provided by an ASC or a HOPD. 

Additionally, we believe that, in 

response to our proposal and comment 

solicitation, commenters have raised an 

important issue that merits 

consideration given the 

Administration’s priorities, particularly 

those seeking to promote and improve 

affordability and accessibility of care. 

For example, under Executive Order 

13813 (issued October 12, 2017), 

entitled ‘‘Presidential Executive Order 

Promoting Healthcare Choice and 

Competition Across the United States,’’ 

‘‘it shall be the policy of the executive 

branch, to the extent consistent with 

law, to facilitate . . . the development 

and operation of a healthcare system 

that provides high-quality care at 

affordable prices for the American 

people’’ and the Administration shall 

‘‘continue to focus on promoting 

competition in healthcare markets and 

limiting excessive consolidation 

throughout the healthcare system.’’ 35

While MedPAC recommends a zero 

percent update, we do not believe that 

such update would serve to promote 

competition in health care markets and 

it could hinder ASCs’ ability to provide 

services to Medicare beneficiaries at a 

lower cost than HOPDs. We know that 

the differential in payments between 

hospitals paid under the OPPS and the 

ASC has increased from approximately 

65 percent in 2008 to approximately 56 

percent in 2017. Accordingly, we plan 

to study this issue further to ensure 

ASCs can continue to offer lower cost 

surgical services to Medicare 

beneficiaries. 

With respect to MedPAC’s comment 

about collecting cost data and comments 

from ASCs expressing a willingness to 

work with CMS to share data in a way 

that balances administrative risk with 

the benefit of collecting such data, we 

will take these comments under 

advisement for future consideration, as 

discussed in greater detail in the 

comment solicitation section below. For 

the reasons stated above, we are 

finalizing our proposal to use the CPI– 

U update factor to update ASC rates for 

CY 2018. However, given the many 

comments supporting alternative update 

methodologies, such as the hospital 

market basket, and given our interest in 

site neutrality and the efficiency of care 

in the ASC setting, we intend to explore 

this issue further. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to apply our 

established methodology for 

determining the final CY 2018 ASC 

conversion factor. Using more complete 

CY 2016 data for this final rule with 

comment period than were available for 

the proposed rule, we calculated a wage 

index budget neutrality adjustment of 

1.0007. Based on IGI’s 2017 third 

quarter forecast, the CPI–U for the 12- 

month period ending with the midpoint 

of CY 2018 is now projected to be 1.7 

percent, while the MFP adjustment (as 

discussed in the CY 2011 MPFS final 

rule with comment period (75 FR 73394 

through 73396), and revised in the CY 

2012 MPFS final rule with comment 

period (76 FR 73300 through 73301) and 

in the CY 2016 OPPS/ASC final rule 

with comment period (80 FR 70500 

through 70501)) is 0.5 percent, resulting 

in an MFP-adjusted CPI–U update factor 

of 1.2 percent for ASCs that meet the 

quality reporting requirements. The 

final ASC conversion factor of $45.575, 

for ASCs that meet the quality reporting 

requirements, is the product of the CY 

2017 conversion factor of $45.003 

multiplied by the wage index budget 

neutrality adjustment of 1.0007 and the 

MFP-adjusted CPI–U payment update of 

1.2 percent. For ASCs that do not meet 

the quality reporting requirements, we 

are reducing the CPI–U update of 1.7 

percent by 2.0 percentage points and 

then we are applying the 0.5 percentage 

point MFP adjustment, resulting in a 

¥0.8 percent MFP adjusted CPI–U 

update factor for CY 2018. The final 


sradovich on DSK3GMQ082PROD with RULES2
59422 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

36Omnibus Reconciliation Act of 1980 (ORA), 

Public Law 96–499, 934(b), 94 Stat. 2599, 2637 

(codified, as amended, at 42 U.S.C. 1395l(i)). 

37Available at: http://www.gao.gov/assets/260/ 

253992.pdf. 

38MedPAC. March 2017 Report to Congress. 

Chapter 5 ‘‘Ambulatory Surgical Center Services’’. 

Available at: http://www.medpac.gov/docs/defaultsource/reports/mar17_medpac_ch5.pdf?sfvrsn=0. 

ASC conversion factor of $44.663 for 

ASCs that do not meet the quality 

reporting requirements is the product of 

the CY 2017 conversion factor of 

$45.003 multiplied by the wage index 

budget neutrality adjustment of 1.0007 

and the MFP-adjusted CPI–U payment 

update of ¥0.8 percent. 

3. Discussion of Comment Solicitation 

on ASC Payment Reform 

a. Historical Perspective 

In 1982, Medicare implemented the 

ASC benefit to provide payment to 

ASCs to perform certain covered 

surgical procedures.36 ASCs were 

recognized by Medicare as a less costly 

alternative to hospital inpatient care 

given differences in patient acuity and 

specialization of services, which 

promotes efficient and cost-effective 

delivery of care. Medicare’s initial 

payment rates to ASCs were based on 

ASC historical cost and charge data 

from 1979 and 1980 collected from 

approximately 40 ASCs and used to 

establish four facility payment rate 

groups (55 FR 4527). 

The ASC facility payment rate was set 

as a standard overhead amount based on 

CMS’ (known then as the Health Care 

Financing Administration (HCFA)) 

estimate of a fair fee, taking into account 

the costs incurred by ASCs generally in 

providing facility services in connection 

with the performance of a specific 

procedure. The Report of the Conference 

Committee accompanying section 934 of 

the Omnibus Budget Reconciliation Act 

of 1980 (Pub. L. 96–499), which enacted 

the ASC benefit in December 1980, 

states, ‘‘This overhead factor is expected 

to be calculated on a prospective basis 

. . . utilizing sample survey and similar 

techniques to establish reasonable 

estimated overhead allowances for each 

of the listed procedures which take 

account of volume (within reasonable 

limits)’’ (H.R. Rep. No 7479, 96th Cong., 

2nd Sess. 134 (1980)). 

In 1987, we updated the ASC facility 

payment rates for the first time since 

1982. The updated rates were based on 

the projected increase in the CPI–U from 

September 1982 to January 1988. CMS 

(then, HCFA) rebased payments to ASCs 

in 1990, relying on a survey of 1986 

ASC cost, charge, and utilization data. 

The ASC payments were updated 

annually based on the 1986 cost data 

until implementation of the revised ASC 

payment system in 2008. 

Congress directed the GAO to conduct 

a study comparing the relative costs of 

procedures furnished in ASCs to those 

furnished in HOPDs paid under the 

OPPS, including examining the 

accuracy of the APC codes, with respect 

to surgical procedures furnished in 

ASCs. On November 30, 2006, the GAO 

published the statutorily mandated 

report entitled, ‘‘Medicare: Payment for 

Ambulatory Surgical Centers Should Be 

Based on the Hospital Outpatient 

Payment System’’ (GAO–07–86).37 As 

directed by section 626(d) of Public Law 

108–173, the report included 

recommendations on the following 

issues: 

1. Appropriateness of using groups of 

covered services and relative weights 

established for the OPPS as the basis of 

payment for ASCs. 

2. If the OPPS relative weights are 

appropriate for this purpose, whether 

the ASC payments should be based on 

a uniform percentage of the payment 

rates or weights under the OPPS, or 

should vary, or the weights should be 

revised based on specific procedures or 

types of services. 

3. Whether a geographic adjustment 

should be used for ASC payment and, 

if so, the labor and nonlabor shares of 

such payment. 

We refer readers to the CY 2008 

OPPS/ASC final rule with comment 

period (71 FR 42474) for a detailed 

summary of the GAO’s methodology, 

results, and recommendations. Notably, 

based on the findings from the study, 

the GAO recommended that CMS 

implement a payment system for 

procedures performed in ASCs based on 

the OPPS, taking into account the lower 

relative costs of procedures performed 

in ASCs compared to HOPDs in 

determining ASC payment rates. 

We considered the report’s 

methodology, findings, and 

recommendations implementing the 

current ASC payment system, effective 

in 2008 (71 FR 42474). Consistent with 

statutory requirements and the GAO’s 

recommendations, we finalized policies 

to implement a revised ASC payment 

system based on the OPPS resource 

costs and relativity of service offerings. 

The payment system for ASC facility 

services was designed as a prospective 

payment system to pay all procedures 

included in an APC a standard rate. 

Under a prospective payment system, 

payment is set to reflect the average cost 

to furnish a service. That is, some cases 

may be more costly than the average 

while others may be less costly. This 

type of payment system inherently 

provides incentives for each facility to 

be more efficient. 

MedPAC conducts an annual review 

of the ASC payment system and submits 

its findings and recommendations in a 

report to Congress. As part of this 

review, MedPAC examines indicators 

such as beneficiaries’ access to care, 

capacity and supply of providers, and 

volume of services, in part to assess the 

adequacy of Medicare payments to 

ASCs. Based on its analysis of indicators 

of payment adequacy, in its March 2017 

Report to Congress, MedPAC found that 

the number of Medicare-certified ASCs 

had increased, beneficiaries’ use of 

ASCs had increased, and access to 

capital has been adequate. As a result, 

for CY 2018, MedPAC stated that 

payments to ASCs are adequate and 

recommended that no payment update 

should be given for 2018 (that is, the 

update factor would be 0 percent). In 

addition, MedPAC recommended that 

Congress require ASCs to report cost 

data to enable the Commission to 

examine the growth of ASCs’ costs over 

time and analyze Medicare payments 

relative to the costs of efficient 

providers, which would help inform 

decisions about the ASC update. Also, 

while MedPAC is concerned that the 

CPI–U may not reflect ASCs’ cost 

structure, until cost information is 

available from ASCs, MedPAC cannot 

determine whether an alternative 

update factor would be more 

appropriate.38

b. Solicitation of Comments 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33668), we stated that we 

are broadly interested in feedback, 

including recommendations and ideas 

for ASC payment system reform. We 

recognize that ASCs provide a critically 

important access point to beneficiaries 

who may be too ill or have the need for 

too complicated a procedure to be 

treated in the physician office setting, 

but for whom hospital care is either not 

medically necessary or undesirable. The 

current ASC payment system was 

implemented in 2008 and major 

revisions have not been made since that 

time. Average ASC payment rates have 

declined relative to OPPS payments 

rates over the past 10 years, from 65 

percent of average OPPS rates in CY 

2008 to 56 percent (as proposed) of 

average OPPS rates in CY 2018. 

However, in the absence of ASC-specific 

cost data, it is difficult, if not 

impossible, to determine whether ASC 

facility payment rates are in line with 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59423 

ASC facility resource costs and the 

impact on beneficiary access to care. 

With respect to the update factor that 

is applied to ASC payments, section 

1833(i)(2)(C)(i) of the Act requires that, 

if the Secretary has not updated the 

payment amounts established under the 

revised ASC payment system in a 

calendar year, the payment amounts 

shall be increased by the percentage 

increase in the Consumer Price Index 

for all urban consumers (CPI–U), (U.S. 

city average), as estimated by the 

Secretary for the 12-month period 

ending with the midpoint of the year 

involved. Therefore, the statute does not 

mandate the adoption of any particular 

update mechanism, except in the 

absence of any update, when it requires 

the payment amounts to be increased by 

the increase in the CPI–U. 

CMS adopted a policy, codified at 42 

CFR 416.171(a)(2)(ii), to update the ASC 

conversion factor using the CPI–U for 

CY 2010 and subsequent calendar years. 

Therefore, the annual update to the ASC 

payment system is the CPI–U (referred 

to as the CPI–U update factor). This 

update factor is adjusted by the 

productivity adjustment described in 

section 1886(b)(3)(B)(xi)(II) of the Act, 

as required by section 1833(i)(2)(D)(v) of 

the Act. In the CY 2018 OPPS/ASC 

proposed rule, we solicited comments 

on the ASC payment system update 

factor and indicated that we are 

interested in data from ASCs that would 

help determine whether the ASC 

payment system should continue to be 

updated by the CPI–U, or by an 

alternative update factor, such as the 

hospital market basket, the Medicare 

Economic Index, and a blend of update 

factors or other mechanism. The 

hospital market basket update is 

typically higher than the CPI–U, while 

the Medicare Economic Index is 

typically lower. Because the rate update 

is not applied in a budget neutral 

manner, applying a higher update factor 

would be a cost to the Medicare 

program while applying a lower update 

factor would result in savings to the 

Medicare program. As mentioned above, 

in the absence of an alternative update, 

the Act requires payments to ASCs to be 

increased in an amount equal to the 

percentage increase in the CPI–U. 

With respect to the ASC update, in its 

March 2017 Report to Congress, 

MedPAC stated that ASCs have a much 

higher share of expenses for supplies 

and drugs than do hospitals or 

physician offices, a much smaller share 

of employee compensation costs than 

hospitals, and a smaller share of all 

other costs (such as rent) than physician 

offices. In the proposed rule, we sought 

public comments on information related 

to ASC costs for items such as supplies, 

drugs, employee compensation, rent, 

and other inputs, as compared to those 

of hospitals or physician offices, 

including qualitative and quantitative 

data from ASCs. We stated that 

information on the cost structure of 

ASCs will help to identify an 

appropriate alternative update factor. 

In addition, we sought public 

comments on whether the Secretary 

should collect cost data from ASCs to 

use in determining ASC payment rates. 

To the extent commenters recommend 

that ASC cost data should be used in the 

determination of ASC payment rates, we 

sought comments on what specific 

method of cost collection commenters 

recommend (such as cost reports or a 

survey). We recognize that the 

submission of costs may be an 

administrative burden to ASCs, and we 

stated that we were interested in 

comments that detail how we could 

mitigate the burden of reporting costs on 

ASCs while also collecting enough data 

to reliably use such data in the 

determination of ASC costs. We noted 

that the ability to calculate ASC-specific 

costs may obviate the need for tying the 

ASC payment system to that of the 

OPPS. In addition, collecting cost data 

from ASCs could inform whether an 

alternative input price index would be 

an appropriate proxy for ASC costs or 

whether an ASC-specific market basket 

should be developed. 

With respect to the ability to adopt 

payment policies that exist under the 

OPPS into the ASC payment system, as 

discussed in prior rulemaking, due to 

differences in the systems used to 

process claims for hospitals and ASCs, 

we were not able to implement certain 

OPPS payment policies in the ASC 

payment system, such as comprehensive 

APCs, conditional packaging, and the 

‘‘FD’’ value modifier for device credits 

(79 FR 66923). ASC facilities report 

services on a professional claim (or 

CMS–1500) rather than an institutional 

claim (or UB–04) used by hospitals. The 

ASC claim form is processed in the 

Medicare Claims System (MCS), the 

same system used to process claims 

submitted by physicians and other 

clinicians, while hospital claims are 

processed through the Fiscal 

Intermediary Shared System (FISS). In 

part, because of differences in the claim 

form and the claims processing systems, 

it is not always possible to adopt OPPS 

payment policies into the ASC payment 

system. The resulting divergence in 

payment policies between the two 

systems may contribute to unintended 

disparities in payment rates for the same 

services. In the CY 2018 proposed rule, 

we stated that we were interested in 

stakeholder comments on whether 

billing on an institutional claim form 

rather than a professional claim form 

would address some of the issues 

affecting ASC payment reform. 

As noted earlier in this section, we 

stated we were broadly interested in 

feedback from stakeholders and other 

interested parties on potential reforms 

to the current ASC payment system, 

including, but not limited to (1) the rate 

update factor applied to ASC payments, 

(2) whether and how ASCs should 

submit costs, (3) whether ASCs should 

bill on the institutional claim form 

rather than the professional claim form, 

and (4) other ideas to improve payment 

accuracy for ASCs. 

Comment: Many commenters 

provided detailed comments and their 

feedback is summarized below. 

• Rate update factor: The vast 

majority of commenters were in favor of 

applying the hospital market basket to 

update annual ASC payment. 

Commenters believed that because ASC 

provide the types of surgical services as 

hospitals that the hospital market basket 

is the most appropriate index. As an 

alternative to the hospital market basket, 

one commenter noted that there are 

other indices in the CPI and MEI that 

would be suitable to both the OPPS and 

ASC settings; for example, the CPI for 

medical care. 

• Collection of cost data: One 

commenter stated that the same types of 

costs that apply to HOPDs also apply to 

ASCs, but they may not be weighted the 

same. The commenter offered to 

collaborate with CMS on ways to collect 

ASC cost information. For example, a 

simple, cost effective survey, perhaps 

voluntary, cost collection tool that 

calculates expense categories as a 

percentage of total expenses to help 

determine the appropriate weights and 

price proxies for the ASC setting. 

However, the commenter urged CMS to 

be mindful of imposing an excessive 

administrative burden. Commenters 

representing individual ASCs were 

generally opposed to submitting formal 

cost reports but expressed a willingness 

to complete a survey so long as it was 

not administratively burdensome. 

MedPAC recommended that CMS 

begin collecting new cost data and use 

that information to examine whether an 

existing Medicare price index is an 

appropriate proxy for the cost of ASC 

facilities or an ASC-specific market 

basket should be developed. MedPAC 

suggested that, to minimize burden on 

ASCs and CMS, CMS could require all 

ASCs to submit streamlined cost reports 

or require a random sample of ASCs to 

respond to annual surveys. For example, 

MedPAC recommended that CMS 


sradovich on DSK3GMQ082PROD with RULES2
59424 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

collect cost data for items such as drugs, 

medical supplies (including costly 

implantable devices), medical 

equipment, employee compensation, 

building expenses (such as rent), and 

other professional services (such as 

legal, accounting, and billing services). 

• Billing: One commenter noted that 

the major issues affecting the payment 

differential between the ASC and OPPS 

would not be fixed by billing on an 

institutional claim form. 

A few ASC facilities expressed 

support for requiring ASCs to bill on a 

UB–04 (institutional claim). These 

commenters stated they currently bill on 

a UB–04 for commercial payers and 

would benefit from a consistent claim 

form across all payers, especially for 

Medicare crossover claims. One 

commenter noted that billing on a UB– 

04 ‘‘is not a foreign concept’’ and that 

it warranted further exploration by 

CMS. A few commenters acknowledged 

that because not all ASCs currently bill 

on an UB–04, a transition period would 

be necessary to allow for successful 

implementation, though a suggested 

timeframe was not provided. 

MedPAC also recommended that CMS 

transition ASCs to billing on an UB–04. 

MedPAC stated that because the ASC 

payment system is closely linked to the 

OPPS, to fully align OPPS payment 

policies with the ASC payment system, 

ASCs and hospitals should use the same 

claim form. However, MedPAC 

suggested that implementation of a 

requirement to bill on an UB–04 and to 

submit cost data should be staggered. 

• Payment relativity: Several 

commenters recommended that CMS 

discontinue applying the ‘‘secondary 

scaling adjustment’’ and instead to 

apply the OPPS relative weights to ASC 

services. In addition, commenters also 

recommended that CMS restore the 

historical relativity between the OPPS 

and ASC setting. Some commenters 

suggested a conservative relativity 

adjustment of 55 percent while others 

suggested 65 percent (CY 2008 ratio). 

Response: We will take the feedback 

on all of these potential ASC payment 

reform issues under advisement and 

consideration for future policymaking. 

4. Display of CY 2018 ASC Payment 

Rates 

Addenda AA and BB to this final rule 

with comment period (which are 

available on the CMS Web site) display 

the final updated ASC payment rates for 

CY 2018 for covered surgical procedures 

and covered ancillary services, 

respectively. For those covered surgical 

procedures and covered ancillary 

services where the payment rate is the 

lower of the final rates under the ASC 

standard ratesetting methodology and 

the MPFS final rates, the final payment 

indicators and rates set forth in this 

final rule with comment period are 

based on a comparison using the final 

MPFS rates that will be effective January 

1, 2018. For a discussion of the MPFS 

rates, we refer readers to the CY 2018 

MPFS final rule with comment period. 

The final payment rates included in 

these addenda reflect the full ASC 

payment update and not the reduced 

payment update used to calculate 

payment rates for ASCs not meeting the 

quality reporting requirements under 

the ASCQR Program. These addenda 

contain several types of information 

related to the final CY 2018 payment 

rates. Specifically, in Addendum AA, a 

‘‘Y’’ in the column titled ‘‘To be Subject 

to Multiple Procedure Discounting’’ 

indicates that the surgical procedure 

will be subject to the multiple 

procedure payment reduction policy. As 

discussed in the CY 2008 OPPS/ASC 

final rule with comment period (72 FR 

66829 through 66830), most covered 

surgical procedures are subject to a 50- 

percent reduction in the ASC payment 

for the lower-paying procedure when 

more than one procedure is performed 

in a single operative session. 

Display of the comment indicator 

‘‘CH’’ in the column titled ‘‘Comment 

Indicator’’ indicates a change in 

payment policy for the item or service, 

including identifying discontinued 

HCPCS codes, designating items or 

services newly payable under the ASC 

payment system, and identifying items 

or services with changes in the ASC 

payment indicator for CY 2018. Display 

of the comment indicator ‘‘NI’’ in the 

column titled ‘‘Comment Indicator’’ 

indicates that the code is new (or 

substantially revised) and that 

comments will be accepted on the 

interim payment indicator for the new 

code. Display of the comment indicator 

‘‘NP’’ in the column titled ‘‘Comment 

Indicator’’ indicates that the code is new 

(or substantially revised) and that 

comments will be accepted on the ASC 

payment indicator for the new code. 

The values displayed in the column 

titled ‘‘Final CY 2018 Payment Weight’’ 

are the final relative payment weights 

for each of the listed services for CY 

2018. The final relative payment 

weights for all covered surgical 

procedures and covered ancillary 

services where the ASC payment rates 

are based on OPPS relative payment 

weights were scaled for budget 

neutrality. Therefore, scaling was not 

applied to the device portion of the 

device-intensive procedures, services 

that are paid at the MPFS nonfacility PE 

RVU-based amount, separately payable 

covered ancillary services that have a 

predetermined national payment 

amount, such as drugs and biologicals 

and brachytherapy sources that are 

separately paid under the OPPS, or 

services that are contractor-priced or 

paid at reasonable cost in ASCs. 

To derive the final CY 2018 payment 

rate displayed in the ‘‘Final CY 2018 

Payment Rate’’ column, each ASC 

payment weight in the ‘‘Final CY 2018 

Payment Weight’’ column was 

multiplied by the final CY 2018 

conversion factor of $45.575. The final 

conversion factor includes a budget 

neutrality adjustment for changes in the 

wage index values and the annual 

update factor as reduced by the 

productivity adjustment (as discussed in 

section XII.G.2.b. of this final rule with 

comment period). 

In Addendum BB, there are no 

relative payment weights displayed in 

the ‘‘Final CY 2018 Payment Weight’’ 

column for items and services with 

predetermined national payment 

amounts, such as separately payable 

drugs and biologicals. The ‘‘Final CY 

2018 Payment’’ column displays the 

final CY 2018 national unadjusted ASC 

payment rates for all items and services. 

The final CY 2018 ASC payment rates 

listed in Addendum BB for separately 

payable drugs and biologicals are based 

on ASP data used for payment in 

physicians’ offices in October 2017. 

Addendum EE provides the HCPCS 

codes and short descriptors for surgical 

procedures that are to be excluded from 

payment in ASCs for CY 2018. 

XIII. Requirements for the Hospital 

Outpatient Quality Reporting (OQR) 

Program 

A. Background 

1. Overview 

CMS seeks to promote higher quality 

and more efficient healthcare for 

Medicare beneficiaries. Consistent with 

these goals, CMS has implemented 

quality reporting programs for multiple 

care settings including the quality 

reporting program for hospital 

outpatient care, known as the Hospital 

Outpatient Quality Reporting (OQR) 

Program, formerly known as the 

Hospital Outpatient Quality Data 

Reporting Program (HOP QDRP). The 

Hospital OQR Program is generally 

aligned with the quality reporting 

program for hospital inpatient services 

known as the Hospital Inpatient Quality 

Reporting (IQR) Program (formerly 

known as the Reporting Hospital 

Quality Data for Annual Payment 

Update (RHQDAPU) Program). 

In addition to the Hospital IQR and 

Hospital OQR Programs, CMS has 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59425 

39Office of the Assistant Secretary for Planning 

and Evaluation. 2016. Report to Congress: Social 

Risk Factors and Performance Under Medicare’s 

Value-Based Purchasing Programs. Available at: 

https://aspe.hhs.gov/pdf-report/report-congresssocial-risk-factors-and-performance-undermedicares-value-based-purchasing-programs. 

40 Ibid. 

41National Academies of Sciences, Engineering, 

and Medicine. 2017. Accounting for social risk 

factors in Medicare payment. Washington, DC: The 

National Academies Press. 

implemented quality reporting programs 

for other care settings that provide 

financial incentives for the reporting of 

quality data to CMS. These additional 

programs include reporting for care 

furnished by: 

• Physicians and other eligible 

professionals, under the Physician 

Quality Reporting System (PQRS, 

formerly referred to as the Physician 

Quality Reporting Program Initiative 

(PQRI)). We note that 2018 is the last 

year of the PQRS payment adjustment. 

Beginning in 2019, eligible clinicians 

may be subject to upward or downward 

payment adjustments under the Meritbased Incentive Payment System (MIPS) 

or be able to earn a positive payment 

incentives through participation in 

certain advanced alternative payment 

models (APMs) under the Quality 

Payment Program (QPP) (81 FR 77008); 

• Inpatient rehabilitation facilities, 

under the Inpatient Rehabilitation 

Facility Quality Reporting Program (IRF 

QRP); 

• Long-term care hospitals, under the 

Long-Term Care Hospital Quality 

Reporting Program (LTCH QRP); 

• PPS-exempt cancer hospitals, under 

the PPS-Exempt Cancer Hospital 

Quality Reporting (PCHQR) Program; 

• Ambulatory surgical centers, under 

the Ambulatory Surgical Center Quality 

Reporting (ASCQR) Program; 

• Inpatient psychiatric facilities, 

under the Inpatient Psychiatric Facility 

Quality Reporting (IPFQR) Program; 

• Home health agencies, under the 

Home Health Quality Reporting Program 

(HH QRP); and 

• Hospices, under the Hospice 

Quality Reporting Program (HQRP). 

In addition, CMS has implemented 

several value-based purchasing 

programs that link payment to 

performance, including the Hospital 

Value-Based Purchasing (VBP) Program; 

the Hospital-Acquired Condition (HAC) 

Reduction Program; and the End-Stage 

Renal Disease (ESRD) Quality Incentive 

Program (QIP); and the Quality Payment 

Program (QPP). 

In implementing the Hospital OQR 

Program and other quality reporting 

programs, we have focused on measures 

that have high impact and support 

national priorities for improved quality 

and efficiency of care for Medicare 

beneficiaries as reflected in the National 

Quality Strategy (NQS) and the CMS 

Quality Strategy for conditions with 

reported wide cost and treatment 

variations despite established clinical 

treatment guidelines. To the extent 

possible under various authorizing 

statutes, our ultimate goal is to align the 

clinical quality measure requirements of 

the various quality reporting programs. 

As appropriate, we will consider the 

adoption of measures with electronic 

specifications to enable the collection of 

this information for our quality 

programs. 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68467 through 68469) for 

a discussion on the principles 

underlying consideration for future 

measures that we intend to use in 

implementing this and other quality 

reporting programs. We did not propose 

any changes to these policies. 

2. Statutory History of the Hospital OQR 

Program 

We refer readers to the CY 2011 

OPPS/ASC final rule with comment 

period (75 FR 72064 through 72065) for 

a detailed discussion of the statutory 

history of the Hospital OQR Program. 

3. Regulatory History of the Hospital 

OQR Program 

We refer readers to the CY 2008 

through 2017 OPPS/ASC final rules 

with comment period (72 FR 66860 

through 66875; 73 FR 68758 through 

68779; 74 FR 60629 through 60656; 75 

FR 72064 through 72110; 76 FR 74451 

through 74492; 77 FR 68467 through 

68492; 78 FR 75090 through 75120; 79 

FR 66940 through 66966; 80 FR 70502 

through 70526; and 81 FR 79753 

through 79797). We have also codified 

certain requirements under the Hospital 

OQR Program at 42 CFR 419.46. In the 

CY 2018 OPPS/ASC proposed rule (82 

FR 33671), we proposed editorial 

changes to 42 CFR 419.46, replacing the 

terms ‘‘Web’’ and ‘‘Web site’’ with the 

terms ‘‘web’’ and ‘‘website,’’ 

respectively. 

We did not receive any comments on 

our proposal. Therefore, we are 

finalizing our changes to 42 CFR 419.46 

as proposed, by replacing the terms 

‘‘Web’’ and ‘‘Web site’’ with the terms 

‘‘web’’ and ‘‘website,’’ respectively. 

B. Hospital OQR Program Quality 

Measures 

1. Considerations in the Selection of 

Hospital OQR Program Quality 

Measures 

We refer readers to the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74458 through 74460) for 

a detailed discussion of the priorities we 

consider for the Hospital OQR Program 

quality measure selection. We did not 

propose any changes to our measure 

selection policy. 

2. Accounting for Social Risk Factors in 

the Hospital OQR Program 

We understand that social risk factors 

such as income, education, race and 

ethnicity, employment, disability, 

community resources, and social 

support (certain factors of which are 

also sometimes referred to as 

socioeconomic status (SES) factors or 

socio-demographic status (SDS) factors) 

play a major role in health. One of our 

core objectives is to improve beneficiary 

outcomes including reducing health 

disparities, and we want to ensure that 

all beneficiaries, including those with 

social risk factors, receive high quality 

care. In addition, we seek to ensure that 

the quality of care furnished by 

providers and suppliers is assessed as 

fairly as possible under our programs 

while ensuring that beneficiaries have 

adequate access to excellent care. 

We have been reviewing reports 

prepared by the Office of the Assistant 

Secretary for Planning and Evaluation 

(ASPE) 39 and the National Academies 

of Sciences, Engineering, and Medicine 

on the issue of measuring and 

accounting for social risk factors in 

CMS’ value-based purchasing and 

quality reporting programs, and 

considering options on how to address 

the issue in these programs. On 

December 21, 2016, ASPE submitted a 

Report to Congress on a study it was 

required to conduct under section 2(d) 

of the Improving Medicare Post-Acute 

Care Transformation (IMPACT) Act of 

2014. The study analyzed the effects of 

certain social risk factors of Medicare 

beneficiaries on quality measures and 

measures of resource use used in one or 

more of nine Medicare value-based 

purchasing programs.40 The report also 

included considerations for strategies to 

account for social risk factors in these 

programs. In a January 10, 2017 report 

released by the National Academies of 

Sciences, Engineering, and Medicine, 

that body provided various potential 

methods for measuring and accounting 

for social risk factors, including 

stratified public reporting.41

As noted in the FY 2017 IPPS/LTCH 

PPS final rule, the NQF has undertaken 

a 2-year trial period in which new 

measures, measures undergoing 

maintenance review, and measures 

endorsed with the condition that they 

enter the trial period can be assessed to 

determine whether risk adjustment for 

selected social risk factors is appropriate 


sradovich on DSK3GMQ082PROD with RULES2
59426 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

42NQF. NQF Initiative to Determine the Impact 

of Adjusting Healthcare Performance Measures for 

Social Risk Factors Highlights Successes, 

Opportunities. Available at: https://

www.qualityforum.org/News_And_Resources/Press_

Releases/2017/NQF_Initiative_to_Determine_the_

Impact_of_Adjusting_Healthcare_Performance_

Measures_for_Social_Risk_Factors_Highlights_

Successes,_Opportunities.aspx. 

for these measures. This trial entailed 

temporarily allowing inclusion of social 

risk factors in the risk-adjustment 

approach for these measures. Since 

publication of the proposed rule, we 

have learned that the National Quality 

Forum (NQF) has concluded their initial 

trial on risk adjustment for quality 

measures.42 Based on the findings from 

the initial trial, we have been informed 

that the NQF intends to continue its 

work to evaluate the impact of social 

risk factor adjustment on intermediate 

outcome and outcome measures for an 

additional three years. We understand 

that the extension of this work will 

allow NQF to determine further how to 

effectively account for social risk factors 

through risk adjustment and other 

strategies in quality measurement. 

As we continue to consider the 

analyses and recommendations from 

these reports and the results of the NQF 

trial on risk adjustment for quality 

measures, we are continuing to work 

with stakeholders in this process. As we 

have previously communicated, we are 

concerned about holding providers to 

different standards for the outcomes of 

their patients with social risk factors 

because we do not want to mask 

potential disparities or minimize 

incentives to improve the outcomes for 

disadvantaged populations. Keeping 

this concern in mind, in the proposed 

rule we sought public comment on 

whether we should account for social 

risk factors in the Hospital OQR 

Program, and if so, what method or 

combination of methods would be most 

appropriate for accounting for social 

risk factors. Examples of methods 

include: Confidential reporting to 

providers of measure rates stratified by 

social risk factors; public reporting of 

stratified measure rates; and potential 

risk adjustment of a particular measure 

as appropriate based on data and 

evidence. 

In addition, we requested public 

comment on which social risk factors 

might be most appropriate for reporting 

stratified measure scores and/or 

potential risk adjustment of a particular 

measure. Examples of social risk factors 

include, but are not limited to, dual 

eligibility/low-income subsidy, race and 

ethnicity, and geographic area of 

residence. We requested comments on 

which of these factors, including current 

data sources where this information 

would be available, could be used alone 

or in combination, and whether other 

data should be collected to better 

capture the effects of social risk. We will 

take commenters’ input into 

consideration as we continue to assess 

the appropriateness and feasibility of 

accounting for social risk factors in the 

Hospital OQR Program. 

We look forward to working with 

stakeholders as we consider the issue of 

accounting for social risk factors and 

reducing health disparities in CMS 

programs. Of note, implementing any of 

the above methods would be taken into 

consideration in the context of how this 

and other CMS programs operate (for 

example, data submission methods, 

availability of data, statistical 

considerations relating to reliability of 

data calculations, among others), so we 

also welcome comment on operational 

considerations. CMS is committed to 

ensuring that its beneficiaries have 

access to and receive excellent care, and 

that the quality of care furnished by 

providers and suppliers is assessed 

fairly in CMS programs. 

We received extensive comments in 

response to our request for public 

comments on whether we should 

account for social risk factors in the 

Hospital OQR Program, and if so, what 

method or combination of methods 

would be most appropriate for 

accounting for social risk factors. 

Comment: Many commenters 

supported CMS’ effort to address social 

risk factors in the Hospital OQR 

Program, noting that social risk factors 

are powerful drivers of outcomes and 

requested that CMS adopt risk 

adjustment methodologies soon. 

Commenters also noted that lack of risk 

adjustment can contribute to disparities 

by diverting resources away from 

communities in need. 

One commenter specifically 

recommended risk adjustment in quality 

measurement in the psychiatric setting. 

Another commenter recommended that 

when identifying social risk factors, 

CMS consider the relationship with the 

outcome of interest, a risk factor’s 

presence at the start of care, and 

whether it can be modified or 

manipulated through providers’ actions. 

A third commenter noted that 

approaches to risk adjustment should be 

measure-specific. 

A few commenters recommended that 

CMS apply risk adjustment by 

stratifying providers into groups by 

proportion of patients that are at risk, 

noting that this approach does not 

require measure-level research and 

recommending that risk adjustment 

results be shared with providers. One 

commenter supported methodologies 

including providing confidential 

reporting of stratified measure rates to 

providers and risk adjustment of 

measures. Several commenters 

expressed concern with public reporting 

of risk adjusted data, while others 

recommended that publicly reported 

data specifically be risk adjusted. 

A few commenters noted concern that 

adjusting for social risk factors will not 

address the underlying disparities that 

are associated with poor health 

outcomes and could instead lead to 

masking these disparities. One 

commenter noted that using social risk 

factors may not be appropriate until it 

is clear how the information is collected 

and shared. One commenter 

recommended that any risk adjustment 

methodology adopted adhere to CMS’ 

previously adopted standards of setting 

minimum case volumes and using 

confidence intervals. Some commenters 

noted that better data sources for 

socioeconomic status are needed, 

including patient-level and communitylevel data sources. 

Response: We appreciate all the 

comments and interest in this topic. As 

we have previously stated regarding risk 

adjustment of publicly reported data for 

these factors, we are concerned about 

holding providers to different standards 

for the outcomes of their patients with 

social risk factors, because we do not 

want to mask potential disparities or 

minimize incentives to improve 

outcomes for disadvantaged 

populations. With respect to public 

reporting, while we agree with 

commenters and believe it is important 

to avoid a scenario in which underlying 

disparities are masked rather than 

addressed, we also agree with 

commenters who support the public 

reporting of risk-adjusted data. We 

appreciate the need to balance risk 

adjustment as a strategy to account for 

social risk factors with the concern that 

risk adjustment could minimize 

incentives and reduce efforts to address 

disparities for patients with social risk 

factors. We believe that the path forward 

should incentivize improvements in 

health outcomes for disadvantaged 

populations while ensuring that 

beneficiaries have access to excellent 

care. 

As with previous policies, we intend 

to follow our previously adopted 

standards for setting case minimums. 

We refer readers to the CY 2009 OPPS/ 

ASC final rule with comment period (73 

FR 68773 through 68775) where we 

discuss these standards. In addition, we 

acknowledge that administrative claims 

data can be limited; we will investigate 

the feasibility and appropriateness of 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59427 

additional data sources for obtaining 

patient and community-level data. 

We reiterate that we are committed to 

ensuring that CMS beneficiaries have 

access to and receive excellent care and 

that the quality of care furnished by 

providers and suppliers is assessed 

fairly in CMS programs. We thank the 

commenters, and we will consider their 

views as we develop further policy 

regarding social risk factors in the 

Hospital OQR Program. 

Comment: Many commenters 

recommended many factors to consider 

including: Body mass index; race; 

smoking status; age; sex; back pain; pain 

in non-operative lower extremity joint; 

health risk status; mental health factors; 

chronic narcotic use; socioeconomic 

status; pre-procedure ambulatory status; 

literacy; marital status; live-in home 

support; family support structure; home 

health resources; patient travel distance; 

homelessness; community distress; 

unavoidable readmissions; readmission 

risks; and poverty; as well as access to 

health care, transportation, and healthy 

food. 

One commenter recommended that 

the following variables not be used: 

American Society of Anesthesiologists 

score; range of motion; or mode of 

patient-reported outcome measure 

collection. Several commenters 

supported the use of dual eligible status 

as a factor, while one commenter 

opposed it and noted concern that that 

it does not reflect the conditions where 

the hospital is located and that there are 

variations between States in dual 

eligibility status. 

Response: We appreciate commenters’ 

recommendations regarding specific 

social risk factor variables and will 

consider them as we continue exploring 

options for accounting for social risk 

factors in the Hospital OQR Program. 

Comment: Several commenters 

recommended empirical testing to 

prioritize the national collection of data 

that are most essential for valid risk 

adjustment methodologies and that CMS 

focus on factors that have an empirically 

proven relationship to outcomes or 

processes of care metrics. Some 

commenters recommended that CMS 

consider recommendations from NQF, 

ASPE, the National Academy of 

Medicine, and the Agency for 

Healthcare Research and Quality 

(AHRQ). One commenter suggested that 

CMS engage providers and vendors in 

demonstration projects allowing 

collection of sociodemographic data 

elements in electronic health records. A 

few commenters recommended that 

testing and methodologies be made 

transparent. Some commenters also 

recommended that CMS monitor any 

unintended consequences that result 

from risk adjustment. 

Response: We plan to actively 

perform additional research and 

monitor for trends to prevent 

unintended consequences. We intend to 

conduct further analyses on the impact 

of different approaches to accounting for 

social risk factors in quality programs. 

In addition, we will consider the 

commenters’ suggestion that we conduct 

empirical testing of risk-adjusted quality 

metrics, and assess the potential impact 

of the findings from such testing on the 

prioritization of national data collection, 

in relation to risk adjustment 

methodologies. We look forward to 

continuing to work with stakeholders 

such as NQF, ASPE, the National 

Academy of Medicine, and AHRQ. 

We thank commenters for their 

suggestion that we allow collection of 

sociodemographic data elements in 

electronic health records, but note that 

the Hospital OQR Program does not yet 

include eCQMs. Any testing and 

methodologies used would be made 

transparent through future rulemaking, 

which includes the public notice and 

comment process. Moreover, any 

proposals would be made in future 

rulemaking after further analysis, 

research, and continued stakeholder 

engagement. 

Comment: Several commenters 

recommended that CMS align across 

quality payment programs when 

accounting for social risk factors. 

Response: We thank the commenters 

for their feedback. We intend to 

investigate options for adjusting for 

social risk factors with continued 

consideration of alignment across 

programs. 

Comment: Several commenters asked 

that CMS consider the impact of 

socioeconomic data collection on the 

patient as well as on provider burden. 

A few commenters recommended that 

CMS consider potential administrative 

complexities as CMS develops social 

risk factor adjustment processes. 

Response: As we consider the 

feasibility of collecting patient-level 

data and the impact of strategies to 

account for social risk factors through 

further analysis, we will also continue 

to evaluate the reporting burden on 

providers and patients. 

We thank all of the commenters for 

their input and will consider all 

suggestions as we continue to assess the 

issue of accounting for social risk factors 

within individual measures, the 

Hospital OQR Program as a whole, and 

across CMS quality programs. 

3. Retention of Hospital OQR Program 

Measures Adopted in Previous Payment 

Determinations 

We previously adopted a policy to 

retain measures from the previous year’s 

Hospital OQR Program measure set for 

subsequent years’ measure sets in the 

CY 2013 OPPS/ASC final rule with 

comment period (77 FR 68471). Quality 

measures adopted in a previous year’s 

rulemaking are retained in the Hospital 

OQR Program for use in subsequent 

years unless otherwise specified. We 

refer readers to that rule for more 

information. We did not propose any 

changes to our retention policy for 

previously adopted measures. 

4. Removal of Quality Measures From 

the Hospital OQR Program Measure Set 

a. Considerations in Removing Quality 

Measures From the Hospital OQR 

Program 

In the FY 2010 IPPS/LTCH PPS final 

rule (74 FR 43863), for the Hospital IQR 

Program, we finalized a process for 

immediate retirement, which we later 

termed ‘‘removal,’’ of Hospital IQR 

Program measures based on evidence 

that the continued use of the measure as 

specified raised patient safety concerns. 

We adopted the same immediate 

measure retirement policy for the 

Hospital OQR Program in the CY 2010 

OPPS/ASC final rule with comment 

period (74 FR 60634 through 60635). We 

refer readers to the CY 2013 OPPS/ASC 

final rule with comment period (77 FR 

68472 through 68473) for a discussion 

of our reasons for changing the term 

‘‘retirement’’ to ‘‘removal’’ in the 

Hospital OQR Program. We did not 

propose any changes to our policy to 

immediately remove measures as a 

result of patient safety concerns. 

In the CY 2013 OPPS/ASC final rule 

with comment period, we finalized a set 

of criteria for determining whether to 

remove measures from the Hospital 

OQR Program. We refer readers to the 

CY 2013 OPPS/ASC final rule with 

comment period (77 FR 68472 through 

68473) for a discussion of our policy on 

removal of quality measures from the 

Hospital OQR Program. The benefits of 

removing a measure from the Hospital 

OQR Program will be assessed on a 

case-by-case basis (79 FR 66941 through 

66942). We note that, under this caseby-case approach, a measure will not be 

removed solely on the basis of meeting 

any specific criterion. We refer readers 

to the CY 2013 OPPS/ASC final rule 

with comment period (77 FR 68472 

through 68473) for our list of factors 

considered in removing measures from 

the Hospital OQR Program. We did not 


sradovich on DSK3GMQ082PROD with RULES2
59428 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

43CMS Opioid Misuse Strategy 2016. Available 

at: https://www.cms.gov/Outreach-and-Education/ 

Outreach/Partnerships/Prescription-DrugInformation-for-Partners-Items/CMS-OpioidMisuse-Strategy-2016.html. 

propose any changes to our measure 

removal policy. 

b. Criteria for Removal of ‘‘Topped-Out’’ 

Measures 

We refer readers to the CY 2015 

OPPS/ASC final rule with comment 

period where we finalized our proposal 

to refine the criteria for determining 

when a measure is ‘‘topped-out’’ (79 FR 

66942). We did not propose any changes 

to our ‘‘topped-out’’ criteria policy. 

c. Removal of Quality Measures From 

the Hospital OQR Program Measure Set 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33673), we proposed to 

remove a total of six measures. 

Specifically, beginning with the CY 

2020 payment determination, we 

proposed to remove: (1) OP–21: Median 

Time to Pain Management for Long 

Bone Fracture; and (2) OP–26: Hospital 

Outpatient Volume Data on Selected 

Outpatient Surgical Procedures. In 

addition, beginning with the CY 2021 

payment determination, we proposed to 

remove: (1) OP–1: Median Time to 

Fibrinolysis; (2) OP–4: Aspirin at 

Arrival; (3) OP–20: Door to Diagnostic 

Evaluation by a Qualified Medical 

Professional; and (4) OP–25: Safe 

Surgery Checklist. By removing these 

six measures, our intent is to alleviate 

the maintenance costs and 

administrative burden to hospitals 

associated with retaining them. While 

we proposed to remove two measures 

beginning with the CY 2020 payment 

determination and four measures for the 

CY 2021 payment determination, in this 

final rule, we are finalizing removal of 

all six measures for the CY 2020 

payment determination. These are 

discussed in detail below. 

(1) Removal of OP–21: Median Time to 

Pain Management for Long Bone 

Fracture Beginning With the CY 2020 

Payment Determination 

We refer readers to the CY 2011 

OPPS/ASC final rule with comment 

period (75 FR 72088), where we adopted 

the OP–21: Median Time to Pain 

Management for Long Bone Fracture 

measure. This process of care measure 

assesses the median time from 

emergency department arrival to time of 

initial oral, nasal, or parenteral pain 

medication (opioid and non-opioid) 

administration for emergency 

department patients with a principal 

diagnosis of long bone fracture (LBF). 

We have previously finalized a policy 

to note that the benefits of removing a 

measure from the Hospital OQR 

Program will be assessed on a case-bycase basis (79 FR 66941 through 66942). 

Accordingly, although it does not 

exactly meet one of the specific measure 

removal criteria finalized for the 

Hospital OQR Program (77 FR 68472 

through 68473), it has the potential to 

lead to negative unintended 

consequences (removal factor #7). 

Therefore, we proposed to remove OP– 

21: Median Time to Pain Management 

for Long Bone Fracture for the CY 2020 

payment determination and subsequent 

years due to the concerns described in 

more detail below. 

Given the growing body of evidence 

on the risks of opioid misuse, CMS has 

developed a strategy to impact the 

national opioid misuse epidemic by 

combating nonmedical use of 

prescription opioids, opioid use 

disorder, and overdose through the 

promotion of safe and appropriate 

opioid utilization, improved access to 

treatment for opioid use disorders, and 

evidence-based practices for acute and 

chronic pain management.43

Due to the potential for a 

misinterpretation of the intent of the 

measure, we are concerned that OP–21: 

Median Time to Pain Management for 

Long Bone Fracture may create undue 

pressure for hospital staff to prescribe 

more opioids. We note that the measure 

only assesses the time to initial, acute 

administration of pain medication in a 

specific acute clinical situation, and 

does not promote long-term pain 

medication prescriptions. In fact, this 

measure assesses an element of 

appropriate pain management, 

specifically the time to pain medication 

administration in the case of long bone 

fracture. In addition, the measure 

assesses the use of both opioid and 

nonopioid pain medications. While we 

acknowledge that pain control is an 

important issue for patients and clinical 

care, and the measure does not call for 

increased opioid prescriptions, many 

factors outside the control of CMS 

quality program requirements may 

contribute to the perception of a link 

between the measure and opioid 

prescribing practices. Although we are 

not aware of any scientific studies that 

support an association between this 

measure and opioid prescribing 

practices, out of an abundance of 

caution, we proposed to remove the 

measure in order to remove any 

potential ambiguity and to avoid 

misinterpretation of the intent of the 

measure. We also note that, in the CY 

2017 OPPS/ASC final rule with 

comment period (81 FR 79856), we 

removed the Pain Management 

dimension of the HCAHPS Survey in 

the Patient- and Caregiver-Centered 

Experience of Care/Care Coordination 

domain beginning with the FY 2018 

program year for the Hospital VBP 

Program for similar reasons. In addition, 

in the FY 2018 IPPS/LTCH PPS final 

rule (82 FR 38342), we finalized 

refinements to the former pain 

management questions in the HCAHPS 

Survey measure for the Hospital IQR 

Program. 

We invited public comment on our 

proposal to remove the OP–21: Median 

Time to Pain Management for Long 

Bone Fracture measure for the CY 2020 

payment determination and subsequent 

years as discussed above. 

Comment: Many commenters 

supported the removal of OP–21 for the 

CY 2020 payment determination noting 

concern about the potential incentive to 

over prescribe opioids. One commenter 

applauded CMS’ efforts to combat the 

opioid epidemic. A few commenters 

noted that the measure could be more 

appropriate or valuable if it were 

refined, for example to include oral pain 

medication or to ensure that it does not 

incentivize prescribing opioids. One 

commenter recommended that CMS 

remove the measure for the CY 2019 

payment determination. 

Response: We disagree that it would 

be more appropriate to refine this 

measure. We do not believe that 

introducing a modified version of the 

measure would address our main 

concern regarding potential for 

misinterpretation of the intent of the 

measure because whether pain 

management is initiated, our main 

concern for misinterpretation, is what 

this measure is meant to assess. As 

stated in our proposal, many factors 

outside the control of CMS quality 

program requirements may contribute to 

the perception of a link between the 

measure and opioid prescribing 

practices. Although we are not aware of 

any scientific studies that support an 

association between this measure and 

opioid prescribing practices, out of an 

abundance of caution, we proposed to 

remove the measure in order to remove 

any potential ambiguity and to avoid 

misinterpretation of the intent of the 

measure. We note that due to 

operational limitations, we cannot 

remove the measure for the CY 2019 

payment determination. The CY 2020 

payment determination (CY 2018 data 

collection) is the earliest we can remove 

this measure from the program. 

Comment: One commenter did not 

support the proposal to remove OP–21 

and noted that there is a lack of 

evidence that the measure incentivizes 

overprescribing of opioids. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59429 

44OP–26 Measure Information Form. Available 

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

Page&pagename=QnetPublic%2FPage%2FSpecs

ManualTemplate&cid=1228775748170. 

45Antman EM, Hand M, Armstrong PW, Bates ER, 

Green LA, Halasyamani LK, et al. 2007 focused 

update of the ACC/AHA 2004 Guidelines for the 

Management of Patients With ST-Elevation 

Myocardial Infarction: A report of the American 

College of Cardiology/American Heart Association 

Task Force on Practice Guidelines (Writing Group 

to Review New Evidence and Update the ACC/AHA 

2004 Guidelines for the Management of Patients 

With ST-Elevation Myocardial Infarction). Journal 

of the American College of Cardiology. 2008; 

51:210–47. 

Response: We acknowledge the 

commenter’s concerns. As stated in our 

proposal, although we are not aware of 

any scientific studies that support an 

association between this measure and 

opioid prescribing practices, out of an 

abundance of caution, however, we 

believe it is important to remove the 

measure in order to remove any 

potential ambiguity and to avoid any 

misinterpretation of the intent of the 

measure. We want to ensure that the 

Hospital OQR Program measure set does 

not create any potential undue pressure 

for hospital staff to overprescribe 

opioids. 

After consideration of the public 

comments we received, we are 

finalizing the proposal to remove OP– 

21: Median Time to Pain Management 

for Long Bone Fracture for the CY 2020 

payment determination and subsequent 

years, as proposed. 

(2) Removal of OP–26: Hospital 

Outpatient Volume Data on Selected 

Outpatient Surgical Procedures 

Beginning With the CY 2020 Payment 

Determination 

We refer readers to the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74468), where we adopted 

OP–26: Hospital Outpatient Volume 

Data on Selected Outpatient Surgical 

Procedures beginning with the CY 2014 

payment determination. This measure, 

which is submitted via a web-based 

tool, collects surgical procedure volume 

data on eight categories of procedures 

frequently performed in the outpatient 

hospital setting. 

We believe there is a lack of evidence 

to support this measure’s link to 

improved clinical quality. The measure 

requires hospitals to report on the 

volumes of surgical procedures 

performed at the facility.44 This 

information, number of surgical 

procedures, does not offer insight into 

the facilities’ overall performance or 

quality improvement in regard to 

surgical procedures. Accordingly, this 

measure meets the following measure 

removal criterion: performance or 

improvement on a measure does not 

result in better patient outcomes (79 FR 

66941). We believe the burden of this 

measure, which is submitted via a webbased tool, outweighs the value, and, 

therefore, we proposed to remove OP– 

26: Hospital Outpatient Volume Data on 

Selected Outpatient Surgical Procedures 

for the CY 2020 payment determination 

and subsequent years. We also refer 

readers to section XIV.B.3.b.(3) of this 

final rule with comment period, where 

the ASCQR Program is finalizing the 

removal of a similar measure. 

We invited public comment on our 

proposal to removal the OP–26: Hospital 

Outpatient Volume Data on Selected 

Outpatient Surgical Procedures measure 

for the CY 2020 payment determination 

and subsequent years as discussed 

above. 

Comment: Many commenters 

supported the removal of OP–26 for the 

CY 2020 payment determination. One 

commenter recommended that CMS 

remove the measure for the CY 2019 

payment determination. 

Response: We thank the commenters 

for their support and feedback. We note 

that due to operational limitations, we 

cannot remove the measure for the CY 

2019 payment determination. The CY 

2020 payment determination (CY 2018 

data collection) is the earliest we can 

remove this measure from the program. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to remove OP– 

26: Hospital Outpatient Volume Data on 

Selected Outpatient Surgical Procedures 

for the CY 2020 payment determination 

and subsequent years, as proposed. 

(3) Removal of OP–1: Median Time to 

Fibrinolysis Beginning With the CY 

2020 Payment Determination 

We refer readers to the CY 2008 

OPPS/ASC final rule with comment 

period (referred to as ‘‘ED–AMI–2— 

Median Time to Fibrinolysis’’ in 72 FR 

66862 through 66865) where we 

adopted OP–1: Median Time to 

Fibrinolysis beginning with services 

furnished in CY 2009. This chartabstracted measure assesses the median 

time from ED arrival to administration 

of fibrinolytic therapy in ED patients 

with ST-segment elevation on the ECG 

performed closest to ED arrival and 

prior to transfer. 

We believe that this measure meets 

the following measure removal 

criterion—the availability of a measure 

that is more strongly associated with 

desired patient outcomes for the 

particular topic (79 FR 66941). We note 

that the currently adopted OP–2: 

Fibrinolytic Therapy Received Within 

30 Minutes of ED Arrival (72 FR 66862 

through 66865) has been designed with 

a threshold that is based on a clinical 

standard, allows us to measure this 

topic area, and provides meaningful and 

clinically relevant data on the receipt of 

fibrinolytic therapy. National guidelines 

recommend that fibrinolytic therapy be 

given within 30 minutes of hospital 

arrival in patients with ST-segment 

elevation myocardial infarction.45

Because OP–1: Median Time to 

Fibrinolysis measures only the median 

time from door to needle and does not 

note whether or not that value exceeds 

the clinical best practice of 30 minutes, 

we do not believe that reporting of OP– 

1 improves quality of care or patient 

outcomes. In addition, we believe that 

retaining OP–1: Median Time to 

Fibrinolysis would be redundant with 

OP–2: Fibrinolytic Therapy Received 

Within 30 Minutes of ED Arrival. As a 

result, we proposed to remove OP–1: 

Median Time to Fibrinolysis for the CY 

2021 payment determination and 

subsequent years. We note that although 

OP–1: Median Time to Fibrinolysis is a 

chart-abstracted measure, we do not 

expect removing this measure would 

reduce burden, as the data collected for 

this measure is required to calculate 

another program measure in the AMI 

measure set (OP–2: Fibrinolytic Therapy 

Received Within 30 Minutes of ED 

Arrival) and will, therefore, continue to 

be collected even if the proposal to 

remove OP–1: Median Time to 

Fibrinolysis is finalized as proposed. 

We invited public comment on our 

proposal to remove OP–1: Median Time 

to Fibrinolysis for the CY 2021 payment 

determination and subsequent years as 

discussed above. 

Comment: Several commenters 

supported the proposal to remove OP– 

1: Median Time to Fibrinolysis for the 

CY 2021 payment determination. Some 

commenters supported the proposal to 

remove the measure, but recommended 

that it be removed as soon as possible. 

Many commenters supported the 

proposal to remove the measure, but 

recommended that it be removed 

beginning with the CY 2020 payment 

determination, one year earlier than 

proposed. 

Response: We thank the commenters 

for their support and feedback. While 

planning for the proposed rule, we did 

not believe we had the logistical 

capacity to support successful removal 

of all six measures at once from our 

systems. Upon further consideration 

however, we have determined it is, in 

fact, operationally feasible to remove 

OP–1 beginning with the CY 2020 

payment determination rather than the 


sradovich on DSK3GMQ082PROD with RULES2
59430 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

CY 2021 payment determination as 

proposed. We believe that removing this 

measure one year earlier than proposed 

will reduce hourly and financial burden 

on hospital. Therefore, we agree that we 

should remove the measure as soon as 

possible. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to remove OP–1: 

Median Time to Fibrinolysis with 

modification. Instead of beginning with 

the CY 2021 payment determination as 

proposed, we are finalizing the removal 

of this measure for the CY 2020 

payment determination and subsequent 

years, one year earlier than proposed. 

(4) Removal of OP–4: Aspirin at Arrival 

Beginning With the CY 2020 Payment 

Determination 

We refer readers to the CY 2008 

OPPS/ASC final rule with comment 

period (72 FR 66862 through 66865) 

where we adopted OP–4: Aspirin at 

Arrival beginning with services 

furnished in CY 2009. This chartabstracted measure assesses the rate of 

patients with chest pain or possible 

heart attack who received aspirin within 

24 hours of arrival or before transferring 

from the emergency department. 

We previously finalized two criteria 

for determining when a measure is 

‘‘topped out’’ under the Hospital OQR 

Program: (1) When there is statistically 

indistinguishable performance at the 

75th and 90th percentiles of national 

facility performance; and (2) when the 

measure’s truncated coefficient of 

variation (COV) is less than or equal to 

0.10 (79 FR 66942). Based on our 

analysis of Hospital OQR Program 

measure data, we have determined that 

performance on this measure is so high 

and unvarying that meaningful 

distinctions in improvement cannot be 

made; specifically, our analyses show 

that there is statistically 

indistinguishable performance at the 

75th and 90th percentiles of national 

facility performance for this measure. 

These analyses are captured in the table 

below. 

OP–4—ASPIRIN AT ARRIVAL TOPPED OUT ANALYSIS

Encounters Number of 

hospitals 

75th 

percentile 

90th 

percentile 

Truncated 

COV 

CY 2014 ........................................................................................................... 1,706 100.00 100.00 0.030 

CY 2015 ........................................................................................................... 1,749 100.00 100.00 0.035 

CY 2016 ........................................................................................................... 1,803 100.00 100.00 0.042 

As displayed in the table above, there 

is no distinguishable difference in 

hospital performance between the 75th 

and 90th percentiles under the OP–4: 

Aspirin at Arrival measure, and the 

truncated coefficient of variation has 

been below 0.10 since 2014. Therefore, 

this measure meets both ‘‘topped out’’ 

measure criteria for the ASCQR 

Program. 

Thus, we believe the burden of 

reporting this chart-abstracted measure 

is not justified by the value of retaining 

it in the program and we proposed to 

remove OP–4: Aspirin at Arrival from 

the program for the CY 2021 payment 

determination and subsequent years. 

We invited public comment on our 

proposal to remove the OP–4: Aspirin at 

Arrival measure for the CY 2021 

payment determination and subsequent 

years as discussed above. 

Comment: Several commenters 

supported the removal of OP–4: Aspirin 

at Arrival for the CY 2021 payment 

determination. Some commenters 

supported the proposal to remove the 

measure, but recommended that it be 

removed as soon as possible. Many 

commenters supported the proposal to 

remove the measure, but recommended 

that it be removed beginning with the 

CY 2020 payment determination, one 

year earlier than proposed. 

Response: We thank the commenters 

for their support. While planning for the 

proposed rule, we did not believe we 

had the logistical capacity to support 

successful removal of all six measures at 

once from our systems. Upon further 

consideration, we have determined it is, 

in fact, operationally feasible to remove 

OP–4 beginning with the CY 2020 

payment determination rather than the 

CY 2021 payment determination as 

proposed. We believe that removing this 

measure one year earlier than proposed 

will reduce hourly and financial burden 

on hospitals. Therefore, we agree that 

we should remove the measure as soon 

as possible. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to remove OP–4: 

Aspirin at Arrival measure with 

modification. Instead of beginning with 

the CY 2021 payment determination as 

proposed, we are finalizing the removal 

of this measure for the CY 2020 

payment determination and subsequent 

years, one year earlier than proposed. 

(5) Removal of OP–20: Door to 

Diagnostic Evaluation by a Qualified 

Medical Professional Beginning With 

the CY 2020 Payment Determination 

We refer readers to the CY 2011 

OPPS/ASC final rule with comment 

period (75 FR 72087 through 72088) 

where we adopted OP–20: Door to 

Diagnostic Evaluation by a Qualified 

Medical Professional for the CY 2013 

payment determination. This chartabstracted measure assesses the time 

from ED arrival to provider contact for 

Emergency Department patients. 

During regular measure maintenance, 

specific concerns about OP–20: Door to 

Diagnostic Evaluation by a Qualified 

Medical Professional were raised by a 

Technical Expert Panel (TEP), 

comprised of experts representing a 

variety of stakeholders and was 

convened by a CMS contractor. These 

concerns include: (1) Limited evidence 

linking the measure to improved patient 

outcomes; (2) validity concerns related 

to wait times and the accuracy of doorto-door time stamps; and (3) potential 

for skewed measure performance due to 

disease severity and institution-specific 

confounders. After our own analysis, we 

agree with the TEP’s analysis and 

believe that this measure meets the 

following measure removal criterion: 

Performance or improvement on a 

measure does not result in better patient 

outcomes. As a result, we believe the 

burden of continuing to include this 

chart-abstracted measure in the program 

outweighs the benefits; and thus, we 

proposed to remove OP–20: Door to 

Diagnostic Evaluation by a Qualified 

Medical Professional for the CY 2021 

payment determination and subsequent 

years. 

We invited public comment on our 

proposal to remove OP–20: Door to 

Diagnostic Evaluation by a Qualified 

Medical Professional for the CY 2021 

payment determination and subsequent 

years as discussed above. 

Comment: Several commenters 

supported the proposal to remove OP– 

20: Door to Diagnostic Evaluation by a 

Qualified Medical Professional for the 

CY 2021 payment determination. Some 

commenters supported the proposal to 

remove the measure, but recommended 

that it be removed as soon as possible. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59431 

Many commenters supported the 

proposal to remove the measure, but 

recommended that it be removed 

beginning with the CY 2020 payment 

determination, one year earlier than 

proposed. 

Response: We thank the commenters 

for their support. While planning for the 

proposed rule, we did not believe we 

had the logistical capacity to support 

successful removal of all six measures at 

once from our systems. Upon further 

consideration, we have determined it is, 

in fact, operationally feasible to remove 

OP–20 beginning with the CY 2020 

payment determination rather than the 

CY 2021 payment determination as 

proposed. We believe that removing this 

measure one year earlier than proposed 

will reduce hourly and financial burden 

on hospitals. Therefore, we agree that 

we should remove the measure as soon 

as possible. 

Comment: A few commenters 

expressed concern that there are 

socioeconomic pressures that can vary 

by community that cause variation in 

performance on this measure. However, 

these commenters also noted the value 

of the measure and recommended that 

CMS consider a refined version of OP– 

20 that stratifies by hospital size and 

other factors related to measure 

performance. 

Response: We acknowledge the 

suggestion that OP–20 be refined to 

account for community factors that 

influence performance. While the TEP 

found a potential for skewed measure 

performance due to disease severity and 

institution-specific confounders, we do 

not believe modifying the measure to 

account for social risk factors will 

address our primary concern that the 

measure is not adequately tied to better 

patient outcomes. We thank the 

commenters for their recommendation, 

however; we will take these comments 

into consideration as we continue to 

review and refine the Hospital OQR 

Program measure set. In addition, we 

acknowledge the suggestion that OP–20 

be refined to account for community 

factors that influence performance and 

note that the TEP found a potential for 

skewed measure performance due to 

disease severity and institution-specific 

confounders. However, modifying the 

measure to account for social risk 

factors in this or future rulemaking will 

not address our primary concern that 

the measure is not adequately tied to 

patient outcomes. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to remove OP– 

20: Door to Diagnostic Evaluation by a 

Qualified Medical Professional with 

modification. Instead of beginning with 

the CY 2021 payment determination as 

proposed, we are finalizing the removal 

of this measure for the CY 2020 

payment determination and subsequent 

years, one year earlier than proposed. 

(6) Removal of OP–25: Safe Surgery 

Checklist Use Beginning With the CY 

2020 Payment Determination 

We refer readers to the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74464 through 74466), 

where we adopted OP–25: Safe Surgery 

Checklist Use beginning with the CY 

2014 payment determination. This 

structural measure of hospital process 

assesses whether a hospital employed a 

safe surgery checklist that covered each 

of the three critical perioperative 

periods (prior to administering 

anesthesia, prior to skin incision, and 

prior to patient leaving the operating 

room) for the entire data collection 

period. Based on our review of reported 

data under the measure, this measure 

meets our first criterion for measure 

removal that measure performance is so 

high and unvarying that meaningful 

distinctions and improvements in 

performance can no longer be made. 

The Hospital OQR Program 

previously finalized two criteria for 

determining when a measure is ‘‘topped 

out’’: (1) When there is statistically 

indistinguishable performance at the 

75th and 90th percentiles of national 

facility performance; and (2) when the 

measure’s truncated coefficient of 

variation is less than or equal to 0.10 (79 

FR 66942). Our estimations indicate that 

performance on this measure is trending 

towards topped out status. This analysis 

is captured in the table below. 

OP–25—SAFE SURGERY CHECKLIST USE PERFORMANCE ANALYSIS

Encounters Number of 

hospitals Rate 75th percentile 

90th 

percentile 

Truncated 

COV 

CY 2012 ............................................................................... 3,227 0.910 100.000 100.000 0.314 

CY 2013 ............................................................................... 3,184 0.949 100.000 100.000 0.232 

CY 2014 ............................................................................... 3,177 0.963 100.000 100.000 0.196 

CY 2015 ............................................................................... 3,166 0.970 100.000 100.000 0.176 

Based on the analysis above, the 

national rate of ‘‘Yes’’ response for the 

OP–25 measure is nearly 1.0, or 100 

percent, nationwide, and has remained 

at this level for the last two years. In 

addition, the truncated coefficient of 

variation has decreased such that it is 

trending towards 0.10 and there is no 

distinguishable difference in hospital 

performance between the 75th and 90th 

percentiles. We have previously stated 

the benefits of removing a measure from 

the Hospital OQR Program will be 

assessed on a case-by-case basis (79 FR 

66941 through 66942). We believe that 

removal of this measure from the 

Hospital OQR Program measure set is 

appropriate, as there is little room for 

improvement. We believe that safe 

surgical checklist is widely used and 

that hospitals will continue its use. In 

addition, removal of this measure would 

alleviate the administrative burden to 

hospitals associated with reporting on 

this measure. As such, we believe the 

reporting burden of this measure 

outweigh the benefits of keeping the 

measure in the Hospital OQR Program. 

Therefore, we proposed to remove 

OP–25: Safe Surgery Checklist Use for 

the CY 2021 payment determination and 

subsequent years. We refer readers to 

section XIV.B.3.b.(2) of this final rule 

with comment period, where the 

ASCQR Program is finalizing a proposal 

to remove a similar measure. 

We invited public comment on our 

proposal to remove the OP–25: Safe 

Surgery Checklist Use measure for the 

CY 2021 payment determination and 

subsequent years as discussed above. 

Comment: Several commenters 

supported the proposal to remove OP– 

25 for the CY 2021 payment 

determination. Some commenters 

supported the proposal to remove the 

measure, but recommended removal as 

soon as possible. Many commenters 

supported the proposal to remove the 

measure, but recommended that it be 

removed beginning with the CY 2020 

payment determination, one year earlier 

than proposed. 

Response: We thank the commenters 

for their support. While planning for the 

proposed rule, we did not believe we 

had the logistical capacity to support 


sradovich on DSK3GMQ082PROD with RULES2
59432 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

46About the National Implementation and Public 

Reporting. Available at: https://oascahps.org/ 

General-Information/National-Implementation. 47 Ibid. 

successful removal of all six measures at 

once from our systems. Upon further 

consideration, we have determined it is, 

in fact, operationally feasible to remove 

OP–25 beginning with the CY 2020 

payment determination rather than the 

CY 2021 payment determination as 

proposed. We believe that removing this 

measure one year earlier than proposed 

will reduce hourly and financial burden 

on hospitals. Therefore, we agree that 

we should remove the measure as soon 

as possible. 

Comment: A few commenters 

opposed the proposal to remove OP–25: 

Safe Surgery Checklist Use, noting that 

the measure adds value. One commenter 

recommended that CMS retain the 

measure until there is further evidence 

that the use of a safe surgery checklist 

is supporting effective perioperative 

communication. 

Response: As stated in our proposal, 

we believe that there is little room for 

improvement as shown by the data in 

our table above. In addition, removal of 

this measure would alleviate the 

maintenance costs and administrative 

burden to hospitals of data collection 

and reporting. While retaining the 

measure may add some nominal value, 

we believe that the burdens outweigh 

the benefits. In addition, in response to 

the suggestion that we retain the 

measure until there is further evidence 

that the use of a safe surgery checklist 

is supporting effective perioperative 

communication, we would like to make 

clear that high performance on OP–25: 

Safe Surgery Checklist Use is not 

intended to indicate whether 

perioperative communication among 

team members is effective; this measure 

is not specified to assess the 

effectiveness of a team’s 

communication, only whether a safe 

surgery checklist is used. Therefore, we 

do not believe continuing to collect—or, 

conversely, ceasing to collect—data 

under this measure will assess or affect 

the effectiveness of perioperative 

communication within Hospital 

Outpatient Departments. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to remove OP– 

25: Safe Surgery Checklist Use with 

modification. Instead of beginning with 

the CY 2021 payment determination as 

proposed, we are finalizing the removal 

of this measure for the CY 2020 

payment determination and subsequent 

years, one year earlier than proposed. 

5. Delay of OP–37a–e: Outpatient and 

Ambulatory Surgery Consumer 

Assessment of Healthcare Providers and 

Systems (OAS CAHPS) Survey-Based 

Measures Beginning With the CY 2020 

Payment Determination 

We refer readers to the CY 2017 

OPPS/ASC final rule with comment 

period where we adopted OP–37a–e (81 

FR 79771 through 79784), and finalized 

data collection and data submission 

timelines (81 FR 79792 through 79794). 

These measures assess patients’ 

experience with care following a 

procedure or surgery in a hospital 

outpatient department by rating patient 

experience as a means for empowering 

patients and improving the quality of 

their care. 

In CY 2018 OPPS/ASC proposed rule 

(82 FR 33675), we proposed to delay 

implementation of the Outpatient and 

Ambulatory Surgery Consumer 

Assessment of Healthcare Providers and 

Systems (OAS CAHPS) Survey-Based 

Measures OP–37a–e beginning with the 

CY 2020 payment determination (2018 

data collection) and subsequent years. 

Since our adoption of these measures, 

we have come to believe that we need 

to collect more operational and 

implementation data. Specifically, we 

want to ensure that the survey measures 

appropriately account for patient 

response rates, both aggregate and by 

survey administration method; reaffirm 

the reliability of national 

implementation of OAS CAHPS Survey 

data; and appropriately account for the 

burden associated with administering 

the survey in the outpatient setting of 

care. We note that commenters 

expressed concern over the burden 

associated with the survey in the CY 

2017 OPPS/ASC final rule with 

comment period (81 FR 79777). We 

believe that the voluntary national 

implementation of the survey, which 

began in January 2016, would provide 

valuable information moving forward.46

We plan to conduct analyses of the 

national implementation data to 

undertake any necessary modifications 

to the survey tool and/or CMS systems. 

We believe it is important to allow time 

for any modifications before requiring 

the survey under the Hospital OQR 

Program. However, we continue to 

believe that these measures address an 

area of care that is not adequately 

addressed in our current measure set 

and will be useful to assess aspects of 

care where the patient is the best or only 

source of information. Further, we 

continue to believe these measures will 

enable objective and meaningful 

comparisons between hospital 

outpatient departments. Therefore, we 

proposed to delay implementation of 

OP–37a–e beginning with the CY 2020 

payment determination (2018 data 

collection) until further action in future 

rulemaking. We also refer readers to 

section XIV.B.4. of this final rule with 

comment period where we are finalizing 

a similar proposal in the ASCQR 

Program. 

We invited public comment on our 

proposal to delay the OAS CAHPS 

Survey measures beginning with the CY 

2020 payment determination (2018 data 

collection) as discussed above. 

Comment: Many commenters 

supported the proposal to delay 

implementation of the OAS CAHPS 

Survey, noting agreement that an 

analysis of the national implementation 

will provide valuable information. One 

commenter noted that the high volume 

of facilities and hospitals participating 

in the voluntary national 

implementation indicates that the data 

collection burden of the survey is low. 

Response: We thank the commenters 

for their support, and note our belief 

that an analysis of the national 

implementation of OAS CAHPS Survey 

will provide valuable information. 

Comment: Citing the importance of 

patient experience data, a few 

commenters recommended that CMS 

move toward mandatory data collection 

in the future as some hospitals have 

already invested resources to begin data 

collection. One commenter 

recommended a dry run for the first 

quarter of mandatory implementation. A 

few commenters recommended that the 

survey be voluntary for all future years 

of the program. Another commenter 

recommended that the survey be 

introduced with advance notice so 

hospitals can prepare. 

Response: We thank the commenters 

for their recommendations, and will 

take these comments under 

consideration as we craft future policy 

for the OAS CAHPS Survey. First, we 

acknowledge the work completed thus 

far by hospitals beginning to prepare for 

OAS CAHPS Survey data collection and 

thank them for their commitment to 

improving patient experience. We note 

that changes to this measure would be 

made in notice and comment 

rulemaking so that stakeholders can 

prepare. Finally, while we do not 

anticipate conducting a dry run for this 

survey at this time, we refer readers to 

the voluntary national implementation 

of the OAS CAHPS Survey.47


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59433 

48OASCAHPS.org. Additional Procedural Codes 

for Exclusion from the OAS CAHPS Survey. 

Available at: https://oascahps.org/GeneralInformation/Announcements/EntryId/80/ 

Additional-Procedural-Codes-for-Exclusion-fromthe-OAS-CAHPS-Survey. 49National Quality Forum. List of Measures 

under Consideration for December 1, 2014. National 

Quality Forum, Dec. 2014. Available at: https://

www.qualityforum.org/Setting_Priorities/ 

Partnership/Measures_Under_Consideration_List_

2014.aspx. 

50National Quality Forum. MAP 2015 Final 

Recommendations to HHS and CMS. Rep. National 

Quality Forum, Jan. 2015. Available at: http://

www.qualityforum.org/WorkArea/linkit.aspx?

LinkIdentifier=id&ItemID=78711. 

51 Ibid. 

52 Ibid. 

53 Ibid. 

54 Ibid. 

Comment: Several commenters noted 

specific concerns about the OAS CAHPS 

Survey, including that the survey is 

unnecessarily long, that not all of the 

questions are relevant, and that 

requiring a standardized survey 

prevents hospitals from targeting 

specific areas for improvement. Some 

commenters noted that the use of a 

third-party vendor is too costly. Several 

commenters recommended that vendors 

should provide electronic or email 

options for conducting the OAS CAHPS 

Survey in order to increase response 

rates. Others recommended that CMS 

administer the survey on its Web site. 

One commenter noted concern that 

timely results are not provided. A few 

commenters expressed concern about 

the use of CPT codes to determine 

eligibility for the survey and one noted 

that the CPT codes include procedures 

that a patient may not perceive as a 

surgery. 

Response: While web-based surveys 

are not available survey modes at 

present, we are actively investigating 

these modes as possible options for the 

future. We are exploring whether 

hospitals and ASCs receive reliable 

email addresses from patients and 

whether there is adequate access to the 

internet across all types of patients. 

Ultimately, the purpose of the 

investigation is to ensure that any future 

survey administration method does not 

introduce bias in the survey process and 

reduces length and burden if at all 

possible. Although we are investigating 

other modes of survey administration, 

we do not expect that CMS will directly 

administer the survey; the survey would 

still be administered through vendors. 

Finally, we acknowledge the concern 

about the use of CPT codes, including 

those for procedures that patients may 

not perceive as surgery, and note that 

we will consider this issue. We note that 

many CPT codes have been excluded 

from inclusion in the OAS CAHPS 

Survey, including services like 

application of a cast or splint, in order 

to ensure that only patients receiving 

applicable procedures are surveyed.48

We thank the commenters and will take 

all comments under consideration as we 

craft future policy for the OAS CAHPS 

Survey. 

Comment: Several commenters 

recommended that the survey be NQFendorsed prior to implementation and 

that the survey should be refined with 

input from stakeholders. 

Response: Section 1833(t)(17)(C)(i) of 

the Act does not require that each 

measure we adopt for the Hospital OQR 

Program be endorsed by a national 

consensus building entity, or the NQF 

specifically. While we strive to adopt 

NQF-endorsed measures when feasible 

and practicable, we believe the 

requirement that measures reflect 

consensus among affected parties can be 

achieved in other ways, including 

through the measure development 

process, stakeholder input via a 

Technical Expert Panel (TEP), review by 

the MAP, broad acceptance and use of 

the measure, and public comments. As 

stated in the CY 2017 OPPS/ASC final 

rule with comment period (81 FR 

79772), the OAS CAHPS Survey 

measures were included on the CY 2014 

MUC list,49 and reviewed by the MAP.50

The MAP encouraged continued 

development of these survey-based 

measures; however, we note that these 

measures had not been fully specified 

by the time of submission to the MUC 

List.51 The MAP stated that these are 

high impact measures that will improve 

both quality and efficiency of care and 

be meaningful to consumers.52 Further, 

the MAP stated that given that these 

measures are also under consideration 

for the ASCQR Program, they help to 

promote alignment across care 

settings.53 It also stated that these 

measures would begin to fill a gap MAP 

has previously identified for this 

program including patient reported 

outcomes and patient and family 

engagement.54 Several MAP workgroup 

members noted that CMS should 

consider how these measures are related 

to other existing ambulatory surveys to 

ensure that patients and facilities are 

not overburdened. In addition, we refer 

readers to the CY 2017 OPPS/ASC final 

rule with comment period (81 FR 

79775), where we received public 

comments on this measure during 

development. 

Comment: One commenter requested 

that survey development and testing 

data be made public. 

Response: We refer commenters to the 

voluntary national implementation of 

the OAS CAHPS Survey for more 

information on results to date (https:// 

oascahps.org/General-Information/ 

National-Implementation). 

After consideration of the public 

comments we received, we are 

finalizing the proposal to delay 

implementation of the Outpatient and 

Ambulatory Surgery Consumer 

Assessment of Healthcare Providers and 

Systems (OAS CAHPS) Survey-based 

Measures (OP–37a–e) beginning with 

the CY 2020 payment determination (CY 

2018 data collection) until further action 

in future rulemaking, as proposed. We 

refer readers to section XIV.B.4. of this 

final rule with comment where we are 

also finalizing delay of the OAS CAHPS 

Survey-based measures in the ASCQR 

Program. 

6. Previously Adopted Hospital OQR 

Program Measure Set for the CY 2020 

Payment Determination and Subsequent 

Years 

We refer readers to the CY 2017 

OPPS/ASC final rule with comment 

period (81 FR 79784) for the previously 

finalized measure set for the Hospital 

OQR Program CY 2020 payment 

determination and subsequent years. 

These measures also are listed below. 

PREVIOUSLY FINALIZED HOSPITAL OQR PROGRAM MEASURE SET FOR THE CY 2020 PAYMENT DETERMINATION AND

SUBSEQUENT YEARS

NQF No. Measure name 

0287 ................ OP–1: Median Time to Fibrinolysis.† 

0288 ................ OP–2: Fibrinolytic Therapy Received Within 30 Minutes of ED Arrival. 

0290 ................ OP–3: Median Time to Transfer to Another Facility for Acute Coronary Intervention. 

0286 ................ OP–4: Aspirin at Arrival.† 

0289 ................ OP–5: Median Time to ECG.† 


sradovich on DSK3GMQ082PROD with RULES2
59434 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

PREVIOUSLY FINALIZED HOSPITAL OQR PROGRAM MEASURE SET FOR THE CY 2020 PAYMENT DETERMINATION AND

SUBSEQUENT YEARS—Continued 

NQF No. Measure name 

0514 ................ OP–8: MRI Lumbar Spine for Low Back Pain. 

None ............... OP–9: Mammography Follow-up Rates. 

None ............... OP–10: Abdomen CT—Use of Contrast Material. 

0513 ................ OP–11: Thorax CT—Use of Contrast Material. 

None ............... OP–12: The Ability for Providers with HIT to Receive Laboratory Data Electronically Directly into their ONC-Certified EHR System as Discrete Searchable Data. 

0669 ................ OP–13: Cardiac Imaging for Preoperative Risk Assessment for Non-Cardiac, Low-Risk Surgery. 

None ............... OP–14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus Computed Tomography (CT). 

0491 ................ OP–17: Tracking Clinical Results between Visits.† 

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

None ............... OP–20: Door to Diagnostic Evaluation by a Qualified Medical Professional. 

0662 ................ OP–21: Median Time to Pain Management for Long Bone Fracture. 

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

0661 ................ OP–23: Head CT or MRI Scan Results for Acute Ischemic Stroke or Hemorrhagic Stroke who Received Head CT or MRI Scan 

Interpretation Within 45 minutes of ED Arrival. 

None ............... OP–25: Safe Surgery Checklist Use. 

None ............... OP–26: Hospital Outpatient Volume on Selected Outpatient Surgical Procedures. * 

0431 ................ OP–27: Influenza Vaccination Coverage among Healthcare Personnel. 

0658 ................ OP–29: Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk Patients.** 

0659 ................ OP–30: Colonoscopy Interval for Patients with a History of Adenomatous Polyps—Avoidance of Inappropriate Use.** 

1536 ................ OP–31: Cataracts: Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery.*** 

2539 ................ OP–32: Facility 7-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy. 

1822 ................ OP–33: External Beam Radiotherapy for Bone Metastases. 

None ............... OP–35: Admissions and Emergency Department (ED) Visits for Patients Receiving Outpatient Chemotherapy. 

2687 ................ OP–36: Hospital Visits after Hospital Outpatient Surgery. 

None ............... OP–37a: OAS CAHPS—About Facilities and Staff.  

None ............... OP–37b: OAS CAHPS—Communication About Procedure.** ** 

None ............... OP–37c: OAS CAHPS—Preparation for Discharge and Recovery.  

None ............... OP–37d: OAS CAHPS—Overall Rating of Facility.** ** 

None ............... OP–37e: OAS CAHPS—Recommendation of Facility.**** 

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

* OP–26: Procedure categories and corresponding HCPCS codes are located at: https://www.qualitynet.org/dcs/ContentServer?c=Page&

pagename=QnetPublic%2FPage%2FQnetTier3&cid=1196289981244. 

** We note that measure name was revised to reflect NQF title. 

*** Measure voluntarily collected as set forth in section XIII.D.3.b. of the CY 2015 OPPS/ASC final rule with comment period (79 FR 66946 

through 66947). 

**** Measure reporting delayed beginning with CY 2018 reporting and for subsequent years as discussed in section XIII.B.5. of this final rule 

with comment period. 

7. Newly Finalized Hospital OQR 

Program Measure Set for the CY 2020 

Payment Determination and Subsequent 

Years 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33676), we did not propose 

any new measures for the Hospital OQR 

Program. However, beginning with the 

CY 2020 payment determination, in 

section XIII.B.4.c. of this final rule with 

comment period, we are finalizing 

proposals to remove six measures, and 

in section XIII.B.5. of this final rule with 

comment period, we are finalizing a 

proposal to delay OP–37a–e beginning 

with the CY 2020 payment 

determination (2018 data collection). 

The table below outlines the Hospital 

OQR Program measure set we are 

finalizing in this final rule with 

comment period for the CY 2020 

payment determination and subsequent 

years. 

NEWLY FINALIZED HOSPITAL OQR PROGRAM MEASURE SET FOR THE CY 2020 PAYMENT DETERMINATION AND

SUBSEQUENT YEARS

NQF No. Measure name 

0288 ................ OP–2: Fibrinolytic Therapy Received Within 30 Minutes of ED Arrival. 

0290 ................ OP–3: Median Time to Transfer to Another Facility for Acute Coronary Intervention. 

0289 ................ OP–5: Median Time to ECG.† 

0514 ................ OP–8: MRI Lumbar Spine for Low Back Pain. 

None ............... OP–9: Mammography Follow-up Rates. 

None ............... OP–10: Abdomen CT—Use of Contrast Material. 

0513 ................ OP–11: Thorax CT—Use of Contrast Material. 

None ............... OP–12: The Ability for Providers with HIT to Receive Laboratory Data Electronically Directly into their ONC-Certified EHR System as Discrete Searchable Data. 

0669 ................ OP–13: Cardiac Imaging for Preoperative Risk Assessment for Non-Cardiac, Low-Risk Surgery. 

None ............... OP–14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus Computed Tomography (CT). 

0491 ................ OP–17: Tracking Clinical Results between Visits.† 

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

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


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59435 

NEWLY FINALIZED HOSPITAL OQR PROGRAM MEASURE SET FOR THE CY 2020 PAYMENT DETERMINATION AND

SUBSEQUENT YEARS—Continued 

NQF No. Measure name 

0661 ................ OP–23: Head CT or MRI Scan Results for Acute Ischemic Stroke or Hemorrhagic Stroke who Received Head CT or MRI Scan 

Interpretation Within 45 minutes of ED Arrival. 

0431 ................ OP–27: Influenza Vaccination Coverage among Healthcare Personnel. 

0658 ................ OP–29: Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk Patients.* 

0659 ................ OP–30: Colonoscopy Interval for Patients with a History of Adenomatous Polyps—Avoidance of Inappropriate Use.* 

1536 ................ OP–31: Cataracts: Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery.** 

2539 ................ OP–32: Facility 7-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy. 

1822 ................ OP–33: External Beam Radiotherapy for Bone Metastases. 

None ............... OP–35: Admissions and Emergency Department (ED) Visits for Patients Receiving Outpatient Chemotherapy. 

2687 ................ OP–36: Hospital Visits after Hospital Outpatient Surgery. 

None ............... OP–37a: OAS CAHPS—About Facilities and Staff.*** 

None ............... OP–37b: OAS CAHPS—Communication About Procedure.*** 

None ............... OP–37c: OAS CAHPS—Preparation for Discharge and Recovery.*** 

None ............... OP–37d: OAS CAHPS—Overall Rating of Facility.*** 

None ............... OP–37e: OAS CAHPS—Recommendation of Facility.*** 

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

Æ OP–26: Procedure categories and corresponding HCPCS codes are located at: https://www.qualitynet.org/dcs/ContentServer?c=Page&

pagename=QnetPublic%2FPage%2FQnetTier3&cid=1196289981244. 

* We note that measure name was revised to reflect NQF title. 

** Measure voluntarily collected as set forth in section XIII.D.3.b. of the CY 2015 OPPS/ASC final rule with comment period (79 FR 66946 

through 66947). 

*** Measure reporting delayed beginning with CY 2018 reporting and for subsequent years as discussed in section XIII.B.5. of this final rule 

with comment period. 

8. Hospital OQR Program Measures and 

Topics for Future Consideration 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33678), we requested public 

comment on: (1) Future measure topics; 

and (2) future development of OP–2: 

Fibrinolytic Therapy Received Within 

30 Minutes of ED Arrival as an 

electronic clinical quality measure 

(eCQM). These are discussed in detail 

below. 

a. Future Measure Topics 

We seek to develop a comprehensive 

set of quality measures to be available 

for widespread use for informed 

decision-making and quality 

improvement in the hospital outpatient 

setting. The current measure set for the 

Hospital OQR Program includes 

measures that assess process of care, 

imaging efficiency patterns, care 

transitions, ED throughput efficiency, 

Health Information Technology (health 

IT) use, care coordination, and patient 

safety. Measures are of various types, 

including those of process, structure, 

outcome, and efficiency. Through future 

rulemaking, we intend to propose new 

measures that help us further our goal 

of achieving better health care and 

improved health for Medicare 

beneficiaries who receive health care in 

hospital outpatient settings, while 

aligning quality measures across the 

Medicare program. 

We are moving towards the use of 

outcome measures and away from the 

use of clinical process measures across 

our Medicare quality reporting and 

value-based purchasing programs. We 

invited public comments on possible 

measure topics for future consideration 

in the Hospital OQR Program. We 

specifically requested comment on any 

outcome measures that would be useful 

to add to the Hospital OQR Program as 

well as any clinical process measures 

that should be eliminated from the 

Hospital OQR Program. 

Comment: A few commenters 

recommended that we adopt the eCQM 

version of OP–18: Median Time from ED 

Arrival to ED Departure for Discharged 

ED Patients. 

Response: We thank the commenters 

for their feedback. We will consider 

these suggestions as we consider 

including and developing eCQMs for 

future rulemaking. 

Comment: Several commenters 

suggested measure topics for future 

consideration, including measures that 

address Total Knee Arthroplasty (TKA) 

and Total Hip Arthroplasty (THA) 

procedures and measures that address 

recommended vaccines for adults, 

including pneumococcal immunization 

measures. A few commenters noted 

support for outcome measures, and 

recommended that CMS engage with 

stakeholders in identifying priority 

measurement areas. One commenter 

specifically recommended patient 

reported outcomes and patient reported 

experience measures. A commenter 

recommended the inclusion of pain 

experience and management measures. 

One commenter recommended the 

following topic areas for quality 

measures: Patient safety outcomes, 

readmission rates, risk-adjusted 

mortality, effective patient transitions, 

diabetes, obesity, guidelines for 

overused procedures, end of life care 

according to preferences, cost per 

episode, behavioral health and patient 

experience. 

Response: We thank the commenters 

for their recommendations and 

suggestions and agree that there are 

additional high priority topic 

measurement areas that may be 

appropriate for the Hospital OQR 

Program. We will consider the suggested 

topic areas for future rulemaking and 

intend to work with stakeholders as we 

continue to develop the Hospital OQR 

Program measure set. 

b. Possible Future Adoption of the 

Electronic Version of OP–2: Fibrinolytic 

Therapy Received Within 30 Minutes of 

Emergency Department Arrival 

We have previously stated that 

automated electronic extraction and 

reporting of clinical quality data, 

including measure results calculated 

automatically by appropriately certified 

health IT, could significantly reduce the 

administrative burden on hospitals 

under the Hospital OQR Program (81 FR 

79785). In the CY 2017 OPPS/ASC final 

rule with comment period (81 FR 

79786), some commenters supported 

CMS’ goal to incorporate electronic 

clinical quality measures (eCQMs) in 

the Hospital OQR Program. 

OP–2: Fibrinolytic Therapy Received 

Within 30 Minutes of Emergency 

Department Arrival was finalized in the 

CY 2008 OPPS/ASC final rule with 

comment period (72 FR 66865), where 


sradovich on DSK3GMQ082PROD with RULES2
59436 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

55 eCQI Resource Center: https://ecqi.healthit.gov/ 

eh/ecqms-2016-reporting-period/fibrinolytictherapy-received-within-30-minutes-hospitalarrival. 

56A Measure Information Form provides detail on 

the rationale for a measure as well as the relevant 

numerator statements, denominator statements and 

measure calculations. 

57Hospital OQR Program ED Throughput 

Measures Information Form. Available at: http://

www.qualitynet.org/dcs/ContentServer?c=Page&

pagename=QnetPublic%2FPage%2FSpecsManual

Template&cid=1228775748170. 

it was designated as ED–AMI–3. In the 

CY 2009 OPPS/ASC final rule with 

comment period (73 FR 68761), the 

measure was re-labeled as OP–2 for the 

CY 2010 payment determination and 

subsequent years. OP–2 measures the 

number of AMI patients receiving 

fibrinolytic therapy during the ED visit 

with a time from hospital arrival to 

fibrinolysis of 30 minutes or less. 

We are considering developing OP–2: 

Fibrinolytic Therapy Received Within 

30 Minutes of Emergency Department 

Arrival 55 as an eCQM and proposing the 

eCQM in future rulemaking. We note 

that since OP–2 is not yet developed as 

an eCQM; electronic measure 

specifications are not available at this 

time. We are considering OP–2: 

Fibrinolytic Therapy Received Within 

30 Minutes of Emergency Department 

Arrival in particular because we believe 

this measure is the most feasible out of 

all the existing Hospital OQR Program 

measures for development as an eCQM. 

We invited public comment on the 

possible future development and future 

adoption of an eCQM version of OP–2: 

Fibrinolytic Therapy Received Within 

30 Minutes of Emergency Department 

Arrival. 

Comment: A few commenters 

supported the adoption of an eCQM 

version of OP–2: Fibrinolytic Therapy 

Received Within 30 Minutes of 

Emergency Department Arrival. Several 

commenters noted their support for the 

adoption of eCQMs, but expressed 

concern about the future adoption of an 

eCQM version OP–2: Fibrinolytic 

Therapy Received Within 30 Minutes of 

Emergency Department Arrival in the 

Hospital OQR Program noting that other 

measures, such as OP–18, are already 

specified as an eCQM and that other 

measures may be more relevant to the 

Hospital OQR Program since fibrinolytic 

therapy is not always appropriate with 

the increasing availability of cardiac 

catheterization labs. 

Response: We will consider OP–18 for 

future rulemaking. In addition, while 

we acknowledge that OP–2 may not be 

relevant to all hospitals due to the 

increased availability of cardiac 

catheterization labs, we believe this 

measure would be important for smaller 

hospitals that continue to rely on 

fibrinolytic therapy. We thank the 

commenters for their feedback and will 

consider these concerns and suggestions 

before we decide whether to develop an 

eCQM version of OP–2: Fibrinolytic 

Therapy Received Within 30 Minutes of 

Emergency Department Arrival or 

propose the eCQM in future rulemaking. 

Comment: Other commenters opposed 

the adoption of eCQMs in the Hospital 

OQR Program and expressed concern 

that eCQMs add, rather than reduce, 

administrative burden. Some 

commenters recommended that CMS 

delay implementation of eCQMs in the 

Hospital OQR Program until the vendor 

and CMS systems issues noted in 

Hospital IQR Program rulemaking are 

addressed and until the Hospital IQR 

Program demonstrates accurate and 

feasible submission of electronic data. 

Response: In the FY 2018 IPPS/LTCH 

PPS final rule (82 FR 38355), 

commenters raised concerns about EHR 

system upgrades, the difficulty of 

transitioning to a new EHR vendor, and 

updating to new editions of certified 

health IT. We appreciate commenters 

sharing their concerns about the 

challenges associated with eCQM 

reporting, including the significant 

expenditure of resources required to 

make necessary changes to health IT 

systems, documentation or utilization of 

EHRs, and workflow process changes 

and acknowledge commenters’ feedback 

that many hospitals may not be ready to 

report eCQMs. We will take lessons 

learned from eCQM submission in the 

Hospital IQR Program into 

consideration as we develop policy for 

the Hospital OQR Program. As we stated 

in the FY 2017 IPPS/LTCH PPS final 

rule (81 FR 57177) regarding the 

Hospital IQR Program, however, we 

acknowledge that there are initial costs, 

but believe that long-term benefits 

associated with electronic data capture 

outweigh those costs. In addition, as we 

stated in the FY 2016 IPPS/LTCH PPS 

final rule (80 FR 49696) regarding the 

Hospital IQR Program, we believe that it 

is appropriate to consider reporting of 

eCQMs given that measures available 

now and those being developed for the 

future are increasingly based on 

electronic standards. We thank the 

commenters for their feedback and 

acknowledge the concerns raised. We 

will consider these concerns and 

suggestions as we further consider 

developing OP–2: Fibrinolytic Therapy 

Received Within 30 Minutes of 

Emergency Department Arrival as an 

eCQM or proposing the eCQM in future 

rulemaking. 

9. Maintenance of Technical 

Specifications for Quality Measures 

CMS maintains technical 

specifications for previously adopted 

Hospital OQR Program measures. These 

specifications are updated as we modify 

the Hospital OQR Program measure set. 

The manuals that contain specifications 

for the previously adopted measures can 

be found on the QualityNet Web site at: 

https://www.qualitynet.org/dcs/Content

Server?c=Page&pagename=Qnet

Public%2FPage%2FQnetTier2&cid=

1196289981244. 

For a history of our policies regarding 

maintenance of technical specifications 

for quality measures, we refer readers to 

the CY 2010 OPPS/ASC final rule with 

comment period (74 FR 60631), the CY 

2011 OPPS/ASC final rule with 

comment period (75 FR 72069), and the 

CY 2013 OPPS/ASC final rule with 

comment period (77 FR 68469 through 

68470). We did not propose any changes 

to our technical specifications policies. 

10. Public Display of Quality Measures 

a. Background 

We refer readers to the CY 2014 and 

CY 2017 OPPS/ASC final rules with 

comment period (78 FR 75092 and 81 

FR 79791, respectively) for our 

previously finalized policies regarding 

public display of quality measures. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33679), we proposed to 

update public reporting for the OP–18: 

Median Time from ED Arrival to ED 

Departure for Discharged ED Patients 

measure. 

b. Public Reporting of OP–18c: Median 

Time From Emergency Department 

Arrival to Emergency Department 

Departure for Discharged Emergency 

Department Patients—Psychiatric/ 

Mental Health Patients 

OP–18 Median Time from ED Arrival 

to ED Departure for Discharged ED 

Patients was finalized for reporting for 

the CY 2013 payment determination and 

subsequent years in the CY 2011 OPPS/ 

ASC final rule with comment period (75 

FR 72086). This measure addresses ED 

efficiency in the form of the median 

time from ED arrival to time of 

departure from the ED for patients 

discharged from the ED (also known as 

ED throughput). Reducing the time 

patients spend in the ED can improve 

the quality of care. As discussed in the 

measure specifications and Measure 

Information Form (MIF),56 57 OP–18 

measure data is stratified into four 

separate calculations: (1) OP–18a is 

defined as the overall rate; (2) OP–18b 

is defined as the reporting measure; (3) 

OP–18c is defined as assessing 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59437 

58 Ibid. 

59 Ibid. 

60Pearlmutter, Mark D. et al. Analysis of 

Emergency Department Length of Stay for Mental 

Health Patients at Ten Massachusetts Emergency 

Departments. Annals of Emergency Medicine, 

Volume 70, Issue 2, 193–202.e16. 

61Atzema CL, Schull MJ, Tu JV. The effect of a 

charted history of depression on emergency 

department triage and outcomes in patients with 

acute myocardial infarction. CMAJ 2011;183:663–9. 

62NQF: Median Time from ED Arrival to ED 

Departure for Discharged ED Patients. Available at: 

https://qualityforum.org/qps/0496. 

63SAMHSA. Results from the 2014 National 

Survey on Drug Use and Health: Mental Health 

Findings. 

64Robert Drake. ‘‘Dual Diagnosis and Integrated 

Treatment of Mental Illness and Substance Abuse 

Disorder.’’ 

Psychiatric/Mental Health Patients; and 

(4) OP–18d is defined as assessing 

Transfer Patients. 

Section 1833(t)(17)(E) of the Act, 

requires that the Secretary establish 

procedures to make data collected under 

the Hospital OQR Program available to 

the public and that such procedures 

must ensure that a hospital has the 

opportunity to review the data that are 

to be made public, with respect to the 

hospital prior to such data being made 

public. Currently, and as detailed in the 

OP–18 MIF, the OP–18 measure 

publicly reports data only for the 

calculations designated as OP–18b: 

Median Time from Emergency 

Department Arrival to Emergency 

Department Departure for Discharged 

Emergency Department Patients— 

Reporting Measure, which excludes 

psychiatric/mental health patients and 

transfer patients.58

The ICD–10 diagnostic codes for OP– 

18c include numerous substance abuse 

codes for inclusion in this subset, along 

with numerous nonsubstance abuse 

codes. We believe it is important to 

publicly report data for OP–18c (Median 

Time from Emergency Department 

Arrival to Emergency Department 

Departure for Discharged Emergency 

Department Patients—Psychiatric/ 

Mental Health Patients) to address a 

behavioral health gap in the publicly 

reported Hospital OQR Program 

measure set. Therefore, in the CY 2018 

OPPS/ASC proposed rule (82 FR 33679), 

we proposed to also publicly report OP– 

18c and begin public reporting as early 

as July of 2018 using data from patient 

encounters during the third quarter of 

2017. In addition, we would make 

corresponding updates to our MIF to 

reflect these proposals,59 such as: (1) 

Renaming OP–18b from ‘‘Median Time 

from Emergency Department Arrival to 

Emergency Department Departure for 

Discharged Emergency Department 

Patients—Reporting Measure’’ to ‘‘OP– 

18b: Median Time from Emergency 

Department Arrival to Emergency 

Department Departure for Discharged 

Emergency Department Patients— 

Excluding Psychiatric/Mental Health 

Patients and Transfer Patients;’’ and (2) 

modifying the form to reflect that OP– 

18c would also be publicly reported. 

Administrative changes made to the 

MIF would not affect hospital reporting 

requirements or burden. The data 

required for public reporting are already 

collected and submitted by participating 

outpatient hospital departments and our 

proposal to publicly report OP–18c does 

not create additional burden. We note 

that hospitals would be able to preview 

these data in accordance with our 

previously established 30-day preview 

period procedures (81 FR 79791). 

In developing this proposal, we also 

considered proposing to publicly report 

around July 2019 (not 2018 as proposed) 

using data from patient encounters 

occurring during the first quarter of 

2018. However, we decided against this 

timeline, because under this reporting 

option, we would not be able to publicly 

report behavioral health data until as 

early as July of 2019, creating a delay in 

our efforts to address the behavioral 

health data gap in the publicly reported 

measure set. 

We invited public comment on our 

proposal to publicly report OP–18c: 

Median Time from Emergency 

Department Arrival to Emergency 

Department Departure for Discharged 

Emergency Department Patients— 

Psychiatric/Mental Health Patients 

beginning with third quarter 2017 data 

as discussed above. 

Comment: Some commenters 

supported the proposal to publicly 

display OP–18c Median Time from ED 

Arrival to ED Departure for Discharged 

ED Patients—Psychiatric/Mental Health 

Patient, noting that the data can be 

valuable to improving patient care. 

Response: We thank the commenters 

for their support; we agree that these 

data can be useful toward improving 

patient care for these patients. 

Comment: Several commenters 

opposed the proposal to publicly report 

OP–18c: Median Time from ED Arrival 

to ED Departure for Discharged ED 

Patients—Psychiatric/Mental Health 

Patients. These commenters expressed 

concern that publicly reporting the 

measure will not address the behavioral 

health gap in the Hospital OQR 

Program. Several commenters expressed 

concern that data on time to departure 

may not help patients make care 

decisions. One commenter expressed 

concern that the measure sample size is 

small, leading to large variation in 

month-to-month performance. Another 

commenter recommended that data for 

substance abuse and non-substance 

abuse patients be separated in publicly 

reported OP–18c data, citing a concern 

that substance abuse patients may spend 

more time in the ED. 

A few commenters cited concerns that 

delays in discharging psychiatric 

patients are caused by a lack of 

community resources rather than poor 

quality of care. One commenter 

recommended that publicly displayed 

data for OP–18c also include data on 

mental health resources in the 

community to provide context for the 

data. Other commenters expressed 

concern that the data could incentivize 

limiting the care provided to these 

patients in the ED in order to discharge 

them quickly. 

Response: We disagree that OP–18c 

does not address the Hospital OQR 

Program’s gap in measuring behavioral 

health or that it would not provide 

useful information. We believe this 

helps to address a gap in measuring 

behavioral health by attempting to 

address the increased wait times 

experienced by mental health patients 

in EDs. Research has indicated that 

mental health patients experience a 

prolonged ED length of stay as 

compared to other patients, and that 

these longer wait times can lead to 

medication errors and adverse 

outcomes.60 Another study 

demonstrated that patients presenting to 

the ED with acute myocardial infarction 

who have a history of depression are 

given lower priority care.61 In addition, 

we believe data from OP–18c will be 

useful to researchers and hospital staff 

as they attempt to address these 

disparities, as well as to patients 

choosing a care location. We further 

disagree that measure sample size will 

lead to inconsistent measure results. 

This measure has undergone the NQF 

endorsement process and, as such, has 

been tested and determined to be 

reliable.62 Although, we acknowledge 

commenters concerns that substance 

abuse patients may spend more time in 

the ED, we believe it is important to not 

separate substance abuse patients in the 

measure, as research shows that illicit 

drug use is particularly high among 

adults with serious mental illnesses and 

that these co-occurring disorders tend to 

go undetected and untreated, especially 

among the elderly population.63 64

Given this, we believe it is important to 

include substance abuse populations for 

quality improvement. 

However, the comments received 

have shed some light on aspects of this 

particular subset of data that may need 

additional consideration prior to posting 

on the consumer-facing Hospital 


sradovich on DSK3GMQ082PROD with RULES2
59438 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

65Tuttle GA. Report of the Council on Medical 

Service, American Medical Association: Access to 

psychiatric beds and impact on emergency 

medicine [Internet]. Chicago (IL): AMA; 2008. 

66 Data.medicare.gov OP Imaging Measures: 

https://data.medicare.gov/Hospital-Compare/ 

Outpatient-Imaging-Efficiency-Hospital/wkfw-kthe. 

67 Data.medicare.gov OP Procedure Volume: 

https://data.medicare.gov/Hospital-Compare/ 

Outpatient-Procedures-Volume/xbz4-gvaz. 

68 Data.medicare.gov Timely and Effective Care 

Measures: https://data.medicare.gov/HospitalCompare/Timely-and-Effective-Care-Hospital/yv7exc69. 

Compare Web site. We acknowledge 

commenters’ concerns regarding 

unintended consequences, including 

that the time to discharge for mental 

health patients may be influenced, in 

part, by the availability of community 

resources and that the measure could be 

perceived as creating pressure on 

providers to inappropriately limit care 

in order to quickly discharge mental 

health patients. Literature has shown 

that the number of inpatient psychiatric 

beds as decreased from 400,000 in 1970 

to 50,000 in 2006.65

Therefore, after considering the public 

comments we received, including these 

additional factors, we would like to err 

on the side of caution and take 

additional time for further consideration 

prior to posting this particular subset of 

data on Hospital Compare, a consumerfacing Web site. As background, we 

typically allow 30 days for hospitals to 

preview their data two months prior to 

public reporting, after which we deliver 

final public reporting files for the 

Hospital Compare Web site (77 FR 

68483). Simultaneously, in addition to 

posting on Hospital Compare, Hospital 

OQR Program quality measure data are 

also typically published on 

data.medicare.gov in downloadable data 

files.66 67 68 While we will not publicly 

report OP–18c on Hospital Compare, we 

will instead publish it on 

data.medicare.gov. Affected parties will 

be notified via CMS listservs, CMS 

email blasts, national provider calls, and 

QualityNet announcements regarding 

the release of preview reports followed 

by the posting of data on a Web site 

other than Hospital Compare (76 FR 

74453). 

Based on the public comments we 

received, we intend to make measure 

data available in a downloadable data 

file rather than on Hospital Compare so 

that we may continue to evaluate the 

concerns raised by commenters 

regarding unintended consequences. We 

believe this modified approach to our 

original proposal is more appropriate 

than publishing on Hospital Compare, 

which is more public facing, because we 

want to avoid any potential 

circumstance in which the publication 

of these data exacerbate the concerns 

raised by commenters. We continue to 

believe the measure provides value to 

hospital quality improvement efforts 

and to patients. However, out of an 

abundance of caution, we intend to 

make data available on 

data.medicare.gov instead of Hospital 

Compare until we have been able to 

evaluate the concerns raised by 

commenters. 

To be clear, data for what is referred 

to as OP–18b Median Time from 

Emergency Department Arrival to 

Emergency Department Departure for 

Discharged Emergency Department 

Patients—Reporting Measure will still 

continue to be made available on 

Hospital Compare as it has in the past. 

In addition, in accordance with our 

decision to not publish OP–18c data on 

Hospital Compare, we are also not 

finalizing the proposed measure subset 

name changes or MIF form changes 

described in our proposal. We will 

continue to work toward finding the 

best means to make this subset of 

information more easily understandable 

to the public and consider other 

measures to help fill the behavioral 

health gap in the future. 

After consideration of the public 

comments we received, we are 

finalizing the proposal, with 

modification, as discussed in our 

response above, such that we will make 

OP–18c rates available to the public on 

https://data.medicare.gov in 

downloadable files. We will take 

additional time to further assess how 

best to make this subset of data available 

on the Hospital Compare Web site for 

consumers. In addition, we are not 

finalizing our proposals to: (1) Rename 

OP–18b from ‘‘Median Time from 

Emergency Department Arrival to 

Emergency Department Departure for 

Discharged Emergency Department 

Patients—Reporting Measure’’ to ‘‘OP 

18b: Median Time from Emergency 

Department Arrival to Emergency 

Department Departure for Discharged 

Emergency Department Patients— 

Excluding Psychiatric/Mental Health 

Patients and Transfer Patients;’’ and (2) 

modify the MIF to reflect that OP–18c 

would also be publicly reported on 

Hospital Compare. 

C. Administrative Requirements 

1. QualityNet Account and Security 

Administrator 

The previously finalized QualityNet 

security administrator requirements, 

including setting up a QualityNet 

account and the associated timelines, 

are described in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

75108 through 75109). In that final rule 

with comment period, we codified these 

procedural requirements at 42 CFR 

419.46(a). 

2. Requirements Regarding Participation 

Status 

a. Background 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75108 through 75109) and 

the CY 2016 OPPS/ASC final rule with 

comment period (80 FR 70519) for 

requirements for participation and 

withdrawal from the Hospital OQR 

Program. We also codified these 

procedural requirements at 42 CFR 

419.46(a) and 42 CFR 419.46(b). In the 

CY 2018 OPPS/ASC proposed rule (82 

FR 33679), we proposed changes to the 

NOP submission deadline, as described 

below. 

b. Proposed Changes to the NOP 

Submission Deadline 

We finalized in the CY 2014 OPPS/ 

ASC final rule with comment period (78 

FR 75108 through 75109) that 

participation in the Hospital OQR 

Program requires that hospitals must: (1) 

Register on the QualityNet Web site 

before beginning to report data; (2) 

identify and register a QualityNet 

security administrator; and (3) complete 

and submit an online participation form 

available at the QualityNet.org Web site 

if this form has not been previously 

completed, if a hospital has previously 

withdrawn, or if the hospital acquires a 

new CMS Certification Number (CCN). 

In addition, in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

75108 through 75109) we finalized the 

requirement that hospitals must submit 

the NOP according to the following 

deadlines: 

• If a hospital has a Medicare 

acceptance date before January 1 of the 

year prior to the affected annual 

payment update, the hospital must 

complete and submit to CMS a 

completed Hospital OQR Program 

Notice of Participation Form by July 31 

of the calendar year prior to the affected 

annual payment update. 

• If a hospital has a Medicare 

acceptance date on or after January 1 of 

the year prior to the affected annual 

payment update, the hospital must 

submit a completed participation form 

no later than 180 days from the date 

identified as its Medicare acceptance 

date. 

These requirements are also codified 

at 42 CFR 419.46(a). 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33680), beginning with the 

CY 2020 payment determination, we 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59439 

proposed to: (1) Revise the NOP 

submission deadline described above, 

and (2) make corresponding revisions at 

42 CFR 419.46(a). Specifically, we 

proposed to change the NOP submission 

deadlines such that hospitals are 

required to submit the NOP any time 

prior to registering on the QualityNet 

Web site, rather than by the deadlines 

specified above. For example, under this 

proposal, and in accordance with the 

data submission deadlines described in 

section XIII.D.1. of this final rule with 

comment period, below and finalized in 

the CY 2016 OPPS/ASC final rule with 

comment period (80 FR 70519 through 

70520), a hospital submitting data for 

Q1 2019 encounters would be required 

to submit the NOP only prior to 

registering on the QualityNet Web site, 

which must be done prior to the data 

submission deadline of August 1, 2019 

(80 FR 70519 through 70520). 

We believe this proposed timeline is 

appropriate, because registration with 

the QualityNet Web site is necessary to 

submit data. We believe that extending 

the NOP submission deadline will better 

enable hospitals to meet the Hospital 

OQR Program participation 

requirements. 

As discussed above, we also proposed 

to make conforming revisions at 42 CFR 

419.46(a). 

We invited public comment on our 

proposals as discussed above. 

We did not receive any public 

comment on our proposal to require 

submission of the NOP any time prior 

to registering on the QualityNet Web 

site. However, due to logistical and 

operational constraints, participants in 

the Hospital OQR Program must still 

first login to QualityNet in order to 

access the NOP form; therefore, we are 

unable to implement this proposal. As 

a result, we are not finalizing our 

proposals to extend the NOP submission 

deadline and to make conforming 

revisions at 42 CFR 419.46(a). We 

intend to revisit this issue in future 

rulemaking, because we believe that 

extending the NOP submission deadline 

will better enable hospitals to meet the 

Hospital OQR Program participation 

requirements. 

D. Form, Manner, and Timing of Data 

Submitted for the Hospital OQR 

Program 

1. Hospital OQR Program Annual 

Payment Determinations 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75110 

through 75111) and the CY 2016 OPPS/ 

ASC final rule with comment period (80 

FR 70519 through 70520), we specified 

our data submission deadlines. We also 

codified our submission requirements at 

42 CFR 419.46(c). 

We refer readers to the CY 2016 

OPPS/ASC final rule with comment 

period (80 FR 70519 through 70520), 

where we finalized our proposal to shift 

the quarters upon which the Hospital 

OQR Program payment determinations 

are based, beginning with the CY 2018 

payment determination. The finalized 

deadlines for the CY 2020 payment 

determination and subsequent years are 

illustrated in the tables below. 

CY 2020 PAYMENT DETERMINATION

AND SUBSEQUENT YEARS

Patient encounter quarter 

Clinical 

data 

submission 

deadline 

Q2 2018 (April 1–June 30) ....... 11/1/2018 

Q3 2018 (July 1–September 

30) ......................................... 2/1/2019 

Q4 2018 (October 1–December 

31) ......................................... 5/1/2019 

Q1 2019 (January 1–March 31) 8/1/2019 

For the CY 2020 payment 

determination and subsequent years, we 

proposed to revise the data submission 

requirements for hospitals that did not 

participate in the previous year’s 

Hospital OQR Program. Specifically, we 

proposed to revise the first quarter for 

which newly participating hospitals are 

required to submit data (see details 

below). We did not propose any changes 

to the previously finalized data 

submission deadlines for each quarter. 

In the CY 2013 OPPS/ASC final rule 

with comment period (77 FR 68482), we 

finalized the following data submission 

requirements for hospitals that did not 

participate in the previous year’s 

Hospital OQR Program: 

• If a hospital has a Medicare 

acceptance date before January 1 of the 

year prior to the affected annual 

payment update, the hospital must 

submit data beginning with encounters 

occurring during the first calendar 

quarter of the year prior to the affected 

annual payment update; 

• If a hospital has a Medicare 

acceptance date on or after January 1 of 

the year prior to the affected annual 

payment update, the hospital must 

submit data for encounters beginning 

with the first full quarter following 

submission of the completed Hospital 

OQR Program Notice of Participation 

Form; and 

• Hospitals with a Medicare 

acceptance date before or after January 

1 of the year prior to an affected annual 

payment update must follow data 

submission deadlines as posted on the 

QualityNet Web site. 

These policies are also codified at 42 

CFR 419.46(c)(3). In the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33680), we 

proposed to: (1) Align the timeline 

specifying the initial quarter for which 

hospitals must submit data for all 

hospitals that did not participate in the 

previous year’s Hospital OQR Program, 

rather than specifying different 

timelines for hospitals with Medicare 

acceptance dates before versus after 

January 1 of the year prior to an affected 

annual payment update; and (2) make 

conforming revisions at 42 CFR 

419.46(c)(3). Specifically, we proposed 

that any hospital that did not participate 

in the previous year’s Hospital OQR 

Program must submit data beginning 

with encounters occurring during the 

first calendar quarter of the year prior to 

the affected annual payment update. We 

note that hospitals must still follow data 

submission deadlines corresponding to 

the quarter for which they are reporting 

data as posted on the QualityNet Web 

site. 

We invited public comment on our 

proposals to align the initial data 

submission timeline for all hospitals 

that did not participate in the previous 

year’s Hospital OQR Program and to 

make conforming revisions at 42 CFR 

419.46(c)(3). 

We did not receive any public 

comment on our proposals. Therefore, 

we are finalizing our proposals to align 

the initial data submission timeline for 

all hospitals that did not participate in 

the previous year’s Hospital OQR 

Program and to make conforming 

revisions at 42 CFR 419.46(c)(3), as 

proposed. 

2. Requirements for Chart-Abstracted 

Measures Where Patient-Level Data Are 

Submitted Directly to CMS for the CY 

2020 Payment Determination and 

Subsequent Years 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68481 through 68484) for 

a discussion of the form, manner, and 

timing for data submission requirements 

of chart-abstracted measures for the CY 

2014 payment determination and 

subsequent years. 

We did not propose any changes to 

our policies regarding the submission of 

chart abstracted measure data where 

patient-level data are submitted directly 

to CMS. 

We note that, in section XIII.B.4.c. of 

this final rule with comment period, we 

are finalizing the removal of OP–21: 

Median Time to Pain Management for 

Long Bone Fracture, OP–1: Median 

Time to Fibrinolysis, OP–4: Aspirin at 

Arrival, and OP–20: Door to Diagnostic 

Evaluation by a Qualified Medical 


sradovich on DSK3GMQ082PROD with RULES2
59440 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

Professional for the CY 2020 payment 

determination and subsequent years. 

Therefore, the following previously 

finalized Hospital OQR Program chartabstracted measures will require 

patient-level data to be submitted for the 

CY 2020 payment determination and 

subsequent years: 

• OP–2: Fibrinolytic Therapy 

Received Within 30 Minutes of ED 

Arrival (NQF #0288); 

• OP–3: Median Time to Transfer to 

Another Facility for Acute Coronary 

Intervention (NQF #0290); 

• OP–5: Median Time to ECG (NQF 

#0289); 

• OP–18: Median Time from ED 

Arrival to ED Departure for Discharged 

ED Patients (NQF #0496); 

• OP–23: Head CT Scan Results for 

Acute Ischemic Stroke or Hemorrhagic 

Stroke Patients who Received Head CT 

Scan Interpretation Within 45 Minutes 

of ED Arrival (NQF #0661). 

3. Claims-Based Measure Data 

Requirements for the CY 2020 Payment 

Determination and Subsequent Years 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75111 through 75112) for 

a discussion of the general claims-based 

measure data submission requirements 

for the CY 2015 payment determination 

and subsequent years. We did not 

propose any changes to our claimsbased measures submission policies for 

the CY 2020 payment determination and 

subsequent years. 

There are a total of nine claims-based 

measures for the CY 2020 payment 

determination and subsequent years: 

• OP–8: MRI Lumbar Spine for Low 

Back Pain (NQF #0514); 

• OP–9: Mammography Follow-Up 

Rates; 

• OP–10: Abdomen CT—Use of 

Contrast Material; 

• OP–11: Thorax CT—Use of Contrast 

Material (NQF #0513); 

• OP–13: Cardiac Imaging for 

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

• OP–14: Simultaneous Use of Brain 

Computed Tomography (CT) and Sinus 

Computed Tomography (CT); 

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

Outpatient Colonoscopy (NQF #2539); 

• OP–35: Admissions and Emergency 

Department Visits for Patients Receiving 

Outpatient Chemotherapy; and 

• OP–36: Hospital Visits after 

Hospital Outpatient Surgery (NQF 

#2687). 

4. Data Submission Requirements for 

the OP–37a–e: Outpatient and 

Ambulatory Surgery Consumer 

Assessment of Healthcare Providers and 

Systems (OAS CAHPS) Survey-Based 

Measures for the CY 2020 Payment 

Determination and Subsequent Years 

We refer readers to the CY 2017 

OPPS/ASC final rule with comment 

period (81 FR 79792 through 79794) for 

a discussion of the previously finalized 

requirements related to survey 

administration and vendors for the OAS 

CAHPS Survey-based measures. 

However, we refer readers to section 

XIII.B.5. of this final rule with comment 

period, where we are finalizing our 

proposal to delay implementation of the 

OP–37a–e OAS CAHPS Survey-based 

measures beginning with the CY 2020 

payment determination (2018 data 

collection) until further action in future 

rulemaking. 

As noted in the CY 2017 OPPS/ASC 

final rule with comment period (81 FR 

79815), some commenters suggested 

shortening sections of the survey, such 

as the ‘‘About You’’ section. We 

continue to evaluate the utility of 

individual questions as we collect new 

data from the survey’s voluntary 

national implementation, and will 

consider different options for shortening 

the OAS CAHPS Survey without the 

loss of important data in the future. 

Specifically, we continue to consider 

the removal of two demographic 

questions—the ‘‘gender’’ and ‘‘age’’ 

questions—from the OAS CAHPS 

Survey in a future update. 

Comment: Some commenters 

supported removal of the gender and 

age questions from the survey. 

Response: We thank the commenters 

for their support. We will take these 

comments under consideration as we 

craft future policies for the OAS CAHPS 

Survey. 

5. Data Submission Requirements for 

Previously Finalized Measures for Data 

Submitted via a Web-Based Tool for the 

CY 2020 Payment Determination and 

Subsequent Years 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75112 through 75115) and 

the CY 2016 OPPS/ASC final rule with 

comment period (80 FR 70521) and the 

CMS QualityNet Web site (https://www.

qualitynet.org/dcs/ContentServer?c=

Page&pagename=QnetPublic%2FPage

%2FQnetTier2&cid=1205442125082) 

for a discussion of the requirements for 

measure data submitted via the CMS 

QualityNet Web site for the CY 2017 

payment determination and subsequent 

years. In addition, we refer readers to 

the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75097 through 

75100) for a discussion of the 

requirements for measure data 

(specifically, the Influenza Vaccination 

Coverage Among Healthcare Personnel 

measure (NQF #0431)) submitted via the 

Centers for Disease Control and 

Prevention (CDC) NHSN Web site. We 

did not propose any changes to our 

policies regarding the submission of 

measure data submitted via a web-based 

tool. 

We note that, in section XIII.B.4.c. of 

this final rule with comment period, we 

are finalizing the removal of OP–25: 

Safe Surgery Checklist Use and OP–26: 

Hospital Outpatient Volume on Selected 

Outpatient Surgical Procedures 

beginning with the CY 2020 payment 

determination and for subsequent years. 

Therefore, the following web-based 

quality measures previously finalized 

and retained in the Hospital OQR 

Program will require data to be 

submitted via a web-based tool (CMS’ 

QualityNet Web site or CDC’s NHSN 

Web site) for the CY 2020 payment 

determination and subsequent years: 

• OP–12: The Ability for Providers 

with HIT to Receive Laboratory Data 

Electronically Directly into their ONCCertified EHR System as Discrete 

Searchable Data (via CMS’ QualityNet 

Web site); 

• OP–17: Tracking Clinical Results 

between Visits (NQF #0491) (via CMS’ 

QualityNet Web site); 

• OP–22: Left Without Being Seen 

(NQF #0499) (via CMS’ QualityNet Web 

site); 

• OP–27: Influenza Vaccination 

Coverage among Healthcare Personnel 

(via the CDC NHSN Web site) (NQF 

#0431); 

• OP–29: Appropriate Follow-up 

Interval for Normal Colonoscopy in 

Average Risk Patients (NQF #0658) (via 

CMS’ QualityNet Web site); 

• OP–30: Colonoscopy Interval for 

Patients with a History of Adenomatous 

Polyps—Avoidance of Inappropriate 

Use (NQF #0659) (via CMS’ QualityNet 

Web site); 

• OP–31: Cataracts: Improvement in 

Patient’s Visual Function within 90 

Days Following Cataract Surgery (NQF 

#1536) (via CMS’ QualityNet Web site); 

and 

• OP–33: External Beam 

Radiotherapy (EBRT) for Bone 

Metastases (NQF #1822) (via CMS’ 

QualityNet Web site). 

6. Population and Sampling Data 

Requirements for the CY 2020 Payment 

Determination and Subsequent Years 

We refer readers to the CY 2011 

OPPS/ASC final rule with comment 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59441 

69 Data Validation—Educational Reviews: 

Hospitals-Outpatient. Available at: http://www.

qualitynet.org/dcs/ContentServer?c=Page&

pagename=QnetPublic/Page/QnetTier3&cid=

1228764927987. 

period (75 FR 72100 through 72103) and 

the CY 2012 OPPS/ASC final rule with 

comment period (76 FR 74482 through 

74483) for discussions of our population 

and sampling requirements. 

We did not propose any changes to 

our population and sampling 

requirements. 

7. Hospital OQR Program Validation 

Requirements for Chart-Abstracted 

Measure Data Submitted Directly to 

CMS for the CY 2020 Payment 

Determination and Subsequent Years 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68484 through 68487) and 

the CY 2015 OPPS/ASC final rule with 

comment period (79 FR 66964 through 

66965) for a discussion of finalized 

policies regarding our validation 

requirements. We also refer readers to 

the CY 2013 OPPS/ASC final rule with 

comment period (77 FR 68486 through 

68487) for a discussion of finalized 

policies regarding our medical record 

validation procedure requirements. We 

codified these policies at 42 CFR 

419.46(e). For the CY 2018 payment 

determination and subsequent years, 

validation is based on four quarters of 

data (validation quarter 1 (January 1– 

March 31), validation quarter 2 (April 

1–June 30), validation quarter 3 (July 1– 

September 30), and validation quarter 4 

(October 1–December 31)) (80 FR 

70524). 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33682), we: (1) Clarified the 

hospital selection process previously 

finalized for validation; (2) proposed to 

codify the procedures for targeting 

hospitals at 42 CFR 419.46(e); and (3) 

proposed to formalize and update our 

educational review process. These are 

discussed in more detail below. 

a. Clarification 

In the CY 2012 OPPS/ASC final rule 

with comment period (76 FR 74485), we 

finalized a validation selection process 

in which we select a random sample of 

450 hospitals for validation purposes, 

and select an additional 50 hospitals 

based on the following specific criteria: 

• Hospital fails the validation 

requirement that applies to the previous 

year’s payment determination; or 

• Hospital has an outlier value for a 

measure based on the data it submits. 

We defined an ‘‘outlier value’’ for 

purposes of this targeting as a measure 

value that appears to deviate markedly 

from the measure values for other 

hospitals. Specifically, we would select 

hospitals for validation if their measure 

value for a measure is greater than 5 

standard deviations from the mean, 

placing the expected occurrence of such 

a value outside of this range at 1 in 

1,744,278. 

We note that the criteria for targeting 

50 outlier hospitals, described above, 

does not specify whether high or low 

performing hospitals will be targeted. 

Therefore, we clarified that hospitals 

with outlier values indicating 

specifically poor scores on a measure 

(for example, a long median time to 

fibrinolysis) will be targeted for 

validation. In other words, an ‘‘outlier 

value’’ is a measure value that is greater 

than 5 standard deviations from the 

mean of the measure values for other 

hospitals, and indicates a poor score. 

Comment: One commenter 

recommended that CMS target hospitals 

for validation whether their score is 

greater than five standard deviations 

above or below the mean, noting that 

very good scores may especially 

indicate a need for validation. 

Response: The intent of this policy is 

to target and prevent extreme negative 

values rather than to identify high 

performance. This is also evidenced in 

the first of our two criteria for targeting 

hospitals for validation—to target 

hospitals that fail the validation 

requirement that applies to the previous 

year’s payment determination. We 

believe it is appropriate to specifically 

target hospitals with poor performance, 

rather than those performing well to 

encourage improved performance 

among low performing hospitals. We 

note that only 50 hospitals will be 

selected for validation through these 

targeting criteria and in order to address 

the issue of very low performance, we 

believe it is appropriate to use these 

targeting criteria to identify extreme 

negative measure values. An additional 

450 hospitals will be selected at 

random, and will include both low and 

high performing hospitals. However, we 

thank the commenter for their feedback 

that extremely high performance could 

indicate a need for validation, and will 

take this into consideration as we craft 

future policies. 

b. Codification 

We note that the previously finalized 

procedures for targeting hospitals for 

validation, described in section 

XIII.D.7.a. of this final rule with 

comment period, and finalized in the 

CY 2012 OPPS/ASC final rule with 

comment period (76 FR 74485), are not 

yet codified at 42 CFR 419.46. We 

proposed to codify the previously 

finalized procedures for targeting 

hospitals and well as the procedures 

regarding outlier hospitals as discussed 

and clarified above at 42 CFR 

419.46(e)(3). 

We invited public comment on our 

proposal to codify our validation 

targeting criteria as discussed above. 

We did not receive any public 

comments on this proposal. Therefore, 

we are finalizing our proposal to codify 

the previously finalized procedures for 

targeting hospitals and well as the 

procedures regarding outlier hospitals 

as discussed and clarified above at 42 

CFR 419.46(e)(3), as proposed. 

c. Formalization and Modifications to 

the Educational Review Process for 

Chart-Abstracted Measures Validation 

(1) Background 

We have described our processes for 

educational review on the QualityNet 

Web site.69 We note that historically this 

process functioned as an outreach and 

education opportunity we provided to 

hospitals, but based on our experience, 

stakeholder feedback, and more robust 

validation requirements, we believed 

that it would be beneficial to hospitals 

to propose formalizing and updating 

this process. 

Under the current informal process, if 

results of an educational review indicate 

that CDAC or CMS has incorrectly 

scored a hospital after validation, those 

results are not changed, but are taken 

into consideration if the hospital 

submits a reconsideration request. 

Stakeholder feedback, provided via 

email, has indicated that while the 

educational review process is helpful to 

participating hospitals, it is limited in 

its impact, given that a hospital’s 

validation result is not corrected even 

after an educational review determines 

that CMS reached an incorrect 

conclusion regarding a hospital’s 

validation score for a given quarter. 

Based on this feedback, we proposed to 

formalize and update the Hospital OQR 

Program’s chart-abstracted measure 

validation educational review process. 

Our goal is to reduce the number of 

reconsideration requests by identifying 

and correcting errors before the final 

yearly validation score is derived. By 

identifying and correcting any mistakes 

early on, this process could help 

decrease the burden during the annual 

reconsideration process, both for 

hospitals and CMS. 

Therefore, in an effort to streamline 

this process, we proposed to: (1) 

Formalize this process; and (2) specify 

that if the results of an educational 

review indicate that we incorrectly 

scored a hospital’s medical records 


sradovich on DSK3GMQ082PROD with RULES2
59442 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

70 Ibid. 

71QualityNet: Data Validation—Overview. 

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

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

Page%2FQnetTier2&cid=1228758729356. 

72The educational review request form can be 

found at: https://www.qualitynet.org/dcs/Content

Server?c=Page&pagename=QnetPublic%2FPage

%2FQnetTier3&cid=1228764927987. 

73Hospital OQR Validation Educational Review 

Process: Available at: https://www.qualitynet.org/ 

dcs/ContentServer?c=Page&pagename=QnetPublic

%2FPage%2FQnetTier3&cid=1228764927987. 

74QualityNet Data Validation Overview. 

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

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

Page%2FQnetTier2&cid=1228758729356. 

75 Ibid. 

76 Validation pass-fail status is determined by the 

confidence interval report. Detail at: http://www.

qualityreportingcenter.com/wp-content/uploads/ 

2017/01/OQR-CY18-Validation-Webinar.508.2.pdf. 

selected for validation, the corrected 

quarterly validation score would be 

used to compute the hospital’s final 

validation score at the end of the 

calendar year. These proposals are 

discussed in more detail below. 

(2) Educational Review Process for the 

CY 2020 Payment Determination and 

Subsequent Years 

(a) Formalizing the Educational Review 

Process 

As stated above, our informal 

processes for educational review have 

been described on the QualityNet Web 

site.70 Under the informal process, 

hospitals that were selected and 

received a score for validation may 

request an educational review in order 

to better understand the results. Many 

times, hospitals request an educational 

review to examine any data element 

discrepancies, if they believe the score 

is incorrect, or when they have general 

questions about their score. Currently, 

hospitals receive validation results on a 

quarterly basis 71 and can request 

informal educational reviews for each 

quarter. Under this informal process, a 

hospital has 30 calendar days from the 

date the validation results are posted on 

the QualityNet Secure Portal Web site to 

contact the CMS designated contractor, 

currently known as the Validation 

Support Contractor (VSC), to request an 

educational review.72 In response to a 

request, the VSC obtains and reviews 

medical records directly from the 

Clinical Data Abstraction Center (CDAC) 

and provides feedback. CMS, or its 

contractor, generally provides 

educational review results and 

responses via a secure file transfer to the 

hospital.73

We proposed to formalize this 

educational review process, as 

described above, for the CY 2020 

payment determination and subsequent 

years—in other words, starting for 

validations of CY 2018 data affecting the 

CY 2020 payment determination and 

subsequent years. 

We invited public comment on our 

proposal to formalize the chartabstracted measures validation 

educational review process for the CY 

2020 payment determination and 

subsequent years as described above. 

We did not receive any public 

comments on our proposal. Therefore, 

we are finalizing the proposal to 

formalize the chart-abstracted measures 

validation educational review process 

for the CY 2020 payment determination 

and subsequent years, as proposed. 

(b) Validation Score Review and 

Correction 

We previously finalized, in the CY 

2011 OPPS/ASC final rule with 

comment period (75 FR 72105 to 

72106), that we calculate validation 

scores under the Hospital OQR Program 

using the upper bound of a one-tailed 

confidence interval (CI) with a 75 

percent threshold level with a binomial 

approach. Using that approach, at the 

end of each calendar year, CMS 

computes a CI using the results of all 

four quarters to determine the final 

validation score.74 If the upper bound of 

this confidence interval is 75 percent or 

higher, the hospital will pass the 

Hospital OQR Program validation 

requirement.75 We proposed that if the 

results of a validation educational 

review determine that the original 

quarterly validation score was incorrect, 

the corrected score would be used to 

compute the final validation score and 

CI at the end of each calendar year. 

To determine whether a quarterly 

validation score was correct, in the CY 

2018 OPPS/ASC proposed rule (82 FR 

33683), we proposed to use a similar 

process as one previously finalized for 

reconsideration requests. Specifically, 

we proposed that during an educational 

review request, evaluating a validation 

score would consist of and be limited to 

reviewing data elements that were 

labeled as mismatched (between the 

originally calculated measure score and 

the measure score calculated in 

validation) in the original validation 

results. We would also take into 

consideration written justifications 

provided by hospitals in the 

Educational Review request. For more 

information about the previously 

finalized reconsideration request 

procedures, we refer readers to the CY 

2013 OPPS/ASC final rule with 

comment period (77 FR 68487 through 

68489), the CY 2014 OPPS/ASC final 

rule with comment period (78 FR 75118 

through 75119), the CY 2016 OPPS/ASC 

final rule with comment period (80 FR 

70524), and the CY 2017 OPPS/ASC 

final rule with comment period (81 FR 

79795). 

For the CY 2020 payment 

determination and subsequent years, we 

further proposed that if an educational 

review requested for any of the first 3 

quarters of validation yields incorrect 

CMS validation results for chartabstracted measures, according to the 

review process described above, we 

would use the corrected quarterly score, 

as recalculated during the educational 

review process, to compute the final CI 

at the end of the calendar year.76 We 

note that for the last quarter of 

validation, because of the need to 

calculate the confidence interval in a 

timely manner and the insufficient time 

available to conduct educational 

reviews prior to the annual payment 

update, the validation score review and 

correction would not be available. 

Instead, the existing reconsideration 

process would be used to dispute any 

unsatisfactory validation result. We 

refer readers to section XIII.D.9. of this 

final rule with comment period for a 

discussion about our reconsideration 

and appeals process. 

The corrected scores would be 

applicable to the corresponding quarter, 

for the first 3 quarters of validation, for 

which a request was submitted. Under 

this proposal, after evaluating the 

validation score during the educational 

review process, if results show that 

there was indeed an error in the 

originally calculated score, we would 

take steps to correct it. However, so as 

not to dissuade participation in the 

educational review process, corrected 

scores identified through the 

educational review would only be used 

to recalculate the CI if they indicate that 

the hospital performed more favorably 

than previously determined. If the 

hospital performed less favorably, their 

score would not be updated to reflect 

the less favorable score. 

We note that under this proposal, the 

quarterly validation reports issued to 

hospitals would not be updated to 

reflect the corrected score due to the 

burden associated with reissuing 

corrected reports. However, the 

corrected score would be communicated 

to the hospital via secure file format as 

discussed above. 

We invited public comment on our 

proposal, as discussed above for the CY 

2020 payment determination and 

subsequent years, to use corrected 

quarterly scores, as recalculated during 

the educational review process 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59443 

described and finalized in section 

XIII.D.7.c.(2)(a) of this final rule with 

comment period above, to compute the 

final confidence interval for the first 3 

quarters of validation. 

Comment: Several commenters 

supported the proposed changes to use 

the educational review process to 

correct validation scores, noting that the 

policy will increase efficiency and help 

hospitals understand their annual 

validation score. One commenter 

recommended that CMS accept 

educational review requests from 

facilities that have a passing validation 

score, given that there could be errors 

that result in a mistakenly low, though 

still passing, score. 

Response: We thank the commenters 

for their support and note that under the 

formalized process we are finalizing, 

hospitals may request an educational 

review to examine any data element 

discrepancies, if they believe the score 

is incorrect, or when they have general 

questions about their score (82 FR 

33682). Under this process, hospitals 

receive validation results on a quarterly 

basis and can request informal 

educational reviews for each quarter. A 

hospital has 30 calendar days from the 

date the validation results are posted on 

the QualityNet Secure Portal Web site to 

contact the CMS designated contractor, 

currently known as the Validation 

Support Contractor (VSC), to request an 

educational review. To be clear, 

educational review requests are not 

limited to hospitals that fail validation; 

any hospital that receives validation 

results (pass or fail) may request a 

validation educational review. 

After consideration of the public 

comments received, we are finalizing 

our proposal to use corrected quarterly 

scores, as recalculated during the 

educational review process described in 

section XIII.D.7.c.(2)(a) of this final rule 

with comment period above, to compute 

the final confidence interval for the first 

3 quarters of validation for the CY 2020 

payment determination and subsequent 

years, as proposed. 

8. Extraordinary Circumstances 

Exception Process for the CY 2020 

Payment Determination and Subsequent 

Years 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68489), the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75119 through 75120), the 

CY 2015 OPPS/ASC final rule with 

comment period (79 FR 66966), the CY 

2016 OPPS/ASC final rule with 

comment period (80 FR 70524), and 42 

CFR 419.46(d) for a complete discussion 

of our extraordinary circumstances 

extension or exception process under 

the Hospital OQR Program. 

In the CY 2017 OPPS/ASC final rule 

with comment period (81 FR 79795), we 

finalized an update to our extraordinary 

circumstances exemption (ECE) policy 

to extend the ECE request deadline for 

both chart-abstracted and web-based 

measures from 45 days following an 

event causing hardship to 90 days 

following an event causing hardship, 

effective with ECEs requested on or after 

January 1, 2017. 

We note that many of our quality 

reporting and value-based purchasing 

programs share a common process for 

requesting an exception from program 

reporting due to an extraordinary 

circumstance not within a provider’s 

control. The Hospital IQR, Hospital 

OQR, IPFQR, ASCQR, and PCHQR 

Programs, as well as the Hospital 

Acquired Condition Reduction Program 

and the Hospital Readmissions 

Reduction Program, share similar 

processes for ECE requests. We refer 

readers to policies for the Hospital IQR 

Program (76 FR 51651 through 51652, 

78 FR 50836 through 50837, 79 FR 

50277, 81 FR 57181 through 57182, and 

42 CFR 412.140(c)(2)), the IPFQR 

Program (77 FR 53659 through 53660 

and 79 FR 45978), the ASCQR Program 

(77 FR 53642 through 53643 and 78 FR 

75140 through 75141), the PCHQR 

Program (78 FR 50848), the HAC 

Reduction Program (80 FR 49579 

through 49581), and the Hospital 

Readmissions Reduction Program (80 

FR 49542 through 49543) for program 

specific information about extraordinary 

circumstances exceptions requests. As 

noted below, some of these policies 

were updated in the FY 2018 IPPS/ 

LTCH PPS final rule. 

In reviewing the policies for these 

programs, we recognized that there are 

five areas in which these programs have 

variances regarding ECE requests. These 

are: (1) Allowing the facilities or 

hospitals to submit a form signed by the 

facility’s or hospital’s CEO versus CEO 

or designated personnel; (2) requiring 

the form be submitted within 30 days 

following the date that the extraordinary 

circumstance occurred versus within 90 

days following the date the 

extraordinary circumstance occurred; 

(3) inconsistency regarding specification 

of a timeline for us to provide our 

formal response notifying the facility or 

hospital of our decision; (4) 

inconsistency regarding specification of 

our authority to grant ECEs due to CMS 

data system issues; and (5) referring to 

the program as ‘‘extraordinary 

extensions/exemptions’’ versus as 

‘‘extraordinary circumstances 

exceptions.’’ We believe addressing 

these five areas, as appropriate, can 

improve administrative efficiencies for 

affected facilities or hospitals. 

We note that, in the FY 2018 IPPS/ 

LTCH PPS final rule, we examined our 

policies in these areas for the Hospital 

Readmissions Reduction Program, the 

HAC Reduction Program, the Hospital 

IQR Program, the PCHQR Program and 

the IPFQR Program (82 FR 38240, 

38277, 38410, 38425 and 38473 through 

38474, respectively) and finalized 

proposals to address differences in these 

areas for those programs. In section 

XIV.D.6. of this final rule with comment 

period, we are also finalizing revisions 

to our ECE policies for the ASCQR 

Program. 

With the exception of the 

specification of a timeline for us to 

provide our formal response and the 

terminology used to describe these 

processes (items 3 and 5 above), the 

Hospital OQR Program is aligned with 

the existing and proposed policies for 

the other quality reporting programs 

discussed above. As a result, we 

proposed to rename the process as the 

extraordinary circumstances exceptions 

(ECE) policy and make conforming 

changes to 42 CFR 419.46(d). 

a. ECE Policy Nomenclature 

We have observed that while all 

quality programs listed above have 

developed similar policies to provide 

exceptions from program requirements 

to facilities that have experienced 

extraordinary circumstances, such as 

natural disasters, these programs refer to 

these policies using inconsistent 

terminology. Some programs refer to 

these policies as ‘‘extraordinary 

circumstances extensions/exemptions’’ 

while others refer to the set of policies 

as ‘‘extraordinary circumstances 

exceptions.’’ Several programs 

(specifically, the Hospital VBP Program, 

HAC Reduction Program, and the 

Hospital Readmissions Reduction 

Program) are not able to grant 

extensions to required data reporting 

timelines due to their reliance on data 

external to their program and, thus, the 

term, ‘‘extraordinary circumstances 

extensions/exemptions’’ is not 

applicable to all programs. However, all 

of the described programs are able to 

offer exceptions from their reporting 

requirements. 

As stated above, in order to align this 

policy across CMS quality programs, we 

proposed to: (1) Change the name of this 

policy from ‘‘extraordinary 

circumstances extensions or 

exemptions’’ to ‘‘extraordinary 

circumstances exceptions’’ for the 

Hospital OQR Program, beginning 

January 1, 2018; and (2) revise 42 CFR 


sradovich on DSK3GMQ082PROD with RULES2
59444 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

419.46(d) of our regulations to reflect 

this change. We note that changing the 

terminology for this policy does not 

change the availability for a hospital to 

request an extension under the Hospital 

OQR Program. 

We invited public comment on these 

proposals as discussed above. 

Comment: One commenter supported 

the proposed alignment of the ECE 

process across quality reporting 

programs. 

Response: We appreciate the 

commenter’s support. 

After consideration of the public 

comment we received, we are finalizing 

the proposal to rename the process as 

the extraordinary circumstances 

exceptions (ECE) policy and make 

conforming changes to 42 CFR 

419.46(d), as proposed. 

b. Timeline for CMS Response to ECE 

Requests 

We also note that we believe it is 

important for facilities to receive timely 

feedback regarding the status of ECE 

requests. We strive to complete our 

review of each ECE request as quickly 

as possible. However, we recognize that 

the number of requests we receive, and 

the complexity of the information 

provided impacts the actual timeframe 

to make ECE determinations. To 

improve transparency of our process, we 

believe it is appropriate to specify that 

we will strive to complete our review of 

each request within 90 days of receipt. 

9. Hospital OQR Program 

Reconsideration and Appeals 

Procedures for the CY 2020 Payment 

Determination and Subsequent Years 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68487 through 68489), the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75118 through 

75119), the CY 2016 OPPS/ASC final 

rule with comment period (80 FR 

70524), and the CY 2017 OPPS/ASC 

final rule with comment period (81 FR 

79795) for a discussion of our 

reconsideration and appeals procedures. 

We codified the process by which 

participating hospitals may submit 

requests for reconsideration at 42 CFR 

419.46(f). We also codified language at 

§ 419.46(f)(3) regarding appeals with the 

Provider Reimbursement Review Board. 

We did not propose any changes to 

our reconsideration and appeals 

procedure. 

E. Payment Reduction for Hospitals 

That Fail To Meet the Hospital OQR 

Program Requirements for the CY 2018 

Payment Determination 

1. Background 

Section 1833(t)(17) of the Act, which 

applies to subsection (d) hospitals (as 

defined under section 1886(d)(1)(B) of 

the Act), states that hospitals that fail to 

report data required to be submitted on 

measures selected by the Secretary, in 

the form and manner, and at a time, 

specified by the Secretary will incur a 

2.0 percentage point reduction to their 

Outpatient Department (OPD) fee 

schedule increase factor; that is, the 

annual payment update factor. Section 

1833(t)(17)(A)(ii) of the Act specifies 

that any reduction applies only to the 

payment year involved and will not be 

taken into account in computing the 

applicable OPD fee schedule increase 

factor for a subsequent year. 

The application of a reduced OPD fee 

schedule increase factor results in 

reduced national unadjusted payment 

rates that apply to certain outpatient 

items and services provided by 

hospitals that are required to report 

outpatient quality data in order to 

receive the full payment update factor 

and that fail to meet the Hospital OQR 

Program requirements. Hospitals that 

meet the reporting requirements receive 

the full OPPS payment update without 

the reduction. For a more detailed 

discussion of how this payment 

reduction was initially implemented, 

we refer readers to the CY 2009 OPPS/ 

ASC final rule with comment period (73 

FR 68769 through 68772). 

The national unadjusted payment 

rates for many services paid under the 

OPPS equal the product of the OPPS 

conversion factor and the scaled relative 

payment weight for the APC to which 

the service is assigned. The OPPS 

conversion factor, which is updated 

annually by the OPD fee schedule 

increase factor, is used to calculate the 

OPPS payment rate for services with the 

following status indicators (listed in 

Addendum B to the final rule, which is 

available via the Internet on the CMS 

Web site): ‘‘J1’’, ‘‘J2’’, ‘‘P’’, ‘‘Q1’’, ‘‘Q2’’, 

‘‘Q3’’, ‘‘R’’, ‘‘S’’, ‘‘T’’, ‘‘V’’, or ‘‘U’’. In the 

CY 2017 OPPS/ASC final rule with 

comment period (81 FR 79796), we 

clarified that the reporting ratio does not 

apply to codes with status indicator 

‘‘Q4’’ because services and procedures 

coded with status indicator ‘‘Q4’’ are 

either packaged or paid through the 

Clinical Laboratory Fee Schedule and 

are never paid separately through the 

OPPS. Payment for all services assigned 

to these status indicators will be subject 

to the reduction of the national 

unadjusted payment rates for hospitals 

that fail to meet Hospital OQR Program 

requirements, with the exception of 

services assigned to New Technology 

APCs with assigned status indicator ‘‘S’’ 

or ‘‘‘T’’. We refer readers to the CY 2009 

OPPS/ASC final rule with comment 

period (73 FR 68770 through 68771) for 

a discussion of this policy. 

The OPD fee schedule increase factor 

is an input into the OPPS conversion 

factor, which is used to calculate OPPS 

payment rates. To reduce the OPD fee 

schedule increase factor for hospitals 

that fail to meet reporting requirements, 

we calculate two conversion factors—a 

full market basket conversion factor 

(that is, the full conversion factor), and 

a reduced market basket conversion 

factor (that is, the reduced conversion 

factor). We then calculate a reduction 

ratio by dividing the reduced 

conversion factor by the full conversion 

factor. We refer to this reduction ratio as 

the ‘‘reporting ratio’’ to indicate that it 

applies to payment for hospitals that fail 

to meet their reporting requirements. 

Applying this reporting ratio to the 

OPPS payment amounts results in 

reduced national unadjusted payment 

rates that are mathematically equivalent 

to the reduced national unadjusted 

payment rates that would result if we 

multiplied the scaled OPPS relative 

payment weights by the reduced 

conversion factor. For example, to 

determine the reduced national 

unadjusted payment rates that applied 

to hospitals that failed to meet their 

quality reporting requirements for the 

CY 2010 OPPS, we multiplied the final 

full national unadjusted payment rate 

found in Addendum B of the CY 2010 

OPPS/ASC final rule with comment 

period by the CY 2010 OPPS final 

reporting ratio of 0.980 (74 FR 60642). 

In the CY 2009 OPPS/ASC final rule 

with comment period (73 FR 68771 

through 68772), we established a policy 

that the Medicare beneficiary’s 

minimum unadjusted copayment and 

national unadjusted copayment for a 

service to which a reduced national 

unadjusted payment rate applies would 

each equal the product of the reporting 

ratio and the national unadjusted 

copayment or the minimum unadjusted 

copayment, as applicable, for the 

service. Under this policy, we apply the 

reporting ratio to both the minimum 

unadjusted copayment and national 

unadjusted copayment for services 

provided by hospitals that receive the 

payment reduction for failure to meet 

the Hospital OQR Program reporting 

requirements. This application of the 

reporting ratio to the national 

unadjusted and minimum unadjusted 

copayments is calculated according to 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59445 

77Office of the Assistant Secretary for Planning 

and Evaluation. 2016. Report to Congress: Social 

Risk Factors and Performance Under Medicare’s 

Value-Based Purchasing Programs. 21 Dec. 2016. 

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

§ 419.41 of our regulations, prior to any 

adjustment for a hospital’s failure to 

meet the quality reporting standards 

according to § 419.43(h). Beneficiaries 

and secondary payers thereby share in 

the reduction of payments to these 

hospitals. 

In the CY 2009 OPPS/ASC final rule 

with comment period (73 FR 68772), we 

established the policy that all other 

applicable adjustments to the OPPS 

national unadjusted payment rates 

apply when the OPD fee schedule 

increase factor is reduced for hospitals 

that fail to meet the requirements of the 

Hospital OQR Program. For example, 

the following standard adjustments 

apply to the reduced national 

unadjusted payment rates: the wage 

index adjustment; the multiple 

procedure adjustment; the interrupted 

procedure adjustment; the rural sole 

community hospital adjustment; and the 

adjustment for devices furnished with 

full or partial credit or without cost. 

Similarly, OPPS outlier payments made 

for high cost and complex procedures 

will continue to be made when outlier 

criteria are met. For hospitals that fail to 

meet the quality data reporting 

requirements, the hospitals’ costs are 

compared to the reduced payments for 

purposes of outlier eligibility and 

payment calculation. We established 

this policy in the OPPS beginning in the 

CY 2010 OPPS/ASC final rule with 

comment period (74 FR 60642). For a 

complete discussion of the OPPS outlier 

calculation and eligibility criteria, we 

refer readers to section II.G. of this final 

rule with comment period. 

2. Reporting Ratio Application and 

Associated Adjustment Policy for CY 

2018 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33684 through 33685), we 

proposed to continue our established 

policy of applying the reduction of the 

OPD fee schedule increase factor 

through the use of a reporting ratio for 

those hospitals that fail to meet the 

Hospital OQR Program requirements for 

the full CY 2018 annual payment update 

factor. For the CY 2018 OPPS, the 

proposed reporting ratio was 0.980, 

calculated by dividing the proposed 

reduced conversion factor of 74.953 by 

the proposed full conversion factor of 

76.483. We proposed to continue to 

apply the reporting ratio to all services 

calculated using the OPPS conversion 

factor. For the CY 2018 OPPS, we 

proposed to apply the reporting ratio, 

when applicable, to all HCPCS codes to 

which we have proposed status 

indicator assignments of ‘‘J1’’, ‘‘J2’’, ‘‘P’’, 

‘‘Q1’’, ‘‘Q2’’, ‘‘Q3’’, ‘‘R’’, ‘‘S’’, ‘‘T’’, ‘‘V’’, 

and ‘‘U’’ (other than new technology 

APCs to which we have proposed status 

indicator assignment of ‘‘S’’ and ‘‘T’’). 

We proposed to continue to exclude 

services paid under New Technology 

APCs. We proposed to continue to apply 

the reporting ratio to the national 

unadjusted payment rates and the 

minimum unadjusted and national 

unadjusted copayment rates of all 

applicable services for those hospitals 

that fail to meet the Hospital OQR 

Program reporting requirements. We 

also proposed to continue to apply all 

other applicable standard adjustments 

to the OPPS national unadjusted 

payment rates for hospitals that fail to 

meet the requirements of the Hospital 

OQR Program. Similarly, we proposed 

to continue to calculate OPPS outlier 

eligibility and outlier payment based on 

the reduced payment rates for those 

hospitals that fail to meet the reporting 

requirements. 

We invited public comments on these 

proposals but no comments were 

received. For the CY 2018 OPPS, the 

final reporting ratio is 0.980, calculated 

by dividing the final reduced 

conversion factor of 77.064 by the final 

full conversion factor of 78.636. We are 

finalizing the rest of our proposal 

without modification. 

XIV. Requirements for the Ambulatory 

Surgical Center Quality Reporting 

(ASCQR) Program 

A. Background 

1. Overview 

We refer readers to section XIII.A.1. of 

this final rule with comment period for 

a general overview of our quality 

reporting programs. 

2. Statutory History of the ASCQR 

Program 

We refer readers to section XIV.K.1. of 

the CY 2012 OPPS/ASC final rule with 

comment period (76 FR 74492 through 

74494) for a detailed discussion of the 

statutory history of the ASCQR Program. 

3. Regulatory History of the ASCQR 

Program 

We seek to promote higher quality 

and more efficient health care for 

beneficiaries. This effort is supported by 

the adoption of widely-agreed-upon 

quality measures. We have worked with 

relevant stakeholders to define measures 

of quality in almost every healthcare 

setting and currently measure some 

aspect of care for almost all Medicare 

beneficiaries. These measures assess 

structural aspects of care, clinical 

processes, patient experiences with 

care, and outcomes. We have 

implemented quality measure reporting 

programs for multiple settings of care. 

To measure the quality of ASC services, 

we implemented the ASCQR Program. 

We refer readers to section XV.A.3. of 

the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75122), section 

XIV. of the CY 2015 OPPS/ASC final 

rule with comment period (79 FR 66966 

through 66987), section XIV. of the CY 

2016 OPPS/ASC final rule with 

comment period (80 FR 70526 through 

70538) and section XIV. of the CY 2017 

OPPS/ASC final rule with comment 

period (81 FR 79797 through 79826) for 

an overview of the regulatory history of 

the ASCQR Program. 

B. ASCQR Program Quality Measures 

1. Considerations in the Selection of 

ASCQR Program Quality Measures 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68493 through 68494) for 

a detailed discussion of the priorities we 

consider for ASCQR Program quality 

measure selection. We did not propose 

any changes to this policy. 

2. Accounting for Social Risk Factors in 

the ASCQR Program 

We understand that social risk factors 

such as income, education, race and 

ethnicity, employment, disability, 

community resources, and social 

support (certain factors of which are 

also sometimes referred to as 

socioeconomic status (SES) factors or 

socio-demographic status (SDS) factors) 

play a major role in health. One of our 

core objectives is to improve beneficiary 

outcomes including reducing health 

disparities, and we want to ensure that 

all beneficiaries, including those with 

social risk factors, receive high quality 

care. In addition, we seek to ensure that 

the quality of care furnished by 

providers and suppliers is assessed as 

fairly as possible under our programs 

while ensuring that beneficiaries have 

adequate access to excellent care. 

We have been reviewing reports 

prepared by the Office of the Assistant 

Secretary for Planning and Evaluation 

(ASPE) 77 and the National Academies 

of Sciences, Engineering, and Medicine 

on the issue of measuring and 

accounting for social risk factors in 

CMS’ value-based purchasing and 

quality reporting programs, and 

considering options on how to address 

the issue in these programs. On 

December 21, 2016, ASPE submitted a 


sradovich on DSK3GMQ082PROD with RULES2
59446 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

78 Ibid. 

79National Academies of Sciences, Engineering, 

and Medicine. 2017. Accounting for social risk 

factors in Medicare payment. Washington, DC: The 

National Academies Press. 

80NQF. NQF Initiative to Determine the Impact 

of Adjusting Healthcare Performance Measures for 

Social Risk Factors Highlights Successes, 

Opportunities. Available at: https://

www.qualityforum.org/News_And_Resources/Press_

Releases/2017/NQF_Initiative_to_Determine_the_

Impact_of_Adjusting_Healthcare_Performance_

Measures_for_Social_Risk_Factors_Highlights_

Successes,_Opportunities.aspx. 

Report to Congress on a study it was 

required to conduct under section 2(d) 

of the Improving Medicare Post-Acute 

Care Transformation (IMPACT) Act of 

2014. The study analyzed the effects of 

certain social risk factors of Medicare 

beneficiaries on quality measures and 

measures of resource use used in one or 

more of nine Medicare value-based 

purchasing programs.78 The report also 

included considerations for strategies to 

account for social risk factors in these 

programs. In a January 10, 2017 report 

released by the National Academies of 

Sciences, Engineering, and Medicine, 

the body provided various potential 

methods for accounting for social risk 

factors, including stratified public 

reporting.79

As noted in the FY 2017 IPPS/LTCH 

PPS final rule, the NQF has undertaken 

a 2-year trial period in which new 

measures, measures undergoing 

maintenance review, and measures 

endorsed with the condition that they 

enter the trial period can be assessed to 

determine whether risk adjustment for 

selected social risk factors is appropriate 

for these measures. This trial entailed 

temporarily allowing inclusion of social 

risk factors in the risk-adjustment 

approach for some performance 

measures. Since publication of the 

proposed rule, we have learned that the 

National Quality Forum (NQF) has 

concluded their initial trial on risk 

adjustment for quality measures.80

Based on the findings from the initial 

trial, we have been informed that the 

NQF intends to continue its work to 

evaluate the impact of social risk factor 

adjustment on intermediate outcome 

and outcome measures for an additional 

three years. We understand that the 

extension of this work will allow NQF 

to determine further how to effectively 

account for social risk factors through 

risk adjustment and other strategies in 

quality measurement. 

As we continue to consider the 

analyses and recommendations from 

these reports and the results of the NQF 

trial on risk adjustment for quality 

measures, we are continuing to work 

with stakeholders in this process. As we 

have previously communicated, we are 

concerned about holding providers to 

different standards for the outcomes of 

their patients with social risk factors 

because we do not want to mask 

potential disparities or minimize 

incentives to improve the outcomes for 

disadvantaged populations. Keeping 

this concern in mind, in the proposed 

rule we sought public comment on 

whether we should account for social 

risk factors in the ASCQR Program, and 

if so, what method or combination of 

methods would be most appropriate for 

accounting for social risk factors. 

Examples of methods include: 

Confidential reporting to providers of 

measure rates stratified by social risk 

factors; public reporting of stratified 

measure rates; and potential risk 

adjustment of a particular measure as 

appropriate based on data and evidence. 

In addition, we requested public 

comment on which social risk factors 

might be most appropriate for reporting 

stratified measure scores and/or 

potential risk adjustment of a particular 

measure. Examples of social risk factors 

include, but are not limited to, dual 

eligibility/low-income subsidy, race and 

ethnicity, and geographic area of 

residence. We sought comments on 

which of these factors, including current 

data sources where this information 

would be available, could be used alone 

or in combination, and whether other 

data should be collected to better 

capture the effects of social risk. We will 

take commenters’ input into 

consideration as we continue to assess 

the appropriateness and feasibility of 

accounting for social risk factors in the 

ASCQR Program. We note that any such 

changes would be proposed through 

future notice and comment rulemaking. 

We look forward to working with 

stakeholders as we consider the issue of 

accounting for social risk factors and 

reducing health disparities in CMS 

programs. Of note, implementing any of 

the above methods would be taken into 

consideration in the context of how this 

and other CMS programs operate (for 

example, data submission methods, 

availability of data, statistical 

considerations relating to reliability of 

data calculations, among others), so we 

also welcome comment on operational 

considerations. CMS is committed to 

ensuring that its beneficiaries have 

access to and receive excellent care, and 

that the quality of care furnished by 

providers and suppliers is assessed 

fairly in CMS programs. 

We received extensive comments in 

response to our request for public 

comment on whether we should 

account for social risk factors in the 

ASCQR Program, and if so, what 

method or combination of methods 

would be most appropriate for 

accounting for social risk factors. 

Comment: Many commenters 

expressed support for CMS’ effort to 

address social risk factors in the ASCQR 

Program, noting that social risk factors 

are powerful drivers of care provision 

and clinical outcomes. 

One commenter recommended that 

CMS apply risk adjustment by 

stratifying providers into groups by 

proportion of at-risk patients, noting 

that this approach does not require 

measure-level research. Another 

commenter recommended that CMS 

determine whether or not social risk 

factor disparities exist in the ASC 

setting prior to committing to adjusting 

any measures for these factors, and that 

CMS rely on data elements existing in 

CMS databases. A few commenters 

recommended that CMS provide ASCs 

with both risk-adjusted and unadjusted 

data in order to allow for transparency. 

One commenter noted that better data 

sources for socioeconomic status are 

needed, including patient-level and 

community-level data sources, and that 

measure-specific risk adjustment 

methodologies are appropriate. Finally, 

one commenter noted that risk 

adjustment should balance fair 

measurement with ensuring that 

disparities are not masked. 

Response: We appreciate all the 

comments and interest in this topic. As 

we have previously stated regarding risk 

adjustment of publicly reported data for 

these factors, we are concerned about 

holding providers and suppliers to 

different standards for the outcomes of 

their patients with social risk factors, 

because we do not want to mask 

potential disparities or minimize 

incentives to improve outcomes for 

disadvantaged populations. With 

respect to public reporting, while we 

agree with commenters and believe it is 

important to avoid a scenario in which 

underlying disparities are masked rather 

than addressed, we also agree with 

commenters who support the public 

reporting of risk-adjusted data. We 

appreciate the need to balance risk 

adjustment as a strategy to account for 

social risk factors with the concern that 

risk adjustment could minimize 

incentives and reduce efforts to address 

disparities for patients with social risk 

factors. We believe that the path forward 

should incentivize improvements in 

health outcomes for disadvantaged 

populations while ensuring that 

beneficiaries have access to excellent 

care. We will consider all suggestions as 

we continue to assess the issue of 

accounting for social risk factors within 

individual measures and the program as 

a whole, and will actively perform 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59447 

additional research and monitor for 

trends to prevent unintended 

consequences. We intend to conduct 

further analyses on the impact of 

different approaches to accounting for 

social risk factors in quality programs. 

Comment: Many commenters 

recommended several social variables 

and comorbidities, including: Body 

mass index; race; smoking status; age; 

gender; back pain; pain in non-operative 

lower extremity joint; health risk status; 

mental health factors; chronic narcotic 

use; socioeconomic status; and preprocedure ambulatory status. 

Commenters also recommended that 

future risk variables could include 

literacy, marital status, live-in home 

support, family support structure, and 

home health resources. One commenter 

recommended that the following 

variables not be used: American Society 

of Anesthesiologists score; range of 

motion; and mode of patient-reported 

outcome measure collection. One 

commenter expressed concern with the 

use of dual eligible status as a factor, 

noting that it does not identify or 

address the specific factors that result in 

higher spending and/or poorer health 

outcomes. 

Response: We appreciate commenters’ 

recommendations regarding specific 

social risk factor variables and will 

consider them as we continue exploring 

options for accounting for social risk 

factors in the ASCQR Program. 

Comment: Several commenters 

recommended that CMS consider 

potential administrative complexities as 

well as patient impact when 

implementing risk-adjustment 

methodologies. 

Response: As we consider the 

feasibility of collecting patient-level 

data and the impact of strategies to 

account for social risk factors through 

further analysis, we will also continue 

to evaluate the reporting burden on 

patients and providers. We reiterate that 

we are committed to ensuring that CMS 

beneficiaries have access to and receive 

excellent care and that the quality of 

care furnished by providers and 

suppliers is assessed fairly in CMS 

programs. 

Comment: Some commenters 

recommended that CMS consider 

recommendations from NQF, ASPE, and 

the Agency for Healthcare Research and 

Quality (AHRQ). 

Response: Any proposals would be 

made in future rulemaking after further 

research and continued stakeholder 

engagement including from NQF. In 

addition, we look forward to working 

with all stakeholders, including NQF, 

ASPE, the National Academy of 

Medicine, and AHRQ. 

We thank all of the commenters for 

their input and will consider all 

suggestions as we continue to assess the 

issue of accounting for social risk factors 

within individual measures, the ASCQR 

Program as a whole, and across CMS 

quality programs. 

3. Policies for Retention and Removal of 

Quality Measures From the ASCQR 

Program 

a. Retention of Previously Adopted 

ASCQR Program Measures 

We previously adopted a policy that 

quality measures adopted for an ASCQR 

Program measure set for a previous 

payment determination year be retained 

in the ASCQR Program for measure sets 

for subsequent payment determination 

years, except when they are removed, 

suspended, or replaced as indicated (76 

FR 74494 and 74504; 77 FR 68494 

through 68495; 78 FR 75122; and 79 FR 

66967 through 66969). We did not 

propose any changes to this policy. 

b. Measure Removal 

We refer readers to the CY 2015 

OPPS/ASC final rule with comment 

period (79 FR 66967 through 66969) and 

42 CFR 416.320 for a detailed 

discussion of the process for removing 

adopted measures from the ASCQR 

Program. We did not propose any 

changes to this process. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33687), we proposed to 

remove a total of three measures for the 

CY 2019 payment determination and 

subsequent years: (1) ASC–5: 

Prophylactic Intravenous (IV) Antibiotic 

Timing; (2) ASC–6: Safe Surgery 

Checklist Use; and (3) ASC–7: ASC 

Facility Volume Data on Selected 

Procedures. These proposals are 

discussed in more detail below. 

(1) Removal of ASC–5: Prophylactic 

Intravenous (IV) Antibiotic Timing 

Beginning With the CY 2019 Payment 

Determination 

We refer readers to the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74499 through 74501) 

where we adopted ASC–5: Prophylactic 

Intravenous (IV) Antibiotic Timing 

measure (formerly NQF #0264) 

beginning with the CY 2014 payment 

determination and finalized the 

measure’s data collection and data 

submission timelines (76 FR 74515 

through 74516). This measure assesses 

whether intravenous antibiotics given 

for prevention of surgical site infection 

were administered on time per clinical 

guidelines. 

Based on our analysis of ASCQR 

Program measure data for CY 2014 

through 2016 encounters, ASC 

performance on this measure is so high 

and unvarying that meaningful 

distinctions in improvement cannot be 

made; as a result, we believe this 

measure meets removal criterion 

number one under the ASCQR 

Program’s finalized measure removal 

criteria. The ASCQR Program previously 

finalized two criteria for determining 

when a measure is ‘‘topped out:’’ (1) 

When there is statistically 

indistinguishable performance at the 

75th and 90th percentiles of national 

facility performance; and (2) when the 

measure’s truncated coefficient of 

variation (COV) is less than or equal to 

0.10 (79 FR 66968 through 66969). 

These analyses are captured in the table 

below. 

ASC–5—PROPHYLACTIC INTRAVENOUS (IV) ANTIBIOTIC TIMING TOPPED OUT ANALYSIS

Encounters Number of 

ASCs 

75th 

percentile 

90th 

percentile 

Truncated 

COV 

CY 2014 ........................................................................................................... 2,206 100.000 100.000 0.02633 

CY 2015 ........................................................................................................... 2,196 100.000 100.000 0.03289 

CY 2016 ........................................................................................................... 2,158 100.000 100.000 0.02619 

As displayed in the table above, there 

is no distinguishable difference in ASC 

performance between the 75th and 90th 

percentiles under the ASC–5: 

Prophylactic Intravenous (IV) Antibiotic 

Timing measure, and the truncated 

coefficient of variation has been below 

0.10 since 2014. Therefore, the ASC–5: 

Prophylactic Intravenous (IV) Antibiotic 

Timing measure meets both ‘‘topped 

out’’ measure criteria for the ASCQR 

Program. 

Furthermore, we note that the NQF 

endorsement was removed on February 

13, 2015; in its discussion of whether to 


sradovich on DSK3GMQ082PROD with RULES2
59448 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

81NQF. ‘‘NQF-Endorsed Measures for Surgical 

Procedures.’’ Technical Report. Available at: http:// 

www.qualityforum.org/Publications/2015/02/NQFEndorsed_Measures_for_Surgical_Procedures.aspx. 

82We note that no performance data was 

collected for CY 2013 events for the web-based 

measures; therefore, we lack performance data for 

the ASC–6 measure for this year of the ASCQR 

Program. Available at: https://www.qualitynet.org/ 

dcs/BlobServer?blobkey=id&blobnocache=true&

blobwhere=1228890196351&blobheader=

multipart%2Foctet-stream&blobheadername1=

Content-Disposition&blobheadervalue1=

attachment%3Bfilename%3DASC_wbnr_prsntn_

121813_1ppg.pdf&blobcol=urldata&blobtable=

MungoBlobs. 

continue endorsement for the ASC–5: 

Prophylactic Intravenous (IV) Antibiotic 

Timing measure, the Surgery Standing 

Committee also noted that ASC 

performance on this measure was very 

high, with 99 percent of facilities 

meeting the timely antibiotic 

administration threshold in CY 2013.81

We believe that removal of this measure 

from the ASCQR Program measure set is 

appropriate, as there is little room for 

improvement and removal would 

alleviate maintenance costs and 

administrative burden to ASCs. As such, 

we believe the burdens outweigh the 

benefits of keeping the measure in the 

ASCQR Program. Therefore, in the CY 

2018 OPPS/ASC proposed rule (82 FR 

33687), we proposed to remove the 

ASC–5: Prophylactic Intravenous (IV) 

Antibiotic Timing measure for the CY 

2019 payment determination and 

subsequent years. Furthermore, we note 

that a similar measure was removed 

from the Hospital OQR Program in the 

CY 2015 OPPS/ASC final rule with 

comment period (79 FR 66942 through 

66944) due to topped-out status. 

We invited public comment on our 

proposal to remove the ASC–5: 

Prophylactic Intravenous (IV) Antibiotic 

Timing measure for the CY 2019 

payment determination and subsequent 

years as discussed above. 

Comment: Many commenters 

supported the proposal to remove the 

ASC–5: Prophylactic Intravenous (IV) 

Antibiotic Timing measure, and agreed 

with CMS’ rationale that the measure 

does not add value and that removal of 

this measure reduces administrative 

burden. 

Response: We thank the commenters 

for their support. 

Comment: One commenter opposed 

the proposed removal of ASC–5: 

Prophylactic Intravenous (IV) Antibiotic 

Timing measure. The commenter noted 

that the measure provides value and 

recommended that the measure be 

retained in the ASCQR Program despite 

having ‘‘topped-out’’ status. 

Response: We understand 

commenter’s concern with removing the 

ASC–5: Prophylactic Intravenous (IV) 

Antibiotic Timing measure, and agree 

that the data captured under the ASC– 

5 measure could be useful in selecting 

an ASC at which to receive care. 

However, we believe that removal of 

this measure from the ASCQR Program 

measure set is appropriate as there is 

little room for improvement, as shown 

by our data in the table above, and 

removal would alleviate maintenance 

costs and administrative burden to 

ASCs. Overall, we believe the burdens 

outweigh the benefits of keeping the 

measure in the ASCQR Program, as 

stated in our proposal. In response to 

concerns that the measure adds value, 

we note that Prophylactic Intravenous 

(IV) Antibiotic Timing measure data are 

collected and publicly reported by the 

ASC Quality Collaboration. 

After consideration of the public 

comments we received, we are 

finalizing the proposal to remove the 

ASC–5: Prophylactic Intravenous (IV) 

Antibiotic Timing measure for the CY 

2019 payment determination and 

subsequent years, as proposed. 

(2) Removal of ASC–6: Safe Surgery 

Checklist Use Beginning With the CY 

2019 Payment Determination 

We refer readers to the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74505 through 74507 and 

74509), where we adopted the ASC–6: 

Safe Surgery Checklist Use measure 

beginning with the CY 2015 payment 

determination. This structural measure 

of facility process assesses whether an 

ASC employed a safe surgery checklist 

that covered each of the three critical 

perioperative periods (prior to 

administering anesthesia, prior to skin 

incision, and prior to patient leaving the 

operating room) for the entire data 

collection period. 

Based on our analysis of ASCQR 

Program measure data for CYs 2014 to 

2016 encounters, the ASC–6: Safe 

Surgery Checklist Use measure meets 

our first criterion for measure removal 

that measure performance is so high and 

unvarying that meaningful distinctions 

and improvements in performance can 

no longer be made. The ASCQR Program 

previously finalized two criteria for 

determining when a measure is ‘‘topped 

out:’’ (1) When there is statistically 

indistinguishable performance at the 

75th and 90th percentiles of national 

facility performance; and (2) when the 

measure’s truncated coefficient of 

variation is less than or equal to 0.10 (79 

FR 66968 through 66969). These 

analyses are captured in the table below. 

ASC–6—SAFE SURGERY CHECKLIST USE PERFORMANCE ANALYSIS

Encounters Number of 

ASCs Rate 75th percentile 

90th 

percentile 

Truncated 

COV 

CY 2012 ............................................................................... 4,356 0.989 100.000 100.000 0.106 

CY 2013 82 ........................................................................... (*) (*) (*) (*) (*) 

CY 2014 ............................................................................... 4,328 0.997 100.000 100.000 0.050 

CY 2015 ............................................................................... 4,305 0.998 100.000 100.000 0.043 

Based on the analysis above the 

national rate of ‘‘Yes’’ response for the 

ASC–6: Safe Surgery Checklist Use 

measure is nearly 1.0, or 100 percent, 

nationwide, and has remained at this 

level for the last 2 years. In addition, 

there is no distinguishable difference in 

ASC performance between the 75th and 

90th percentiles under measure, and the 

truncated coefficient of variation has 

been below 0.10 since 2014. We believe 

that removal of this measure from the 

ASCQR Program measure set is 

appropriate, as there is little room for 

improvement. In addition, removal of 

this measure would alleviate the 

maintenance costs and administrative 

burden to ASCs associated with 

retaining the measure. As such, we 

believe the burdens of this measure 

outweigh the benefits of keeping the 

measure in the Program. 

Therefore, in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33688), we 

proposed to remove ASC–6: Safe 

Surgery Checklist Use from the ASCQR 

Program measure set beginning with the 

CY 2019 payment determination. We 

also refer readers to section XIII.B.4.c.(6) 

of this final rule with comment period, 

where the Hospital OQR Program is 

removing a similar measure. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59449 

We invited public comment on our 

proposal to remove the ASC–6: Safe 

Surgery Checklist Use measure for the 

CY 2019 payment determination and 

subsequent years as discussed above. 

Comment: Many commenters 

supported the proposal to remove the 

ASC–6: Safe Surgery Checklist Use 

measure, and agreed with our rationale 

that the measure does not add value and 

that removal would reduce 

administrative burden. 

Response: We thank the commenters 

for their support. 

Comment: A few commenters 

opposed the proposed removal of the 

ASC–6: Safe Surgery Checklist Use 

measure, noting that this measure 

provides value and recommending 

retention of this measure in the ASCQR 

Program. One commenter expressed 

concern that high performance on the 

measure does not indicate whether 

perioperative communication among 

team members is effective, and 

recommended that CMS retain the 

measure until there is further evidence 

of whether the use of a safe surgery 

checklist is supporting effective 

perioperative communication. 

Response: While we agree the ASC–6: 

Safe Surgery Checklist Use measure 

captures data patients may find useful 

in comparing ASCs while selecting an 

ASC for their care, we believe that 

removal of this measure from the 

ASCQR Program measure set is 

appropriate as there is little room for 

improvement, as shown by our data in 

the table above. In addition, removal of 

this measure would alleviate the 

maintenance costs and administrative 

burden to ASCs. Therefore, overall, we 

believe the burden outweighs the 

benefits of keeping the measure in the 

ASCQR Program, as stated in our 

proposal. We also note that high 

performance on the ASC–6: Safe 

Surgery Checklist Use measure does not 

indicate whether perioperative 

communication among team members is 

effective; this measure is not specified 

to assess the effectiveness of a team’s 

communication, only whether a safe 

surgery checklist is used at the ASC. 

Therefore, we do not believe continuing 

to collect—or, conversely, ceasing to 

collect—data under this measure will 

assess or affect the effectiveness of 

perioperative communication within 

ASCs. 

After consideration of the public 

comments we received, we are 

finalizing the proposal to remove ASC– 

6: Safe Surgery Checklist Use from the 

ASCQR Program measure set beginning 

with the CY 2019 payment 

determination, as proposed. We also 

refer readers to section XIII.B.4.c.(6) of 

this final rule where we are finalizing 

removal of a similar measure from the 

Hospital OQR Program. 

(3) Removal of ASC–7: ASC Facility 

Volume Data on Selected Procedures 

Beginning With the CY 2019 Payment 

Determination 

We refer readers to the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74507 through 74509), 

where we adopted the ASC–7: ASC 

Facility Volume Data on Selected 

Procedures measure beginning with the 

CY 2015 payment determination. This 

structural measure of facility capacity 

collects surgical procedure volume data 

on six categories of procedures 

frequently performed in the ASC setting 

(76 FR 74507). 

We adopted the ASC–7: ASC Facility 

Volume Data on Selected Procedures 

measure based on evidence that volume 

of surgical procedures, particularly of 

high-risk surgical procedures, is related 

to better patient outcomes, including 

decreased medical errors and mortality 

(76 FR 74507). We further stated our 

belief that publicly reporting volume 

data would provide patients with 

beneficial performance information to 

use in selecting a care provider. 

However, over time, we have adopted, 

and intend to continue to adopt, more 

measures assessing ASCs’ performance 

on specific procedure types, like ASC– 

14. As stated below, we believe 

measures on specific procedure types 

will provide patients with more 

valuable ASC performance data. These 

types of measures are also more strongly 

associated with desired patient 

outcomes for the particular topic. For 

example, in the CY 2017 OPPS/ASC 

final rule with comment period (81 FR 

79801 through 79803), we adopted 

ASC–14: Unplanned Anterior 

Vitrectomy, a measure assessing patient 

outcomes following ophthalmologic 

procedures, and proposed to adopt a 

second ophthalmology-specific 

measure, ASC–16: Toxic Anterior 

Segment Syndrome, in the CY 2018 

proposed rule (82 FR 33689 through 

33691). We believe these proceduretype-specific measures provide patients 

with more valuable ASC performance 

data than the ASC–7: ASC Facility 

Volume Data on Selected Procedures 

measure in selecting an ASC for their 

care. For this reason, we believe the 

ASC–7: ASC Facility Volume Data on 

Selected Procedures measure meets our 

second criterion for removal from the 

program; specifically, that there are 

other measures available that are more 

strongly associated with desired patient 

outcomes for the particular topic. In 

addition, removal of this measure would 

alleviate the maintenance costs and 

administrative burden to ASCs 

associated with retaining the measure. 

As such, we believe the burdens of this 

measure outweigh the benefits of 

keeping the measure in the ASCQR 

Program. Therefore, in the CY 2018 

OPPS/ASC proposed rule (82 FR 33688), 

we proposed to remove ASC–7: ASC 

Facility Volume Data on Selected 

Procedures from the ASCQR Program 

beginning with the CY 2019 payment 

determination. We refer readers to 

section XIII.B.4.c.(2) of this final rule 

with comment period where we are 

removing a similar measure from the 

Hospital OQR Program. 

We invited public comment on our 

proposal to remove the ASC–7: ASC 

Facility Volume Data on Selected 

Procedures measure for the CY 2019 

payment determination and subsequent 

years as discussed above. 

Comment: Many commenters 

supported the proposal to remove the 

ASC–7: ASC Facility Volume Data on 

Selected Procedures measure and agreed 

with CMS’ rationale that the measure 

does not add value and that its removal 

reduces administrative burden. 

Response: We thank the commenters 

for their support. 

Comment: A few commenters 

opposed the proposal to remove the 

ASC–7: ASC Facility Volume Data on 

Selected Procedures measure. One 

commenter cited concern that removal 

of this measure will limit the 

availability of important data that 

informs comparative research, outcomes 

research, and that this measure provides 

immediate consumer value. Moreover, 

the commenter expressed concern that 

reducing the data available will interfere 

with the growing acceptance of ASCbased procedures. Another commenter 

noted that the measure is not overly 

burdensome and that it is helpful for 

strategic planning. 

Response: While we believe that 

continuing to collect and publicly report 

facility volume data would provide 

patients with beneficial performance 

information to use in selecting a care 

provider, over time, we have adopted, 

and intend to continue to adopt, more 

measures assessing ASCs’ performance 

on specific procedure types. In addition, 

removal of this measure would alleviate 

the maintenance costs and 

administrative burden to ASCs 

associated with retaining the measure. 

As such, although we recognize the 

value of the measure for research, 

strategic planning, and in demonstrating 

the value of ASC-based procedures, 

overall we believe the burden of this 

measure outweighs the benefits of 


sradovich on DSK3GMQ082PROD with RULES2
59450 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

keeping the measure in the ASCQR 

Program as stated in our proposal. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to remove 

ASC–7: ASC Facility Volume Data on 

Selected Procedures from the ASCQR 

Program beginning with the CY 2019 

payment determination, as proposed. 

4. Delaying Implementation of ASC– 

15a–e: Outpatient and Ambulatory 

Surgery Consumer Assessment of 

Healthcare Providers and Systems (OAS 

CAHPS) Survey-Based Measures 

Beginning With the CY 2020 Payment 

Determination 

We refer readers to the CY 2017 

OPPS/ASC final rule with comment 

period where we adopted ASC–15a–e 

(81 FR 79803 through 79817), and 

finalized data collection and data 

submission timelines (81 FR 79822 

through 79824). These measures assess 

patients’ experience with care following 

a procedure or surgery in an ASC by 

rating patient experience as a means for 

empowering patients and improving the 

quality of their care. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33688), we proposed to 

delay implementation of the Outpatient 

and Ambulatory Surgery Consumer 

Assessment of Healthcare Providers and 

Systems (OAS CAHPS) Survey-based 

Measures (ASC–15a–e) beginning with 

the CY 2020 payment determination (CY 

2018 data collection) until further action 

in future rulemaking. Since our 

adoption of these measures, we have 

come to believe that we need to collect 

more operational and implementation 

data. Specifically, we want to ensure 

that the survey measures appropriately 

account for patient response rates, both 

aggregate and by survey administration 

method; reaffirm the reliability of 

national implementation of OAS 

CAHPS Survey data; and appropriately 

account for the burden associated with 

administering the survey in the 

outpatient setting of care. We note that 

commenters expressed concern over the 

burden associated with the survey in the 

CY 2017 OPPS/ASC final rule with 

comment period (81 FR 79810). We 

believe that the voluntary national 

implementation of the survey, which 

began in January 2016, would provide 

valuable information moving forward. 

We plan to conduct analyses of the 

national implementation data to 

undertake any necessary modifications 

to the survey tool and/or CMS systems. 

We believe it is important to allow time 

for any modifications before requiring 

the survey under the ASCQR Program. 

However, we continue to believe that 

these measures address an area of care 

that is not adequately addressed in our 

current measure set and will be useful 

to assess aspects of care where the 

patient is the best or only source of 

information. 

Further, we continue to believe these 

measures will enable objective and 

meaningful comparisons between ASCs. 

Therefore, we proposed to delay 

implementation of ASC–15a–e 

beginning with the CY 2020 payment 

determination (CY 2018 data collection) 

until further action in future 

rulemaking. We also refer readers to 

section XIII.B.5. of this final rule with 

comment period where we are finalizing 

a similar policy in the Hospital OQR 

Program. 

We invited public comment on our 

proposal to delay the OAS CAHPS 

Survey-based measures beginning with 

the CY 2020 payment determination as 

discussed above. 

Comment: Many commenters 

supported the proposal to delay 

implementation of the OAS CAHPS 

Survey and noted that if the survey 

could be improved, ASCs would benefit 

from having their scores available for 

comparison to hospital outpatient 

departments. One commenter agreed 

that an analysis of the national 

implementation will provide valuable 

information. Another commenter noted 

that the high volume of facilities and 

hospitals participating in the voluntary 

national implementation indicates that 

the data collection burden of the survey 

is low. 

Response: We thank the commenters 

for their support, and agree that an 

analysis of the national implementation 

of OAS CAHPS Survey will provide 

valuable information as we continue to 

assess the survey. We also acknowledge 

that comparing scores between ASCs 

and hospital outpatient departments 

may be useful to ASCs and that some 

ASCs may find the survey to have only 

limited burden. However, as discussed 

below, in order to be responsive to 

concerns about vendor costs and to 

review the results of the national 

implementation, we are finalizing our 

proposal to delay implementation of the 

OAS CAHPS Survey. 

Comment: A few commenters 

opposed the proposal to delay 

implementation of the OAS CAHPS 

Survey, noting the importance of patient 

experience data. One commenter noted 

that the survey assesses areas of care not 

yet adequately addressed and that 

patient experience of care is a priority 

area. Another commenter noted a belief 

that the use of surveys about patient 

experience in health care settings is the 

best way to examine whether highquality, patient-centered care actually 

takes place. 

Response: We agree that patient 

experience of care data is valuable in 

assessing the quality of care provided at 

an ASC and assisting patients in 

selecting a provider or supplier for their 

care. However, we seek to ensure the 

value of this data is appropriately 

balanced against the implementation 

and operational burdens imposed to 

collect and submit these data. As we 

stated in the proposed rule, we believe 

delaying implementation of the OAS 

CAHPS Survey will provide additional 

time to assess these issues before 

moving forward. 

Comment: A few commenters 

recommended that the survey be 

voluntary indefinitely or until 

implementation issues with the survey 

are addressed. One commenter 

recommended that CMS delay 

implementation of the OAS CAHPS 

indefinitely and instead increase the 

number of surveyors that inspect ASCs. 

Another commenter recommended that 

CMS adopt the CAHPS surgical care 

survey as a survey option. 

Response: We thank the commenters 

for their recommendations, and we will 

take these comments under 

consideration as we craft future policy. 

We do not believe that inspectors 

replace a patient-experience-of-care 

survey, because inspections and surveys 

collect different information. 

Specifically, we believe that patient 

experience data is an important category 

of information to collect and would not 

be captured by surveyors. Further, we 

believe a patient experience of care 

survey will provide important 

information to not just providers, but 

also patients and the general public. 

Therefore, we will continue to work 

towards a successful implementation of 

a patient experience survey. In addition, 

we acknowledge the commenter’s 

suggestion that we adopt the surgical 

CAHPS survey and we will consider 

this recommendation. 

Comment: A few commenters 

expressed concern about the burden 

associated with collecting 300 surveys 

and requested that only 100 surveys be 

required. Other commenters noted that 

the survey is unnecessarily long, which 

could reduce response rates or skew 

results if only patients with negative 

feedback respond, and that not all of the 

questions are relevant. Some 

commenters noted that the use of a 

third-party vendor is too costly and 

could lead to more impersonal contacts 

with patients than if ASCs surveyed 

patients directly. Several commenters 

recommended that vendors should 

provide electronic or email options for 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59451 

83OASCAHPS.org. Additional Procedural Codes 

for Exclusion from the OAS CAHPS Survey. 

Available at: https://oascahps.org/GeneralInformation/Announcements/EntryId/80/ Additional-Procedural-Codes-for-Exclusion-fromthe-OAS-CAHPS-Survey. 

conducting the OAS CAHPS Survey in 

order to increase response rates. Other 

commenters recommended that CMS 

administer the survey on its Web site. 

One commenter noted concern that 

timely results are not provided. A few 

commenters expressed concern that the 

CPT codes included in the eligibility 

criteria for the survey are not always 

applicable. 

Response: While web-based surveys 

are not available survey modes at 

present, we are actively investigating 

these modes as possible options for the 

future. We are exploring whether 

hospitals and ASCs receive reliable 

email addresses from patients and 

whether there is adequate access to the 

internet across all types of patients. 

Ultimately, the purpose of the 

investigation is to ensure that any future 

survey administration method does not 

introduce bias in the survey process and 

reduces length and burden if at all 

possible. Although we are investigating 

other modes of survey administration, 

we do not expect that CMS will directly 

administer the survey; the survey would 

still be administered through vendors. 

In addition, we acknowledge 

commenters concerns that ASCs would 

not receive immediate feedback from 

patients that is obtained through the 

survey. Finally, we acknowledge the 

concern about the use of CPT codes, 

including those for procedures that 

patients may not perceive as surgery. 

We note that many CPT codes have been 

excluded from inclusion in the OAS 

CAHPS, including services like 

application of a cast or splint, in order 

to ensure that only patients receiving 

applicable procedures are surveyed.83

We thank the commenters and will take 

all comments under consideration as we 

craft future policy for the OAS CAHPS 

Survey. 

After consideration of the public 

comments we received, we are 

finalizing the proposal to delay 

implementation of the Outpatient and 

Ambulatory Surgery Consumer 

Assessment of Healthcare Providers and 

Systems (OAS CAHPS) Survey-based 

Measures (ASC–15a–e) beginning with 

the CY 2020 payment determination (CY 

2018 data collection) until further action 

in future rulemaking, as proposed. We 

refer readers to section XIII.B.5. of this 

final rule with comment where we are 

also finalizing delay of the OAS CAHPS 

Survey-based measures in the Hospital 

OQR Program. 

5. ASCQR Program Quality Measures 

Adopted in Previous Rulemaking 

For the CY 2020 payment 

determination and subsequent years, we 

have previously finalized the following 

measure set. We note that this chart still 

includes the ASC–5, ASC–6, and ASC– 

7 measures, which are being finalized 

for removal beginning with the CY 2019 

payment determination as discussed 

above, as well as the ASC–15a–e 

measures, which are being finalized for 

delay beginning with the CY 2020 

payment determination and until 

further action as discussed above: 

ASCQR PROGRAM MEASURE SET PREVIOUSLY FINALIZED FOR THE CY 2020 PAYMENT DETERMINATION AND

SUBSEQUENT YEARS

ASC No. NQF No. Measure name 

ASC–1 ............. 0263 ............... Patient Burn. 

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

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

ASC–4 ............. 0265† ............. All-Cause Hospital Transfer/Admission. 

ASC–5 ............. 0264† ............. Prophylactic Intravenous (IV) Antibiotic Timing.* 

ASC–6 ............. None .............. Safe Surgery Checklist Use.* 

ASC–7 ............. None .............. ASC Facility Volume Data on Selected Procedures.* 

ASC–8 ............. 0431 ............... Influenza Vaccination Coverage Among Healthcare Personnel. 

ASC–9 ............. 0658 ............... Endoscopy/Polyp Surveillance: Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk Patients. 

ASC–10 ........... 0659 ............... Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous PolypsAvoidance of Inappropriate Use. 

ASC–11 ........... 1536 ............... Cataracts: Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery.** 

ASC–12 ........... 2539 ............... Facility 7-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy. 

ASC–13 ........... None .............. Normothermia Outcome. 

ASC–14 ........... None .............. Unplanned Anterior Vitrectomy. 

ASC–15a ......... None .............. OAS CAHPS—About Facilities and Staff.*** 

ASC–15b ......... None .............. OAS CAHPS—Communication About Procedure.*** 

ASC–15c ......... None .............. OAS CAHPS—Preparation for Discharge and Recovery.*** 

ASC–15d ......... None .............. OAS CAHPS—Overall Rating of Facility.*** 

ASC–15e ......... None .............. OAS CAHPS—Recommendation of Facility.*** 

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

* Measure finalized for removal beginning with the CY 2019 payment determination, as discussed in section XIV.B.3.b. of this final rule with 

comment period. 

** Measure voluntarily collected effective beginning with the CY 2017 payment determination as set forth in section XIV.E.3.c. of the CY 2015 

OPPS/ASC final rule with comment period (79 FR 66984 through 66985). 

*** Measure finalized for delay in reporting beginning with the CY 2020 payment determination (CY 2018 data collection) until further action in 

future rulemaking as discussed in section XIV.B.4. of this final rule with comment period. 


sradovich on DSK3GMQ082PROD with RULES2
59452 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

84Centers for Disease Control and Prevention. 

Toxic Anterior Segment Syndrome after Cataract 

Surgery—Maine, 2006. MMWR. Morbidity and 

Mortality Weekly Report. 2007 Jun 29;56(25):629– 

630. 

85Breebaart AC, Nuyts RM, Pels E, Edelhauser 

HF, Verbraak FD. Toxic Endothelial Cell 

Destruction of the Cornea after Routine 

Extracapsular Cataract Surgery. Archives of 

Ophthalmology 1990;108:1121–1125. 

86Hellinger WC, Bacalis LP, Erdhauser HF, 

Mamalis N, Milstein B, Masket S. ASCRS Ad Hoc 

Task Force on Cleaning and Sterilization of 

Intraocular Instruments: Recommended Practices 

for Cleaning and Sterilizing Intraocular Surgical 

Instruments. Journal of Cataract and Refractive 

Surgery. 2007 Jun;33(6):1095–1100. 

87Moyle W, Yee RD, Burns JK, Biggins T. Two 

Consecutive Clusters of Toxic Anterior Segment 

Syndrome. Optometry and Vision Science. 2013 

Jan;90(1):e11–23. 

88National Quality Forum. ‘‘MAP 2017 

Considerations for Implementing Measures in 

Federal Programs: Hospitals.’’ Report. 2017. 

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

under ‘‘Hospitals—Final Report.’’ 

89National Quality Forum. 2015 Measures Under 

Consideration List. National Quality Forum, Dec. 

2016. Available at: http://www.qualityforum.org/ 

2015_Measures_Under_Consideration.aspx, under 

‘‘2015 Measures Under Consideration List (PDF).’’ 

90National Quality Forum. 2016 Spreadsheet of 

Final Recommendations to HHS and CMS. 

Available at: https://www.qualityforum.org/ 

WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=

81593. 

91 Ibid. 

92ASC Quality Collaboration. ‘‘ASC Quality 

Collaboration.’’ Available at: http://

www.ascquality.org/. 

6. New ASCQR Program Quality 

Measures for the CY 2021 and CY 2022 

Payment Determinations and 

Subsequent Years 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75124) for a detailed 

discussion of our approach to measure 

selection for the ASCQR Program. In the 

CY 2018 OPPS/ASC proposed rule (82 

FR 33689 through 33698), we proposed 

to adopt a total of three new measures 

for the ASCQR Program: one measure 

collected via a CMS web-based tool for 

the CY 2021 payment determination and 

subsequent years (ASC–16: Toxic 

Anterior Segment Syndrome), and two 

measures collected via claims for the CY 

2022 payment determination and 

subsequent years (ASC–17: Hospital 

Visits after Orthopedic Ambulatory 

Surgical Center Procedures; and ASC– 

18: Hospital Visits after Urology 

Ambulatory Surgical Center 

Procedures). These measures are 

discussed in detail below. 

a. Proposal To Adopt ASC–16: Toxic 

Anterior Segment Syndrome Beginning 

With the CY 2021 Payment 

Determination 

(1) Background 

Toxic Anterior Segment Syndrome 

(TASS), an acute, noninfectious 

inflammation of the anterior segment of 

the eye, is a complication of anterior 

segment eye surgery that typically 

develops within 24 hours after 

surgery.84 The TASS measure assesses 

the number of ophthalmic anterior 

segment surgery patients diagnosed 

with TASS within two days of surgery. 

Although most cases of TASS can be 

treated, the inflammatory response 

associated with TASS can cause serious 

damage to intraocular tissues, resulting 

in vision loss.85 Prevention requires 

careful attention to solutions, 

medications, and ophthalmic devices 

and to cleaning and sterilization of 

surgical equipment because of the 

numerous potential etiologies.86 Despite 

a recent focus on prevention, cases of 

TASS continue to occur, sometimes in 

clusters.87 With millions of anterior 

segment surgeries being performed in 

the United States each year, 

measurement and public reporting have 

the potential to serve as an additional 

tool to drive further preventive efforts. 

TASS is of interest to the ASCQR 

Program because cataract surgery is an 

anterior segment surgery commonly 

performed at ASCs. In addition, the 

TASS measure addresses the MAPidentified priority measure area of 

procedure complications for the ASCQR 

Program.88

(2) Overview of Measure 

We believe it is important to monitor 

the rate of TASS in the ASC setting 

because ophthalmologic procedures 

such as anterior segment surgery are 

commonly performed in this setting of 

care. Therefore, in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33690), we 

proposed to adopt the ASC–16: Toxic 

Anterior Segment Syndrome measure, 

which is based on aggregate measure 

data collected by the ASC and 

submitted via a CMS online data 

submission tool (QualityNet), in the 

ASCQR Program for the CY 2021 

payment determination and subsequent 

years. We expect the measure would 

promote improvement in patient care 

over time, because measurement 

coupled with transparency in publicly 

reporting of measure information would 

make patient outcomes following 

anterior segment procedures more 

visible to ASCs and patients and 

incentivize ASCs to incorporate quality 

improvement activities to reduce the 

incidence of TASS where necessary. 

Section 1890A of the Act requires the 

Secretary to establish a prerulemaking 

process with respect to the selection of 

certain categories of quality and 

efficiency measures. Under section 

1890A(a)(2) of the Act, the Secretary 

must make available to the public by 

December 1 of each year a list of quality 

and efficiency measures that the 

Secretary is considering for the 

Medicare program. The ASC–16 

measure was included on the 2015 MUC 

list 89 and reviewed by the MAP. The 

MAP reviewed the measure (MUC15– 

1047) and conditionally supported it for 

the ASCQR Program pending NQF 

review and endorsement.90 The MAP 

noted the high value and urgency of this 

measure, given many new entrants to 

the ambulatory surgical center space, as 

well as the clustering outbreaks of 

TASS. The MAP also cautioned that the 

measure be reviewed and endorsed by 

NQF before adoption into the ASCQR 

Program, so that a specialized standing 

committee can evaluate the measure for 

scientific acceptability.91 A summary of 

the MAP recommendations can be 

found at: https://www.qualityforum.org/ 

WorkArea/linkit.aspx?LinkIdentifier=

id&ItemID=81593. 

Sections 1833(i)(7)(B) and 

1833(t)(17)(C)(i) of the Act, when read 

together, require the Secretary, except as 

the Secretary may otherwise provide, to 

develop measures appropriate for the 

measurement of the quality of care 

furnished by ASCs that reflect 

consensus among affected parties and, 

to the extent feasible and practicable, 

that include measures set forth by one 

or more national consensus building 

entities. However, we note that section 

1833(i)(7)(B) of the Act does not require 

that each measure we adopt for the 

ASCQR Program be endorsed by a 

national consensus building entity, or 

by the NQF specifically. Further, under 

section 1833(i)(7)(B) of the Act, section 

1833(t)(17)(C)(i) of the Act applies to the 

ASCQR Program, except as the Secretary 

may otherwise provide. Under this 

provision, the Secretary has further 

authority to adopt non-endorsed 

measures. As stated in the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74465 and 74505), we 

believe that consensus among affected 

parties can be reflected through means 

other than NQF endorsement, including 

consensus achieved during the measure 

development process, consensus shown 

through broad acceptance and use of 

measures, and consensus through public 

comment. We believe this measure 

meets these statutory requirements. 

The proposed ASC–16: Toxic Anterior 

Segment Syndrome measure is not NQFendorsed. However, this measure is 

maintained by the ASC Quality 

Collaboration,92 an entity recognized 

within the community as an expert in 

measure development for the ASC 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59453 

93National Quality Forum. 2016 Spreadsheet of 

Final Recommendations to HHS and CMS. 

Available at: https://www.qualityforum.org/ 

WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=

81593. 

94 Ibid. 

95AHRQ Measure Summary. Available at: https:// 

www.qualitymeasures.ahrq.gov/summaries/ 

summary/49582/ambulatory-surgery-percentage-ofophthalmic-anterior-segment-surgery-patientsdiagnosed-with-toxic-anterior-segment-syndrometass-within-2-days-of-surgery. 

setting. We believe that this measure is 

appropriate for the measurement of 

quality care furnished by ASCs because 

ophthalmologic procedures are 

commonly performed in ASCs and, as 

discussed above, the inflammatory 

response associated with TASS can 

cause serious damage to patients’ vision, 

but TASS is also preventable through 

careful attention to solutions, 

medications, ophthalmic devices, and to 

cleaning and sterilization of surgical 

equipment. While the ASC–16: Toxic 

Anterior Segment Syndrome measure is 

not NQF-endorsed, we believe this 

measure reflects consensus among 

affected parties, because the MAP, 

which represents stakeholder groups, 

reviewed and conditionally supported 

the measure 93 for use in the ASCQR 

Program. The MAP agreed that this 

measure is high-value and urgent in the 

current healthcare marketplace and the 

number of new entrants to the surgical 

center place, as well as the clustering 

outbreaks of TASS.94 Furthermore, we 

believe that this measure is 

scientifically acceptable, because the 

measure steward has completed 

reliability testing and validity 

assessment of the measure.95

Specifically, an internal retrospective 

chart audit of the ASCs participating in 

measurement testing found no 

differences between the originally 

submitted and re-abstracted TASS rates, 

providing strong evidence the measure 

is reliable. The measure steward also 

conducted a formal consensus review to 

assess the measure’s validity; the results 

of this assessment showed participants 

believe the measure appears to measure 

what it is intended to, and is defined in 

a way that will allow for consistent 

interpretation of the inclusion and 

exclusion criteria from ASC to ASC. 

(3) Data Sources 

This measure is based on aggregate 

measure data collected via chartabstraction by the ASC and submitted 

via a CMS online data submission tool 

(that is, QualityNet). 

We proposed that the data collection 

period for the proposed ASC–16 

measure would be the calendar year two 

years prior to the applicable payment 

determination year. For example, for the 

CY 2021 payment determination, the 

data collection period would be CY 

2019. We also proposed that ASCs 

submit these data to CMS during the 

time period of January 1 to May 15 in 

the year prior to the affected payment 

determination year. For example, for the 

CY 2021 payment determination, the 

submission period would be January 1, 

2020 to May 15, 2020. We refer readers 

to section XIV.D.3.b. of this final rule 

with comment period for a more 

detailed discussion of the requirements 

for data submitted via a CMS online 

data submission tool. 

(4) Measure Calculation 

The outcome measured in the 

proposed ASC–16: Toxic Anterior 

Segment Syndrome measure is the 

number of ophthalmic anterior segment 

surgery patients diagnosed with TASS 

within 2 days of surgery. The numerator 

for this measure is all anterior segment 

surgery patients diagnosed with TASS 

within 2 days of surgery. The 

denominator for this measure is all 

anterior segment surgery patients. The 

specifications for this measure for the 

ASC setting can be found at: http://

ascquality.org/documents/ 

ASC%20QC%20Implementation

%20Guide%203.2%20October

%202015.pdf. 

(5) Cohort 

The measure includes all patients, 

regardless of age, undergoing anterior 

segment surgery at an ASC. Additional 

methodology and measure development 

details are available at: http://

www.ascquality.org/ 

qualitymeasures.cfm under ‘‘ASC 

Quality Collaboration Measures 

Implementation Guide.’’ 

(6) Risk Adjustment 

The proposed ASC–16: Toxic Anterior 

Segment Syndrome measure is not riskadjusted; risk adjustment for patient 

characteristics is not appropriate for this 

measure. 

We invited public comment on our 

proposal to adopt the ASC–16: Toxic 

Anterior Segment Syndrome measure 

for the CY 2021 payment determination 

and subsequent years as discussed 

above. 

Comment: Some commenters 

supported CMS’ proposal to adopt ASC– 

16: Toxic Anterior Segment Syndrome 

beginning with the CY 2021 payment 

determination, citing the measure’s 

clinical significance and impact on 

patients. One commenter specifically 

noted the measure could improve 

patient care while adding little 

administrative burden. One commenter 

noted the measure’s potential to 

promote collaboration between surgeons 

and facilities and ensure that prevention 

guidelines are appropriately followed. 

Another commenter noted this measure 

is currently in use as part of the ASC 

Quality Collaboration’s public report of 

ASC quality data, and expressed 

particular support for submission of 

aggregated measure data for the 

proposed ASC–16: Toxic Anterior 

Segment Syndrome measure via 

QualityNet. 

Response: We thank the commenters 

for their support. 

Comment: Another commenter 

specifically noted the measure could 

improve patient care while adding little 

administrative burden, but also 

expressed concern about an ASC’s 

ability to collect measure data if patients 

do not present back to the ASC where 

their procedure was performed. 

Response: We thank the commenter 

for their feedback and acknowledge that 

it may be difficult to collect data based 

on where patients present. 

Comment: One commenter expressed 

conditional support for the proposed 

ASC–16: Toxic Anterior Segment 

Syndrome measure pending NQF 

endorsement prior to adoption. Other 

commenters expressed concern that the 

measure is not NQF-endorsed and 

recommended CMS secure NQF 

endorsement for the measure prior to 

adopting it for use in the ASCQR 

Program. 

Response: Sections 1833(i)(7)(B) and 

1833(t)(17)(C)(i) of the Act, when read 

together, require the Secretary, except as 

the Secretary may otherwise provide, to 

develop measures appropriate for the 

measurement of the quality of care 

furnished by ASCs that reflect 

consensus among affected parties and, 

to the extent feasible and practicable, 

that include measures set forth by one 

or more national consensus building 

entities. However, we note that section 

1833(i)(7)(B) of the Act does not require 

that each measure we adopt for the 

ASCQR Program be endorsed by a 

national consensus building entity, or 

by the NQF specifically. Further, under 

section 1833(i)(7)(B) of the Act, section 

1833(t)(17)(C)(i) of the Act applies to the 

ASCQR Program, except as the Secretary 

may otherwise provide. Under this 

provision, the Secretary has further 

authority to adopt non NQF-endorsed 

measures. As stated in the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74465 and 74505), we 

believe that consensus among affected 

parties can be reflected through means 

other than NQF endorsement, including 

consensus achieved during the measure 

development process, consensus shown 

through broad acceptance and use of 


sradovich on DSK3GMQ082PROD with RULES2
59454 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

96ASC Quality Collaboration. ‘‘ASC Quality 

Collaboration.’’ Available at: http://

www.ascquality.org/. 97National Quality Forum. 2015 Measures Under 

Consideration List. National Quality Forum, Dec. 

2016. Available at: http://www.qualityforum.org/ 

2015_Measures_Under_Consideration.aspx, under 

‘‘2015 Measures Under Consideration List (PDF).’’ 

98National Quality Forum. 2016 Spreadsheet of 

Final Recommendations to HHS and CMS. 

Available at: https://www.qualityforum.org/ 

WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=

81593. 

99 Ibid. 

100ASC Quality Measures Implementation Guide. 

Available at: http://ascquality.org/documents/ASC– 

QC-Implementation-Guide-4.0-September-2016.pdf. 

101Moyle W, Yee RD, Burns JK, Biggins T. Two 

Consecutive Clusters of Toxic Anterior Segment 

Syndrome. Optometry and Vision Science. 2013 

Jan;90(1):e11–23. 

measures, and consensus through public 

comment. This measure is maintained 

by the ASC Quality Collaboration,96 an 

entity recognized within the community 

as an expert in measure development for 

the ASC setting. Furthermore, the ASC– 

16 measure was included on the 2015 

MUC list 97 and reviewed by the MAP. 

While the ASC–16: Toxic Anterior 

Segment Syndrome measure is not NQFendorsed, we believe this measure 

reflects consensus among affected 

parties, because the MAP, which 

represents stakeholder groups, reviewed 

and conditionally supported the 

measure 98 for use in the ASCQR 

Program. The MAP agreed that this 

measure is high-value and urgent in the 

current healthcare marketplace and the 

number of new entrants to the surgical 

center place, as well as the clustering 

outbreaks of TASS.99

Comment: Several commenters did 

not support adoption of the proposed 

ASC–16: Toxic Anterior Segment 

Syndrome measure. Two commenters 

noted it may not be feasible for ASCs to 

implement the measure due to the small 

number of patients experiencing TASS. 

Other commenters similarly asserted 

ASCs will encounter operational 

difficulties incorporating the measure 

into their clinical workflow, because the 

measure requires information sharing 

across clinicians in order to collect 

accurate data, making accurate data 

collection both expensive and laborintensive. A commenter also expressed 

concern that patients may not 

understand the difference between 

TASS and infection, leading to 

inaccurate data being present in charts. 

Another commenter expressed concern 

that the measure’s reliance on selfreported data may lead to subjective 

results or manipulation, and that the 

measure is limited to a segment of the 

larger ASC industry, as only very few 

ASCs will have patients presenting with 

TASS. One commenter expressed 

concern that the proposed ASC–16: 

Toxic Anterior Segment Syndrome 

measure will not improve healthcare 

quality because the measure provides 

data that is retrospective in nature and 

the commenter believes the measure 

will not assist ASCs in implementing 

improvement activities. 

Response: We thank the commenters 

for their suggestions and note the 

concerns about the proposal to adopt 

ASC–16: Toxic Anterior Segment 

Syndrome beginning with the CY 2021 

payment determination. While we 

believe the measure is reliable, we 

recognize that there are concerns over 

the feasibility of implementing the 

TASS measure. Some commenters 

expressed concern that ASCs will have 

difficulty reporting the measure if 

patients present to another facility with 

TASS within 2 days of a procedure and 

we acknowledge that some cases could 

be missing from inclusion in the 

measure especially given the very low 

incidence of TASS. In response to 

concerns that ASCs will receive 

retrospective data on the measure, 

rather than during the time that a 

patient is experiencing TASS, we note 

our belief that tracking TASS for the 

purpose of the measure reporting would 

increase facility awareness of potential 

outbreaks. In addition, we disagree with 

commenters that the measure relies on 

subjective or self-reported data, as data 

sources for this measure include 

physician diagnosis and report, clinical 

administrative data, paper medical 

records, or incident/occurrence 

reports.100

Regarding concerns about the low 

volume of procedures, although data 

show that TASS occurs in clusters, 

these clusters do indeed include low 

numbers, ranging from just a few cases 

to up to 20 cases during a year’s time.101

As a result of this low volume, we agree 

that this measure may not be 

appropriate for national implementation 

in the ASCQR Program. Upon further 

consideration of the difficulty of 

implementing the measure, the 

likelihood of applicability to only very 

specific ASC facilities where TASS 

occurs, and from incoming comments, 

we believe that the burden of the 

measure would outweigh the benefits 

and no longer believe that the measure 

is appropriate for the ASCQR Program at 

this time. Therefore, we are not 

finalizing this measure. However, we 

refer readers to the ASC Quality 

Collaboration, the measure steward, 

which is independently collecting and 

publicly reporting this TASS measure: 

http://ascquality.org/documents/ASCQC-Implementation-Guide-4.0- 

September-2016.pdf. 

Comment: One commenter 

recommended CMS instead enable 

ASCs to learn best practices and 

techniques from other facilities by 

facilitating data-sharing among 

facilities. 

Response: We agree that data-sharing 

among facilities could inform quality 

improvement activities. We will 

consider opportunities to further 

promote the sharing of best practices 

across ASCs. 

After consideration of the public 

comments we received, we are not 

finalizing the proposal to adopt the 

ASC–16: Toxic Anterior Segment 

Syndrome measure for the CY 2021 

payment determination and subsequent 

years for reasons discussed in our 

responses above. 

The measure set for the ASCQR 

Program CY 2021 payment 

determination and subsequent years is 

as listed below. We note that the 

measures we are finalizing for removal 

in this final rule with comment period 

are not included in this chart. 

ASCQR PROGRAM MEASURE SET FINALIZED FOR THE CY 2021 PAYMENT DETERMINATION AND SUBSEQUENT YEARS *** 

ASC No. NQF No. Measure name 

ASC–1 ............ 0263 ............... Patient Burn. 

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

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

ASC–4 ............ 0265 † ............ All-Cause Hospital Transfer/Admission. 

ASC–8 ............ 0431 ............... Influenza Vaccination Coverage among Healthcare Personnel. 

ASC–9 ............ 0658 ............... Endoscopy/Polyp Surveillance: Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk Patients. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59455 

102Cullen KA, Hall MJ, Golosinskiy A, Statistics 

NFcH. Ambulatory Surgery in the United States, 

2006. National Health Statistics Report; 2009. 

103Medicare Payment Advisory Commission 

(MedPAC). Report to Congress: Medicare Payment 

Policy. March 2017; Available at: http://

www.medpac.gov/docs/default-source/reports/ 

mar17_entirereport.pdf?sfvrsn=0. 

104Bettelli G. High Risk Patients in Day Surgery. 

Minerva Anestesiologica. 2009;75(5):259–268. See 

also Fuchs K. Minimally Invasive Surgery. 

Endoscopy. 2002;34(2):154–159. 

105Fuchs K. Minimally invasive surgery. 

Endoscopy. 200234(2):154159. 

106Cullen KA, Hall MJ, Golosinskiy A, Statistics 

NFcH. Ambulatory Surgery in the United States, 

2006. National Health Statistics Report; 2009. 

107 Goyal KS, Jain S, Buterbaugh GA, et al. The 

Safety of Hang and Upper-Extremity Surgical 

Procedures at a Freestanding Ambulatory Surgical 

Center. The Journal of Bone and Joint Surgery. 

2016;90:600–604. 

108Martı ́n-Ferrero MA, Faour-Martı ́n O. 

Ambulatory surgery in orthopedics: experience of 

over 10,000 patients. Journal of Orthopaedic 

Surgery. 2014;19:332–338. 

ASCQR PROGRAM MEASURE SET FINALIZED FOR THE CY 2021 PAYMENT DETERMINATION AND SUBSEQUENT

YEARS ***—Continued 

ASC No. NQF No. Measure name 

ASC–10 .......... 0659 ............... Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous PolypsAvoidance of Inappropriate Use. 

ASC–11 .......... 1536 ............... Cataracts: Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery.* 

ASC–12 .......... 2539 ............... Facility 7-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy. 

ASC–13 .......... None .............. Normothermia Outcome. 

ASC–14 .......... None .............. Unplanned Anterior Vitrectomy. 

ASC–15a ........ None .............. OAS CAHPS—About Facilities and Staff.** 

ASC–15b ........ None .............. OAS CAHPS—Communication About Procedure.** 

ASC–15c ........ None .............. OAS CAHPS—Preparation for Discharge and Recovery.** 

ASC–15d ........ None .............. OAS CAHPS—Overall Rating of Facility.** 

ASC–15e ........ None .............. OAS CAHPS—Recommendation of Facility.** 

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

* Measure voluntarily collected effective beginning with the CY 2017 payment determination as set forth in section XIV.E.3.c. of the CY 2015 

OPPS/ASC final rule with comment period (79 FR 66984 through 66985). 

** Measure reporting delayed beginning with the CY 2020 payment determination (CY 2018 data collection) and until further action in future 

rulemaking, as discussed in section XIV.B.4. of this final rule with comment period. 

*** The ASC–5, ASC–6 and ASC–7 measures are finalized for removal beginning with the CY 2019 payment determination, as discussed in 

section XIV.B.3.b. of this final rule with comment period. 

b. Adoption of ASC–17: Hospital Visits 

After Orthopedic Ambulatory Surgical 

Center Procedures Beginning With the 

CY 2022 Payment Determination 

(1) Background 

Reporting the quality of care provided 

at ASCs is a key priority in the context 

of growth in the number of ASCs and 

the number of procedures performed in 

this setting. More than 60 percent of all 

medical or surgical procedures 

performed in 2006 were performed at 

ASCs; this represents a three-fold 

increase from the late 1990s.102 In 2015, 

more than 3.4 million fee-for-service 

Medicare beneficiaries were treated at 

5,475 Medicare-certified ASCs, and 

spending on ASC services by Medicare 

and its beneficiaries amounted to 4.1 

billion dollars.103 The patient 

population served at ASCs has 

increased not only in volume, but also 

in age and complexity, which can be 

partially attributed to improvements in 

anesthetic care and innovations in 

minimally invasive surgical 

techniques.104 105 As such, ASCs have 

become the preferred setting for the 

provision of low-risk surgical and 

medical procedures in the United 

States, as many patients experience 

shorter wait times, prefer to avoid 

hospitalization, and are able to return to 

work more quickly.106 As the number of 

orthopedic procedures performed in 

ASCs increases, it is increasingly 

important to report the quality of care 

for patients undergoing these 

procedures. According to Medicare 

claims data, approximately seven 

percent of surgeries performed in ASCs 

in 2007 were orthopedic in nature, 

which reflects a 77-percent increase in 

orthopedic procedures performed at 

ASCs from 2000 to 2007.107

We believe measuring and reporting 

seven-day unplanned hospital visits 

following orthopedic ASC procedures 

will incentivize ASCs to improve care 

and care transitions. Patients that have 

hospital visits that occur at or after 

discharge from the ASC and may not be 

readily visible to clinicians because 

such patients often present to 

alternative facilities, such as emergency 

departments where patient information 

is not linked back to the ASC. 

Furthermore, many of the reasons for 

hospital visits following surgery at an 

ASC are preventable; patients often 

present to the hospital for complications 

of medical care, including infection, 

post-operative bleeding, urinary 

retention, nausea and vomiting, and 

pain. One study found that of 10,032 

patients who underwent orthopedic 

surgery in an ASC between 1993 and 

2012, 121 (1.2 percent) needed attention 

in the emergency department in the first 

24 hours after discharge due to pain or 

bleeding, while others were admitted 

later for issues related to pain and 

swelling.108 Therefore, we believe 

tracking and reporting these events 

would facilitate efforts to lower the rate 

of preventable adverse events and to 

improve the quality of care following 

orthopedic surgeries performed at an 

ASC. 

(2) Overview of Measure 

Based on the increasing prevalence of 

orthopedic surgery in the ASC setting, 

we believe it is important to minimize 

adverse patient outcomes associated 

with these orthopedic ASC surgeries. 

Therefore, in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33692), we 

proposed to adopt the ASC–17: Hospital 

Visits after Orthopedic Ambulatory 

Surgical Center Procedures measure into 

the ASCQR Program for the CY 2022 

payment determination and subsequent 

years. We expect the measure would 

promote improvement in patient care 

over time, because measurement 

coupled with transparency in publicly 

reporting measure information would 

make the rate of unplanned hospital 

visits (emergency department visits, 

observation stays, and unplanned 

inpatient admissions) following 

orthopedic surgery at ASCs more visible 

to both ASCs and patients and would 

incentivize ASCs to incorporate quality 

improvement activities to reduce these 

unplanned hospital visits. The measure 

also addresses the CMS National 

Quality Strategy domains of making care 

safer by reducing harm caused in the 

delivery of care and promoting effective 


sradovich on DSK3GMQ082PROD with RULES2
59456 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

109National Quality Forum. List of Measures 

under Consideration for December 1, 2016. National 

Quality Forum, Dec. 2016. Available at: http://

www.qualityforum.org/map/. 

110National Quality Forum. 2016–2017 

Spreadsheet of Final Recommendations to HHS and 

CMS. Available at: https://www.qualityforum.org/ 

WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=

81593. 

111 Ibid. 

112Landis JR, Koch GG. The Measurement of 

Observer Agreement for Categorical Data. 

Biometrics. 1977;33(1):159–174. 

113 Yale New Haven Health Services 

Corporation—Center for Outcomes Research and 

Evaluation (CORE). Measure Technical Report: 

Hospital Visits after Orthopedic Ambulatory 

Surgical Center Procedures (Version 1.0). May 2017. 

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

Quality-Initiatives-Patient-Assessment-Instruments/ 

HospitalQualityInits/Downloads/Version-10_

Hospital-Visits_Orthopedic-ASC-Procedures_

Measure-Technical-Report_052017.pdf. 

114National Quality Forum. ‘‘MAP 2017 

Considerations for Implementing Measures in 

Federal Programs: Hospitals.’’ Report. 2017. 

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

under ‘‘Hospitals—Final Report.’’ 

115 Ibid. 

communication and coordination of 

care. 

Section 1890A of the Act requires the 

Secretary to establish a prerulemaking 

process with respect to the selection of 

certain categories of quality and 

efficiency measures. Under section 

1890A(a)(2) of the Act, the Secretary 

must make available to the public by 

December 1 of each year a list of quality 

and efficiency measures that the 

Secretary is considering for the 

Medicare program. The ASC–17: 

Hospital Visits after Orthopedic 

Ambulatory Surgical Center Procedures 

measure was included on a publicly 

available document entitled ‘‘List of 

Measures under Consideration for 

December 1, 2016.’’ 109 The MAP 

reviewed this measure (MUC16–152) 

and recommended this measure be 

refined and resubmitted prior to 

adoption, stating that testing results 

should demonstrate reliability and 

validity at the facility level in the 

ambulatory surgical setting.110 MAP 

also recommended that this measure be 

submitted to NQF for review and 

endorsement.111 At the time of the 

MAP’s review, this measure was still 

undergoing field testing. 

Since the MAP’s review and 

recommendation of ‘Refine and 

Resubmit’ in 2016, we have completed 

testing for this measure and continued 

to refine this proposed measure in 

response to the MAP’s 

recommendations. Results of continued 

development activities, including 

stakeholder feedback from the public 

comment period and pilot test findings 

will be presented to the MAP during the 

MAP feedback loop meeting in fall 

2017. The proposed measure is 

consistent with the information 

submitted to the MAP, and the original 

MAP submission and our continued 

refinements support its scientific 

acceptability for use in quality reporting 

programs. Facility-level testing showed 

variation in unplanned hospital visits 

among ASCs after adjusting for case-mix 

differences, which suggests variation in 

quality of care and opportunities for 

quality improvement; and reliability 

testing showed fair measure score 

reliability.112 As expected, the 

reliability increased for ASCs with more 

patients; ASCs with at least 250 cases 

showed moderate reliability, consistent 

with other publicly reported Medicare 

claims-based, risk-adjusted outcome 

measures.113 The validity testing results 

demonstrated that the measure scores 

are valid and useful measures of ASC 

orthopedic surgical quality of care and 

will provide ASCs with information that 

can be used to improve their quality of 

care. Detailed testing results are 

available in the technical report for this 

measure, located at: https://

www.cms.gov/medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/ 

Measure-Methodology.html. 

Sections 1833(i)(7)(B) and 

1833(t)(17)(C)(i) of the Act, when read 

together, require the Secretary, except as 

the Secretary may otherwise provide, to 

develop measures appropriate for the 

measurement of the quality of care 

furnished by ASCs that reflect 

consensus among affected parties and, 

to the extent feasible and practicable, 

that include measures set forth by one 

or more national consensus building 

entities. However, we note that section 

1833(i)(7)(B) of the Act does not require 

that each measure we adopt for the 

ASCQR Program be endorsed by a 

national consensus building entity, or 

by the NQF specifically. Further, under 

section 1833(i)(7)(B) of the Act, section 

1833(t)(17)(C)(i) of the Act applies to the 

ASCQR Program, except as the Secretary 

may otherwise provide. Under this 

provision, the Secretary has further 

authority to adopt non-NQF-endorsed 

measures. As stated in the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74465 and 74505), we 

believe that consensus among affected 

parties can be reflected through means 

other than NQF endorsement, including 

consensus achieved during the measure 

development process, consensus shown 

through broad acceptance and use of 

measures, and consensus through public 

comment. We believe this proposed 

measure meets these statutory 

requirements. 

The proposed ASC–17: Hospital Visits 

after Orthopedic Ambulatory Surgical 

Center Procedures measure is not 

currently NQF-endorsed. However, we 

intend to submit this measure for review 

and endorsement by NQF once an 

appropriate NQF project has a call for 

measures. We believe that this measure 

is appropriate for the measurement of 

quality care furnished by ASCs, because 

surgeries are becoming increasingly 

common in ASCs and, as discussed 

above, can signify unanticipated 

admissions after care provided in ASCs. 

Such visits are an unexpected and 

potentially preventable outcome for 

patients with a low anticipated 

perioperative risk. We also believe this 

proposed measure reflects consensus 

among affected parties, because it was 

developed with stakeholder input from 

a Technical Expert Panel convened by a 

CMS contractor as well as from the 

measure development public comment 

period.114 During the MAP and measure 

development processes, public 

commenters supported the measure’s 

focus on assessing patient outcomes 

after orthopedic surgery performed in 

ASC setting of care, and agreed that the 

measure would be meaningful and 

improve quality of care. In addition, the 

ASC–17: Hospital Visits after 

Orthopedic Ambulatory Surgical Center 

Procedures measure addresses the MAPidentified priority measure area of 

surgical complications for the ASCQR 

Program.115 Therefore, we believe it is 

appropriate to incorporate this measure 

into the ASCQR Program measure set 

because collecting and publicly 

reporting these data will improve 

transparency, inform patients and 

providers, and foster quality 

improvement efforts. 

(3) Data Sources 

This measure is claims-based and 

uses Part A and Part B Medicare 

administrative claims and Medicare 

enrollment data to calculate the 

measure. 

We proposed that the data collection 

period for the proposed ASC–17: 

Hospital Visits after Orthopedic 

Ambulatory Surgical Center Procedures 

measure would be the two calendar 

years ending two years prior to the 

applicable payment determination year. 

For example, for the CY 2022 payment 

determination, the data collection 

period would be CY 2019 to 2020. 

Because the measure data are collected 

via claims, ASCs will not need to 

submit any additional data directly to 

CMS. We refer readers to section 

XIV.D.4. of this final rule with comment 

period for a more detailed discussion of 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59457 

116Centers for Medicare and Medicaid Services. 

‘‘Ambulatory Surgical Center (ASC) Payment: 

Addenda Updates.’’ Available at: https://

www.cms.gov/medicare/medicare-fee-for-servicepayment/ascpayment/11_addenda_updates.html. 117 Ibid. 118Healthcare Cost and Utilization Project. 

Clinical Classifications Software for Services and 

Procedures. Available at: https://www.hcupus.ahrq.gov/toolssoftware/ccs_svcsproc/ 

ccssvcproc.jsp. 

119S. Coberly. The Basics; Relative Value Units 

(RVUs). National Health Policy Forum. January 12, 

2015. Available at: http://www.nhpf.org/library/thebasics/Basics_RVUs_01-12-15.pdf. 

120 Yale New Haven Health Services Corporation. 

Hospital Visits after Orthopedic Ambulatory 

Surgical Center Procedures (Version 1.0). May 2017. 

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

Quality-Initiatives-Patient-Assessment-Instruments/ 

HospitalQualityInits/Downloads/Version-10_

Hospital-Visits_Orthopedic-ASC-Procedures_

Measure-Technical-Report_052017.pdf. 

121Landis JR, Koch GG. The Measurement of 

Observer Agreement for Categorical Data. 

Biometrics. 1977;33(1):159–174. 

122 Ibid. 

the requirements for data submitted via 

claims. 

(4) Measure Calculation 

The measure outcome is all-cause, 

unplanned hospital visits within seven 

days of an orthopedic procedure 

performed at an ASC. For the purposes 

of this measure, ‘‘hospital visits’’ 

include emergency department visits, 

observation stays, and unplanned 

inpatient admissions. When there are 

two or more qualifying surgical 

procedures within a 7-day period, the 

measure considers all procedures as 

index procedures; however, the 

timeframe for outcome assessment is 

defined as the interval between 

procedures (including the day of the 

next procedure) and then 7 days after 

the last procedure. 

The facility-level score is a riskstandardized hospital visit rate, 

calculated by multiplying the ratio of 

the predicted to the expected number of 

post-surgical hospital visits among the 

given ASC’s patients by the national 

observed hospital visit rate for all ASCs. 

For each ASC, the numerator of the ratio 

is the number of hospital visits 

predicted for the ASC’s patients 

accounting for its observed rate, the 

number of the orthopedic surgeries 

performed at the ASC, the case-mix, and 

the surgical complexity mix. The 

denominator of the ratio is the expected 

number of hospital visits given the 

ASC’s case-mix and surgical complexity 

mix. A ratio of less than one indicates 

the ASC facility’s patients were 

estimated as having fewer post-surgical 

visits than expected compared to ASCs 

with similar surgical complexity and 

patients; and a ratio of greater than one 

indicates the ASC facility’s patients 

were estimated as having more visits 

than expected. The national observed 

hospital visit rate is the national 

unadjusted proportion of patients who 

had a hospital visit following an 

orthopedic ASC surgery. For more 

information on measure calculations, 

we refer readers to: https://

www.cms.gov/medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/ 

Measure-Methodology.html. 

(5) Cohort 

The patient cohort for the proposed 

ASC–17 measure includes all Medicare 

beneficiaries ages 65 and older 

undergoing outpatient orthopedic 

surgery at an ASC who have 12 prior 

months of Medicare fee-for-service Parts 

A and B enrollment. The target group of 

procedures includes those that: (1) Are 

routinely performed at ASCs; (2) involve 

some increased risk of post-surgery 

hospital visits; and (3) are routinely 

performed by orthopedists. 

Procedures included in the measure 

cohort are on Medicare’s list of covered 

ambulatory surgical center (ASC) 

procedures.116 Medicare developed this 

list to identify surgeries that have a low 

to moderate risk profile. Surgeries on 

the ASC list of covered procedures do 

not involve or require major or 

prolonged invasion of body cavities, 

extensive blood loss, major blood 

vessels, or care that is either emergent 

or life threatening. Medicare annually 

reviews and updates this list, and 

includes a transparent public comment 

submission and review process for 

addition and/or removal of procedures 

codes.117 The current list is accessible 

in the Downloads section at: https://

www.cms.gov/medicare/medicare-feefor-service-payment/ascpayment/11_

addenda_updates.html. 

In addition, to focus the measure only 

on the subset of surgeries on Medicare’s 

list of covered ASC procedures that 

impose a meaningful risk of postorthopedic ASC surgery hospital visits, 

the measure includes only ‘‘major’’ and 

‘‘minor’’ procedures, as indicated by the 

Medicare Physician Fee Schedule global 

surgery indicator (GSI) values of 090 

and 010, respectively. This list of GSI 

values is publicly available at: https://

www.cms.gov/Medicare/Medicare-feefor-service-payment/physicianfeesched/ 

pfs-federal-regulation-notices-items/ 

cms-1590-fc.html (download 

Addendum B). Moreover, to identify the 

subset of ASC procedures typically 

performed by orthopedists, we used the 

Clinical Classifications Software (CCS) 

developed by the Agency for Healthcare 

Research and Quality (AHRQ) and 

include in this measure procedures from 

AHRQ’s ‘‘operations on the 

musculoskeletal system’’ group of 

procedures.118 For more cohort details, 

we refer readers to the measure 

technical report located at: https://

www.cms.gov/medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/ 

Measure-Methodology.html. 

The measure excludes patients who 

survived at least 7 days following 

orthopedic surgery at an ASC, but were 

not continuously enrolled in Medicare 

fee-for-service Parts A and B in the 7 

days after surgery. These patients are 

excluded to ensure all patients captured 

under this measure have full data 

available for outcome assessment. There 

are no additional inclusion or exclusion 

criteria for the proposed ASC–17 

measure. Additional methodology and 

measure development details are 

available at: https://www.cms.gov/ 

medicare/Quality-Initiatives-PatientAssessment-Instruments/Hospital

QualityInits/MeasureMethodology.html. 

(6) Risk Adjustment 

The statistical risk-adjustment model 

includes 29 clinically relevant riskadjustment variables that are strongly 

associated with risk of hospital visits 

within seven days following ASC 

orthopedic surgery. The measure risk 

adjusts for age, 27 comorbidities, and a 

variable for work Relative Value Units 

(RVUs) to adjust for surgical 

complexity.119 Additional risk 

adjustment details are available in the 

technical report at: https://

www.cms.gov/medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/ 

Measure-Methodology.html. 

(7) Public Reporting 

As stated above, facility-level testing 

showed variation in unplanned hospital 

visits among ASCs after adjusting for 

case-mix differences, which suggests 

variation in quality of care and 

opportunities for quality 

improvement.120 Reliability testing 

showed fair measure score reliability.121

As expected, the reliability increased for 

ASCs with more patients; ASCs with at 

least 250 cases showed moderate 

reliability, consistent with other 

publicly reported Medicare claimsbased, risk-adjusted outcome measures. 

We proposed that if this measure were 

adopted, we would publicly report 

results only for facilities with sufficient 

case numbers to meet moderate 

reliability standards.122 CMS will 

determine the case size cutoff for 

meeting moderate reliability standards 

using the intraclass correlation (ICC) 


sradovich on DSK3GMQ082PROD with RULES2
59458 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

123Spreadsheet of MAP 2017 Final 

Recommendations. February 1, 2017. Available at: 

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

linkit.aspx?LinkIdentifier=id&ItemID=84452. 

during the measure dry run (discussed 

below) by testing the reliability of the 

scores at different case sizes in the dry 

run data. However, we would also 

provide confidential performance data 

directly to smaller facilities, which do 

not meet the criteria for sufficient case 

numbers for reliability considerations 

that would benefit from seeing their 

measure results and individual patientlevel outcomes. These data are currently 

largely unknown to ASCs and providers. 

The validity testing results 

demonstrated that the measure scores 

are valid and useful measures of ASC 

orthopedic surgical quality of care and 

will provide ASCs with information that 

can be used to improve their quality of 

care. Detailed testing results are 

available in the technical report for this 

measure, located at: https://

www.cms.gov/medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/ 

Measure-Methodology.html. 

(8) Provision of Facility-Specific 

Information Prior to Public Reporting 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33694), we stated that if this 

proposed measure is finalized as 

proposed, we intend to conduct a dry 

run before the official data collection 

period or any public reporting. A dry 

run is a period of confidential reporting 

and feedback during which ASCs may 

review their dry-run measure results, 

and in addition, further familiarize 

themselves with the measure 

methodology and ask questions. For the 

dry-run, we intend to use the most 

current 2-year set of complete claims 

(usually 12 months prior to the start 

date) available at the time of dry run. 

For example, if the dry run began in 

June 2018, the most current 2-year set of 

data available would likely be July 2015 

to June 2017. Because we use paid, final 

action Medicare claims, ASCs would 

not need to submit any additional data 

for the dry run. The dry run would 

generate confidential feedback reports 

for ASCs, including patient-level data 

indicating whether the patient had a 

hospital visit and, if so, the type of visit 

(emergency department visit, 

observation stay, or unplanned inpatient 

admission), the admitting facility, and 

the principal discharge diagnosis. 

Further, the dry run would enable ASCs 

to see their risk-standardized hospital 

visit rate prior to the measure being 

implemented. General information 

about the dry run as well as confidential 

facility-specific reports would be made 

available for ASCs to review on their 

accounts at: http://www.qualitynet.org. 

We plan to continue to generate these 

reports for ASCs after we implement the 

measure so ASCs can use the 

information to identify performance 

gaps and develop quality improvement 

strategies. 

These confidential dry run results are 

not publicly reported and do not affect 

payment. We expect the dry run to take 

approximately one month to conduct, 

during which facilities would be 

provided the confidential report and the 

opportunity to review their performance 

and provide feedback to us. However, 

after the dry run, measure results would 

have a payment impact and be publicly 

reported beginning with the CY 2022 

payment determination and for 

subsequent years as proposed. Although 

not previously stated in the CY 2018 

OPPS/ASC proposed rule (82 FR 33694), 

we note that the primary purpose of the 

records maintained in the National 

Claims History system of records (SOR) 

is for evaluating and studying the 

operation and effectiveness of the 

Medicare program, which aligns with 

the purposes of the ASCQR Program and 

a permissible use of beneficiary 

information. In addition, under 45 CFR 

164.506(c)(4) of the HIPAA Privacy 

Rule, we may disclose protected health 

information to another covered entity, 

such as the ASCs, provided that both 

the ASC and CMS have or had a 

relationship with each individual who 

is the subject of the PHI being requested, 

the PHI pertains to such relationship, 

and the disclosure is for the purposes of 

conducting quality assessment and 

improvement activities listed in 

paragraph (1) or (2) of the definition of 

‘‘health care operations’’ at 45 CFR 

164.501. We believe that this provision 

is extensive enough to cover the uses 

that we would expect an ASC to make 

of the PHI. 

We invited public comment on our 

proposal to adopt the ASC–17: Hospital 

Visits after Orthopedic Ambulatory 

Surgical Center Procedures measure 

beginning with the CY 2022 payment 

determination as discussed above. 

Comment: A few commenters 

supported the proposed adoption of the 

ASC–17: Hospital Visits after 

Orthopedic Ambulatory Surgical Center 

Procedures in the ASCQR Program. One 

of the commenters noted that these 

measures will provide patients with 

valuable data and address clinical areas 

critical to providers. 

Response: We thank the commenters 

for their support. We agree that 

measuring quality of care associated 

with orthopedic procedures performed 

at ASCs is patient-centered and is an 

important clinical care area to evaluate. 

Comment: Two commenters believed 

that the measure should be refined and 

resubmitted prior to rulemaking, as 

suggested by the MAP. Several 

commenters noted or were concerned 

that the measure lacks NQF 

endorsement. A few commenters also 

suggested that CMS seek input from the 

MAP on the finalized measure prior to 

including the measure in the program. 

Response: Section 1833(h)(7)(B) of the 

Act does not require that each measure 

we adopt for the ASCQR Program be 

endorsed by a national consensus 

building entity, or the NQF specifically. 

Under this provision, the Secretary has 

further authority to adopt non-endorsed 

measures. As stated in the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74465 and 74505), we 

believe the requirement that measures 

reflect consensus among affected parties 

can be achieved in other ways, 

including through the measure 

development process, broad acceptance 

and use of the measure, and public 

comments. As part of the measure 

development process, a national 

Technical Expert Panel (TEP), clinical 

experts, and stakeholders provided 

input at multiple points during 

development. We believe the ASC–17 

measure meets these statutory 

requirements. 

We strive to adopt NQF-endorsed 

measures when possible. Although 

ASC–17 is not currently NQF-endorsed, 

our research and analysis conducted 

during development demonstrate that 

the measure is accurate, valid, and 

actionable. We refer readers to the 

technical report for more information 

about the measure and testing results: 

https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/ 

Downloads/Version-10_Hospital-Visits_

Orthopedic-ASC-Procedures_MeasureTechnical-Report_052017.pdf. We will 

submit this measure, with complete 

evidence, specifications, and testing 

results, to NQF for endorsement when 

an appropriate NQF project has a call 

for the measure. 

In addition, in December 2016, the 

MAP Hospital Workgroup reviewed and 

classified the measure as ‘‘Refine and 

Resubmit Prior to Rulemaking.’’ 123 We 

understand that the measure received 

this classification because: (1) The 

measure was still undergoing field 

testing at the time, and (2) the MAP also 

recommended that the measure be 

submitted to the NQF for review and 

endorsement. Between that initial MAP 

review in December 2016 and the CY 

2018 OPPS/ASC proposed rule, we 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59459 

124MAP 2017 Considerations for Implementing 

Measures in Federal Programs: Hospitals. Final 

Report. February 15, 2017. Available at: http://

www.qualityforum.org/Publications/2017/02/2017_

Considerations_for_Implementing_Measures_Final_

Report_-_Hospitals.aspx. 

125 Yale New Haven Health Services 

Corporation—Center for Outcomes Research and 

Evaluation (CORE). Measure Technical Report: 

Hospital Visits after Orthopedic Ambulatory 

Surgical Center Procedures (Version 1.0). May 2017. 

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

Quality-Initiatives-Patient-Assessment-Instruments/ 

HospitalQualityInits/Downloads/Version-10_

Hospital-Visits_Orthopedic-ASC-Procedures_

Measure-Technical-Report_052017.pdf. 

126Horwitz, Leora I., et al. ‘‘Development and 

validation of an algorithm to identify planned 

readmissions from claims data.’’ Journal of hospital 

medicine 10.10 (2015): 670–677. 

127Ranasinghe, Isuru, et al. ‘‘Differences in 

colonoscopy quality among facilities: development 

of a post-colonoscopy risk-standardized rate of 

unplanned hospital visits.’’ Gastroenterology 150.1 

(2016): 103–113. 

128 Ibid. 

129Mattila K, Toivonen J, Janhunen L, Rosenberg 

PH, Hynynen M. Postdischarge symptoms after 

ambulatory surgery: First-week incidence, intensity, 

and risk factors. Anesthesia and Analgesia. 

2005;101(6):1643–1650. 

130Fleisher LA, Pasternak LR, Herbert R, 

Anderson GF. Inpatient hospital admission and 

death after outpatient surgery in elderly patients: 

Importance of patient and system characteristics 

and location of care. Archives of Surgery. 

2004;139(1):67–72. 

completed field testing and refined the 

measure.124 The final methodology 

report, which was presented in the 

proposed rule, included the final results 

of measure testing and completed 

measure specifications that occurred 

between the MAP’s review in December 

2016 and CMS’ proposal to adopt the 

measure in the ASCQR Program.125 We 

also intend to update the MAP at the 

next appropriate opportunity. As stated 

above, we also intend to submit the 

measure to the NQF for endorsement 

during the next appropriate call for 

measures. 

Comment: A few commenters 

expressed concerns over the measure 

outcome. One commenter stated that it 

is not well proven that a hospital visit 

within 7 days of ASC procedure is a 

sign of poor quality. Similarly, one 

commenter suggested that CMS should 

adopt a measure that captures hospital 

visits directly tied to complications 

arising from orthopedic procedures 

performed in an ASC, and another 

commenter suggested that CMS exclude 

unrelated hospital visits. A commenter 

suggested that CMS remove ED visits 

and observation stays from the measure 

outcome because the ED is seen not as 

a healthcare resource to be avoided, but 

a key stabilization and decision point 

for patient disposition. Another 

commenter expressed concern about the 

attribution of outcomes. Specifically, 

the commenter flagged four of the top 

reasons for hospital visits within 7 days 

of orthopedic procedures that likely 

reflect routine follow-up rather than 

quality of care as intended by the 

measure. 

Response: We have designed the 

measure to capture all unplanned 

hospital visits that may be a signal of 

poor quality of care and encourage ASCs 

to minimize the risk of follow-up 

hospital visits. The outcome captures 

the full range of adverse events related 

to undergoing orthopedic ASC surgery. 

We believe that the measure, as 

specified, has the potential to illuminate 

differences in quality, inform patient 

choice, drive quality improvement, 

enhance care coordination, and 

ultimately to minimize acute 

complications and reduce unplanned 

hospital visits following orthopedic 

procedures performed at ASCs. 

The measure was purposely designed 

to evaluate all-cause hospital visits to 

broadly capture serious adverse events 

experienced by patients after 

undergoing orthopedic ASC procedures, 

rather than a narrow set of identifiable 

complications, for many reasons. The 

outcome of all-cause hospital visits is 

consistent with a patient-centric view of 

care that is designed to prompt ASC 

providers to minimize the risk and 

reduce the need for a broad range of 

outcomes after undergoing orthopedic 

ASC procedures, including the risk of 

dehydration, nausea and vomiting, 

dizziness, and urinary retention. 

Measuring only hospital visits that are 

overtly related to a procedure, such as 

visits for pain and bleeding, would limit 

the measure’s intended broad impact on 

quality improvement efforts. 

Furthermore, the rate of hospital visits 

is not expected to be zero, since some 

patients will have visits for reasons 

unrelated to the procedure. In designing 

the measure, we narrowed the measure 

to include surgical procedure that: (1) 

Are routinely performed at ASCs; (2) 

involve increased risk of post-surgery 

hospital visits; and (3) are routinely 

performed by orthopedists. In addition, 

the measure is risk adjusted for patient 

demographics, clinical characteristics, 

and surgical procedural complexity, so 

that facilities that experience more 

unrelated visits due to a generally 

higher-risk patient mix will not be 

disadvantaged. We refer readers to the 

methods section in the measure 

specifications for more information 

about the risk-adjustment methodology. 

In addition, we only measure the rate 

of unplanned hospital admissions; ED 

visits and observation stays are never 

considered planned.126 127 This 

approach removes from the outcome 

admissions that are not a signal of 

quality of care, because they represent: 

(1) A condition or diagnosis that is 

considered to be always planned (such 

as transplants or maintenance 

chemotherapy); or (2) that are 

considered potentially planned (such as 

cardiovascular procedures) and are not 

accompanied by an acute diagnosis. The 

planned admission algorithm is based 

on CMS’ widely-used Planned 

Readmission Algorithm v4.0.128 We 

refer readers to the measure 

methodology report at: https://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/ 

Measure-Methodology.html for more 

details. 

Furthermore, we disagree with the 

commenter’s suggestion that we remove 

ED visits and observation stays from the 

measure outcome, because these are 

unplanned visits for patients 

undergoing low- to moderate-risk 

outpatient procedures. From a patient 

perspective, we believe that ED visits 

and observation stays are an undesirable 

outcome. We believe a quality measure 

assessing hospital visits following ASC 

surgery will serve to improve 

transparency, inform patients and 

providers, and foster quality 

improvement, because providers at 

ASCs are often unaware of patients’ 

subsequent acute care visits given that 

patients tend to present to the 

emergency department or to hospitals 

unaffiliated with the ASC. Moreover, 

the measure outcome of hospital visits 

within 7 days after a procedure aligns 

with the NQF-endorsed measure 

Facility 7-Day Risk-Standardized 

Hospital Visit Rate after Outpatient 

Colonoscopy Measure (NQF #2539). 

Regarding the commenter’s concerns 

about the attribution of outcomes and 

whether hospital visits within 7 days of 

ASC procedure is a sign of poor quality, 

we believe that the measure captures the 

full range of potentially serious adverse 

events related to orthopedic procedures 

performed as ASCs. We limited the 

outcome timeframe for hospital visits 

(ED visits, observation stays, and 

unplanned admissions) to 7 days 

because existing literature suggests that 

the vast majority of adverse events after 

an orthopedic procedure occur within 

the first 7 days following the procedure 

and because the highest rates of hospital 

visits were observed in claims data 

within 7 days following the 

procedure.129 130 A 7-day timeframe 

helps to ensure that the measure will 

capture adverse events following the 

procedure, but will not capture events 

impacted by factors unrelated to the 


sradovich on DSK3GMQ082PROD with RULES2
59460 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

131Parry, Nicola. ‘‘7-Day Readmissions: Better 

Indicators of Patient Care.’’ Medscape, 2016. 

132Centers for Medicare & Medicaid Services. 

Ambulatory Surgical Center Quality Reporting 

Specifications Manual Release Notes Version: 6.0. 

2016; http://qualitynet.org/dcs/ContentServer?c=

Page&pagename=QnetPublic%2FPage%2

FQnetTier2&cid=1228772475754. Accessed July 13, 

2016. 

133Mezei G, Chung F. Return hospital visits and 

hospital readmissions after ambulatory surgery. 

Annals of Surgery. 1999;230(5):721–727. 

134 Yale New Haven Health Services 

Corporation—Center for Outcomes Research and 

Evaluation (CORE). Measure Technical Report: 

Hospital Visits after Orthopedic Ambulatory 

Surgical Center Procedures (Version 1.0). May 2017. 

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

Quality-Initiatives-Patient-Assessment-Instruments/ 

HospitalQualityInits/Downloads/Version-10_

Hospital-Visits_Orthopedic-ASC-Procedures_

Measure-Technical-Report_052017.pdf. 

care patients received.131 We appreciate 

the commenter’s careful review of the 

top hospital visit diagnoses within 

seven days of orthopedic procedures. 

We welcome specific examples of 

potentially planned admissions 

following outpatient orthopedic 

procedures. 

Comment: One commenter suggested 

that CMS provide a detailed clinical 

review of all the measure results by 

several seasoned orthopedic surgeons to 

ensure the measure algorithm is 

appropriate. 

Response: In developing the measure, 

we incorporated significant input from 

various experts and stakeholders. In 

addition to the MUC and MAP 

processes described above, a 

multidisciplinary team of clinicians, 

health services researchers, and 

statisticians were informed, in part, by 

a national TEP consisting of patients, 

methodologists, researchers, and 

providers, including orthopedists who 

conducted a detailed clinical review of 

all the measure results to ensure the 

measure algorithm is appropriate. We 

also held a public comment period 

soliciting stakeholder input on the 

measure methodology, including the 

planned admission algorithm. However, 

we will continue to evaluate the 

measure as our goal is to ensure that the 

measure accurately reflects the quality 

of care provided in ASCs. 

We appreciate the commenter’s 

careful review of the top hospital visit 

diagnoses within seven days of 

orthopedic procedures. We welcome 

specific examples of potentially planned 

admissions following outpatient 

orthopedic procedures. 

Comment: Some commenters were 

concerned that ASCs may not have 

actionable information generated from 

ASC–17. Specifically, some commenters 

did not support adoption of the 

measure, because measure score 

calculation relies on retrospective 

claims data. The commenters expressed 

concerns that the delay in providing 

data to facilities would provide limited 

usefulness for quality improvement or 

for consumers in choosing an ASC 

facility. Regarding a similar measure, 

ASC–12 Facility Risk-Standardized Visit 

Rate after Outpatient Colonoscopy, one 

commenter noted that in their members’ 

experience with the confidential 

feedback reports, facilities were already 

aware of most of the visits in the claims 

detail report and did not review the 

reports unless the facilities were 

categorized as underperforming. The 

commenter also questioned the 

usefulness of the measure to make 

distinction among facilities and to 

consumers, because the performance for 

the overwhelming majority of the 

facilities would be no different than 

expected. 

Response: We acknowledge the 

commenters’ concerns regarding the use 

of claims data for the ASC–17 measure; 

however, the measure would provide 

facilities with the most recently 

available, patient-level data to help 

guide quality improvement efforts that 

would also be low burden. 

Further, we believe that measures of 

hospital events following specific types 

of surgical procedures fully based on 

Medicare FFS claims recently adopted 

(for example, ASC–12: Facility 7-Day 

Risk Standardized Hospital Visit Rate 

after Outpatient Colonoscopy Measure) 

and including those newly finalized in 

this final rule with comment period 

(that is, ASC–17: Hospital Visits after 

Orthopedic Ambulatory Surgical Center 

Procedures and ASC–18: Hospital Visits 

after Urology Ambulatory Surgical 

Center Procedures) will better inform 

Medicare beneficiaries and other 

consumers about post-procedure 

complication rates. Existing ASC quality 

measures tend to focus on very rare, 

patient safety-related events. For 

example, ASC–3 counts cases in which 

a wrong site, wrong side, wrong patient, 

wrong procedure, or wrong implant 

event occurred (76 FR 74499).132

Measures designed to capture more 

common adverse outcomes that patients 

experience, such as pain, bleeding, 

urinary retention, and other 

complications, prompting acute care 

hospital visits or admissions are lacking 

at this time, and this is what this 

measure is intended to accomplish. 

While we appreciate the commenter’s 

feedback that some ASCs were already 

aware of most of the visits in the claims 

detail report and did not review the 

reports unless the facilities were 

categorized as underperforming, that is 

not always the case. Providers at ASCs 

are often unaware of patients’ 

subsequent acute care visits given that 

separate providers (for example, 

emergency department physicians) tend 

to provide post-surgical care when it is 

required.133 This measure is intended to 

bring greater awareness to a larger 

number of ASCs and patients, in 

addition to actionable information to 

lower the rate of preventable adverse 

events and to improve the quality of 

care following procedures performed at 

an ASC. 

Although the majority of ASCs would 

be expected to have risk-standardized 

rates that would be classified as ‘‘no 

different than the national rate’’ on 

Hospital Compare, we believe that the 

measure will be able to make distinction 

among facilities and to consumers 

because the variation in riskstandardized hospital visit rates across 

ASCs nationally suggests that there is 

still room for quality improvement. 

Hospital Compare will also report 

facilities’ risk-standardized rates, and 

facilities will receive confidential 

feedback reports to support quality 

improvement efforts. Furthermore, 

feedback from national TEP members 

showed that the ASC–17 measure, as 

specified, can be used to distinguish 

between better and worse quality 

facilities. 134 This shows TEP agreement 

with the overall face validity of the 

measure. 

Comment: A few commenters 

expressed concerns about risk 

adjustment. A commenter noted that the 

measure is not risk adjusted to account 

for socioeconomic status and other 

factors beyond an ASC’s control. 

Another commenter noted that 

successful application of risk 

stratification methods must be 

accomplished before using claims data, 

especially with the move from 

traditionally inpatient procedures to the 

outpatient and ambulatory settings. A 

third commenter expressed a concern 

about including condition category (CC 

82), Respirator dependence/ 

tracheostomy status, on the list of 

condition categories that are not riskadjusted if the condition occurs only at 

the time of the procedure. The 

commenter noted that this type of 

condition is not something that 

develops acutely within the timeframe 

of an ASC procedure, but rather is 

reflective of a more chronic patient 

condition. 

Response: We understand the 

important role that factors outside of an 

ASC’s control, for example, 

socioeconomic and sociodemographic 

status, play in the care of patients. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59461 

135Bonito A, Bann C, Eicheldinger C, Carpenter 

L. Creation of new race-ethnicity codes and 

socioeconomic status (SES) indicators for Medicare 

beneficiaries. RTI International, Agency for 

Healthcare Research and Quality. 2008. 

136 Yale New Haven Health Services 

Corporation—Center for Outcomes Research and 

Evaluation (CORE). Measure Technical Report: 

Hospital Visits after Orthopedic Ambulatory 

Surgical Center Procedures (Version 1.0). May 2017. 

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

Quality-Initiatives-Patient-Assessment-Instruments/ 

HospitalQualityInits/Downloads/Version-10_

Hospital-Visits_Orthopedic-ASC-Procedures_

Measure-Technical-Report_052017.pdf. 

137HCUP CCS Fact Sheet. Healthcare Cost and 

Utilization Project (HCUP). January 2012. Agency 

for Healthcare Research and Quality, Rockville, MD. 

https://www.hcup-us.ahrq.gov/toolssoftware/ccs/ 

ccsfactsheet.jsp. 

138Sherman SL, Lyman S, Koulouvaris P, Willis 

A, Marx RG. Risk factors for readmission and 

revision surgery following rotator cuff repair. 

Clinical Orthopaedics and Related Research. 

2008;466(3):608–613. 

139Fleisher LA, Pasternak LR, Herbert R, 

Anderson GF. Inpatient hospital admission and 

death after outpatient surgery in elderly patients: 

Importance of patient and system characteristics 

and location of care. Archives of Surgery. 

2004;139(1):67–72. 

140 Yale New Haven Health Services 

Corporation—Center for Outcomes Research and 

Evaluation (CORE). Measure Technical Report: 

Hospital Visits after Orthopedic Ambulatory 

Surgical Center Procedures (Version 1.0). May 2017. 

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

Quality-Initiatives-Patient-Assessment-Instruments/ 

HospitalQualityInits/Downloads/Version-10_

Hospital-Visits_Orthopedic-ASC-Procedures_

Measure-Technical-Report_052017.pdf. 141 Ibid. 

Although the risk-adjustment 

methodology does not stratify by social 

risk factors, it does account for risk by 

adjusting for risk factors associated with 

increased risk for hospital visits after 

surgery. In developing this measure, we 

evaluated the potential effects of risk 

adjusting for three socioeconomic status 

(SES) factors that are available in CMS 

claims (Medicaid dual-eligibility status, 

African-American race, and the AHRQ 

SES index). Our results show that 

adjusting for these three factors at the 

patient level do not change the measure 

scores. We assessed the relationship of 

SES to hospital visits at the patient and 

facility levels. Unadjusted and adjusted 

ASC-level risk-standardized hospital 

visit rates were highly correlated 

(Spearman correlation coefficients of 

nearly 1.0) when calculated with and 

without the addition of the three SES 

variables (Medicaid dual-eligibility 

status, African-American race, and the 

AHRQ SES index). This indicates that 

including SES variables in the ASClevel risk-adjusted measure score will 

result in limited differences in measure 

results after accounting for other risk 

factors, such as age and comorbidities. 

We refer readers to the methodology in 

the measure specifications for more 

information about SES testing for this 

measure at: https://www.cms.gov/ 

Medicare/Quality-Initiatives-PatientAssessment-Instruments/Hospital

QualityInits/MeasureMethodology.html. We also refer readers 

to section XIV.B.2. of this final rule with 

comment period where we discuss 

social risk factors in the ASCQR 

Program in more detail. 

In addition, analyses of ASCs 

categorized into quartiles based on 

proportions of Medicaid dual-eligible 

patients, of African-American patients, 

and of low-SES patients (as identified 

by the AHRQ SES index),135 showed 

largely overlapping distributions (with 

similar median values) of the riskstandardized hospital visit rates 

(RSHVRs) by quartile. This means that 

facilities serving larger proportions of 

low-SES patients perform similarly to 

facilities serving lower proportions of 

low-SES patients. 

Furthermore, we appreciate the 

commenter’s concern about including 

condition category (CC) 82 on the list of 

condition categories that are not riskadjusted for if they occur only at the 

time of the procedure.136 Condition 

categories are used to classify diagnoses 

into clinically coherent groups.137 We 

consolidated like risk factors into 

candidate variables, which were the 

variables that we considered for the 

risk-adjustment model. We agree with 

the commenter for noting that CC 82 is 

unlikely to develop acutely during the 

timeframe of a procedure; we will 

review this group of codes and will 

consider revising the list of CCs that are 

not risk-adjusted for if the condition 

occurs at the time of the procedure. As 

explained above, this measure was 

reviewed using a consensus-driven 

approach, with input from a national 

TEP and surgeons, including 

orthopedists, providing care in the ASC 

setting. Potential candidate risk factors 

and condition categories were identified 

from related quality measures and the 

literature; 138 139 a preliminary list of risk 

factors was developed and then revised 

based on national TEP and clinical 

expert review that included several 

orthopedists. These risk variables were 

further released and reviewed during 

the measure development public 

comment period prior to the selection of 

the final model.140 This consensusbased approach was used to achieve 

clinical face validity prior to the model 

selection. 

Comment: One commenter suggested 

that the ASC–17 should not be tied to 

payment or measure procedures until 

after the first year of provision in the 

ASC setting and noted concern that 

doing so at the outset would not 

accurately reflect quality and risks 

incentivizing hospital services over 

ASCs. Another commenter noted that 

ASCs still receive a full payment update 

even if the ASCs are not involved in the 

measure. 

Response: We thank the commenters 

for their suggestions regarding the link 

of the ASC–17 measure to payment. We 

do not believe that the measure risks 

incentivizing hospital services over 

ASCs. The ASCQR Program is a pay-forreporting quality data program. This 

means that payments under our pay-forreporting quality data program are tied 

to reporting of the measures in the form 

and manner specified, not to specific 

performance on the measures, like for 

pay-for-performance programs (for 

example, the Hospital VBP Program (82 

FR 38240)). In addition, we believe that 

the measure does indeed reflect quality. 

Feedback from national TEP members 

showed that the ASC–17 measure, as 

specified, can be used to distinguish 

between better and worse quality 

facilities.141 This shows TEP agreement 

with the overall face validity of the 

measure. 

We note that while ASCs will not be 

required to submit additional data for 

measure calculation, because this is a 

claims-based measure, we strongly 

encourage ASCs to review measure 

scores to improve quality of care and 

patient outcomes. The detailed feedback 

reports, which provide information on 

every procedure performed during the 

performance period and the details of 

the hospital visits within seven days of 

the orthopedic procedure, will enable 

ASCs to understand the post-surgical 

hospital visit patterns. We believe this 

will help to facilitate ASCs to tailor 

clinical and educational interventions 

with the goal of reducing or eliminating 

the risk of hospital visits for 

complication of an orthopedic surgery. 

We also believe that the measure will 

facilitate improvements via public 

reporting by informing the general 

public and ASCs even if particular ASCs 

are not active in the measure. 

Comment: A few commenters 

expressed concerns about the reliability 

of the measure. One commenter noted 

that low-volume situations tend to 

produce measure scores that lack 

reliability. The commenter noted that 

the measure is only ‘‘fairly’’ reliable and 

suggested the reliability for a measure 

intended for public reporting should be 

substantially reliable, or have an ICC of 

0.61 to 0.80. Furthermore, the 

commenter noted that the measure also 

suffers from limited discriminatory 

power because the number of 

underperforming facilities is very small. 


sradovich on DSK3GMQ082PROD with RULES2
59462 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

142Landis J, Koch G. The measurement of 

observer agreement for categorical data, Biometrics 

1977;33:159–174. 

143 Yale New Haven Health Services 

Corporation—Center for Outcomes Research and 

Evaluation (CORE). Measure Technical Report: 

Hospital Visits after Orthopedic Ambulatory 

Surgical Center Procedures (Version 1.0). May 2017. 

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

Quality-Initiatives-Patient-Assessment-Instruments/ 

HospitalQualityInits/Downloads/Version-10_

Hospital-Visits_Orthopedic-ASC-Procedures_

Measure-Technical-Report_052017.pdf. 

144Landis J, Koch G. The measurement of 

observer agreement for categorical data, Biometrics 

1977;33:159–174. 

145The NQF considers ICC values ranging from 

0.01–0.20 as ‘‘slight’’ reliability, 0.21–0.40 as ‘‘fair’’ 

reliability, 0.41 to 0.60 as ‘‘moderate’’ reliability, 

and 0.61 to 0.80 as ‘‘strong’’ reliability. http://

www.qualityforum.org/Measuring_Performance/ 

Improving_NQF_Process/Measure_Testing_Task_

Force_Final_Report.aspx. 

146See the Risk-Standardized Hospital Visits 

within 7 Days After Hospital Outpatient Surgery 

Measure. For ICC score of 0.50: https://

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

Downloads/Hospital-Visits-after-HospitalOutpatient-Surgery-Measure.pdf. 

147 Yale New Haven Health Services 

Corporation—Center for Outcomes Research and 

Evaluation (CORE). Measure Technical Report: 

Hospital Visits after Orthopedic Ambulatory 

Surgical Center Procedures (Version 1.0). May 2017. 

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

Quality-Initiatives-Patient-Assessment-Instruments/ 

HospitalQualityInits/Downloads/Version-10_

Hospital-Visits_Orthopedic-ASC-Procedures_

Measure-Technical-Report_052017.pdf. 

148 Ibid. 

149 Ibid. 

150 Ibid. 

The commenter urged CMS to ensure 

that the publicly reported scores are 

reliable. A few commenters expressed 

concern about the reliability of the 

measure for public reporting. 

Response: We thank the commenters 

for their feedback about the measure 

reliability. We disagree with the 

commenters and believe that ASC–17 is 

sufficiently reliable to be included in 

the ASCQR Program. Our calculated 

intraclass correlation coefficient 

(ICC),142 a measure of reliability or the 

degree to which the measure can 

produce accurate and consistent results 

across multiple measurements of the 

same entities in a time period, for this 

measure was 0.226.143 The NQF 

considers ICC values ranging from 0.01– 

0.20 as ‘‘slight’’ reliability, 0.21–0.40 as 

‘‘fair’’ reliability, 0.41 to 0.60 as 

‘‘moderate’’ reliability, and 0.61 to 0.80 

as ‘‘strong’’ reliability.144 Although this 

value indicates fair measure score 

reliability,145 we recognize that it is 

lower than for other claims-based 

outcomes measures developed by 

CMS.146 However, as we would expect, 

the ICC increases for ASCs with more 

patients.147 We disagree that the 

measure reliability should be 

‘‘substantially’’ reliable, or have an ICC 

of 0.61 to 0.80, and believe the publicly 

reported scores will be sufficiently 

reliable based on results showing 

increased reliability with increased case 

numbers.148 Specifically, for ASCs with 

at least 250 cases in each of the two 

samples, the ICC was 0.359, which 

reflects better reliability that is more 

consistent with previously developed 

measures.149 During the measure dry 

run, we intend to determine the case 

size cutoff for meeting moderate 

reliability standards using the ICC by 

testing the reliability of the scores at 

different case sizes in the dry run data. 

In the 4-year data set, of the 3,075 ASCs, 

467 (15.2 percent) had 250 or more 

procedures, accounting for 57.3 percent 

of all procedures in the measure 

cohort.150

Regarding the comment about lack of 

discriminatory power, we agree that the 

many small-volume ASCs will limit the 

ability to make distinctions in 

performance between facilities. ASCs 

with few cases in a given year limit our 

ability to capture variation in ASC-level 

measure scores because our modeling 

methodology is conservative and will 

estimate measure scores toward the 

national mean for facilities with small 

volumes. Specifically, ASCs with 

relatively few cases in the performance 

period may have a true rate that is 

worse/better than the national average. 

However, the model estimates their rate 

as close to the mean because their low 

volume does not provide enough 

information to accurately estimate a 

value near their true rate. As a result, 

the model may capture less variation 

than truly exists due to low case sizes. 

To improve the measure’s ability to 

detect quality differences, we crafted 

our proposal to use 2 years of data for 

public reporting to expand the number 

of cases available for estimating rates 

across all facilities and to increase both 

the reliability of the measure score and 

the ability to discriminate performance 

across facilities. Furthermore, ASC 

facilities that have too few cases to 

reliably estimate a measure score 

(moderate reliability as discussed in the 

prior paragraph) would be treated in the 

same way as other facilities with too few 

cases and would not have their scores 

posted on Hospital Compare; their data 

would be replaced with a footnote. We 

discuss our Hospital Compare footnotes 

at: https://www.medicare.gov/hospital

compare/data/Footnotes.html. 

However, these facilities will still 

receive confidential feedback reports/ 

facility-specific reports providing 

valuable information about post-surgery 

events. We refer readers to section 

XIV.B.6.b.(7) of this final rule with 

comment period for more details about 

public reporting of this measure. We 

expect that smaller ASCs will still 

benefit from confidentially reviewing 

their measure results and individual 

patient-level outcomes in the facilityspecific report, as these data are 

currently largely unknown to ASCs and 

providers. 

Comment: One commenter requested 

that the dry run results be aggregated 

and made available in its entirety to the 

public for review and comment if the 

measure is finalized. The commenter 

also suggested that CMS conduct pilot 

testing for the measure with volunteer 

ASCs rather than conduct national dry 

runs. 

Response: We refer readers to section 

XIV.B.6.b.(7) of this final rule with 

comment period where we discuss our 

dry run. The intent of the dry run is to 

test production of the measure and for 

ASCs to familiarize themselves with the 

measure and provide feedback to us. 

The dry run will generate confidential 

feedback reports for ASCs on measure 

performance and risk-standardized 

hospital visit rates, among other data. 

We plan to perform a dry run of the 

measure prior to implementation. The 

confidential dry run results will not be 

publicly reported or used for payment 

determination. We believe a dry run 

will be more beneficial than pilot 

testing. The dry run will include all 

ASCs rather than just a subset of 

volunteer ASCs and will enable all 

ASCs to gain familiarity with the 

measure and processes, as well as 

provide feedback to CMS on both the 

measure itself and the reports. This will 

also enable CMS to learn about any 

unanticipated nuances associated with 

measure implementation. 

As proposed, we will not publicly 

report data for this measure until the CY 

2022 payment determination and 

subsequent years. We do not believe 

publicly reporting data from the dry run 

is appropriate as we might still be 

working out unanticipated nuances; the 

data is preliminary and is therefore 

subject to change based on feedback 

provided by ASCs. 

Comment: A commenter noted that 

although CMS believes that there would 

not be any additional burden because 

ASCs are not required to submit 

additional data, reviewing claims detail 

reports and measure scores would be 

associated with additional burden for 

someone at ASCs, likely a clinician. 

Response: We thank the commenter 

for providing this input and 

acknowledge that this measure will be 

calculated completely from data already 

obtained from paid Medicare FFS 

claims submitted by ASCs, hospitals, 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59463 

151Fortier J. Unanticipated Admission after 

Ambulatory Surgery—A Prospective Study. 

Canadian Journal of Anaesthesia. 1998;45(7):612– 

619. 

152Rambachan A. Predictors of Readmission 

Following Outpatient Urological Surgery, Annals of 

the Royal College of Surgeons of England. Journal 

of Urology. 2014;192(1):183–188. 

153Hollingsworth JM. Surgical Quality Among 

Medicare Beneficiaries Undergoing Outpatient 

Urological Surgery. The Journal of Urology. 

2012;188(4):1274–1278. 

154Fortier J. Unanticipated Admission after 

Ambulatory Surgery—A Prospective Study. 

Canadian Journal of Anaesthesia. 1998;45(7):612– 

619. 

155Paez A. Adverse Events and Readmissions 

after Day-Care Urological Surgery. International 

Brazilian Journal of Urology. 2007;33(3):330–338. 

156 Ibid. 

157National Quality Forum. List of Measures 

under Consideration for December 1, 2016. National 

Quality Forum, Dec. 2016. Available at: http://

www.qualityforum.org/map/. 

158National Quality Forum. 2016–2017 

Spreadsheet of Final Recommendations to HHS and 

CMS, available at: https://www.qualityforum.org/ 

WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=

81593. 

159Landis JR, Koch GG. The Measurement of 

Observer Agreement for Categorical Data. 

Biometrics. 1977;33(1):159–174. 

and physicians for billing purposes. 

Because claims data are used, there is 

no burden on the part of ASCs to submit 

additional data for measure calculation. 

We strongly suggest that facilities 

allocate time to review their feedback 

report, because they contain actionable 

information to identify performance 

gaps and further develop quality 

improvement strategies. However, we 

note that these activities do not 

represent burden related to program 

requirements. 

After consideration of the public 

comments we received, we are 

finalizing the proposal to adopt the 

ASC–17: Hospital Visits after 

Orthopedic Ambulatory Surgical Center 

Procedures measure in the ASCQR 

Program for the CY 2022 payment 

determination and subsequent years, as 

proposed. 

c. Adoption of ASC–18: Hospital Visits 

After Urology Ambulatory Surgical 

Center Procedures Beginning With the 

CY 2022 Payment Determination 

(1) Background 

As the number of urology procedures 

performed in ASCs increases, it is of 

increasing importance to report the 

quality of care provided to patients 

undergoing these procedures. One study 

found that urology procedures 

accounted for 4.8 percent of 

unanticipated admissions, and that 

urology surgery patients were almost 

twice as likely as orthopedics, plastic 

surgery, or neurosurgery to be admitted 

following surgery.151 Similarly, a recent 

study found outpatient urology surgery 

has an overall 3.7 percent readmission 

rate.152 A third study using a 5-percent 

national sample of Medicare 

beneficiaries ages 65 and older who 

underwent one of 22 common 

outpatient urologic procedures at ASCs 

from 1998 to 2006 found a 7.9 percent 

30-day risk-adjusted rate of inpatient 

admission following surgery, with more 

frequent same-day admissions following 

outpatient surgery at ASCs than at 

hospitals.153

Because urology surgery performed at 

an ASC is a significant predictive factor 

for unanticipated admissions compared 

to other procedures,154 we believe 

measuring and reporting 7-day 

unplanned hospital visits following 

urology procedures will incentivize 

ASCs to improve care and care 

transitions. Many of the reasons for 

hospital visits following surgery at an 

ASC are preventable; patients often 

present to the hospital following 

urology surgery for complications of 

medical care, including urinary tract 

infection, calculus of the ureter, urinary 

retention, hematuria, and septicemia.155

However, increased patient and staff 

education present opportunities to 

improve the success rate of urology 

surgeries in ASCs.156 Therefore, we 

believe tracking and reporting these 

events would facilitate efforts to lower 

the rate of preventable adverse events 

and to improve the quality of care 

following urology procedures performed 

at an ASC. 

(2) Overview of Measure 

We believe it is important to 

minimize adverse patient outcomes 

associated with urology ASC surgeries. 

Therefore, in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33695), we 

proposed to adopt the ASC–18: Hospital 

Visits after Urology Ambulatory 

Surgical Center Procedures measure in 

the ASCQR Program for the CY 2022 

payment determination and subsequent 

years. We expect the measure would 

promote improvement in patient care 

over time, because measurement 

coupled with transparency in publicly 

reporting measure information would 

make the rate of unplanned hospital 

visits (emergency department visits, 

observation stays, and unplanned 

inpatient admissions) following urology 

procedures at ASCs more visible to both 

ASCs and patients, and would 

incentivize ASCs to incorporate quality 

improvement activities to reduce these 

unplanned hospital visits. The measure 

also addresses the CMS National 

Quality Strategy domains of making care 

safer by reducing harm caused in the 

delivery of care and promoting effective 

communication and coordination of 

care. 

Section 1890A of the Act requires the 

Secretary to establish a prerulemaking 

process with respect to the selection of 

certain categories of quality and 

efficiency measures. Under section 

1890A(a)(2) of the Act, the Secretary 

must make available to the public by 

December 1 of each year a list of quality 

and efficiency measures that the 

Secretary is considering for the 

Medicare program. The ASC–18: 

Hospital Visits after Urology 

Ambulatory Surgical Center Procedures 

measure was included on a publicly 

available document entitled ‘‘List of 

Measures under Consideration for 

December 1, 2016.’’ 157 The MAP 

reviewed this measure (MUC16–153) 

and recommended that this measure be 

refined and resubmitted prior to 

adoption by the ASCQR Program 

because, at the time of the MAP’s 

review, this measure was still 

undergoing field testing. The 

Workgroup stated testing results should 

demonstrate reliability and validity at 

the facility level in the ambulatory 

surgical setting, and recommended this 

measure be submitted to NQF for review 

and endorsement.158

Since the MAP’s review and 

recommendation of ‘Refine and 

Resubmit’ in 2016, we have completed 

testing for this measure and continued 

to refine this proposed measure in 

response to the MAP’s 

recommendations. Results of continued 

development activities, including 

stakeholder feedback from the public 

comment period and pilot test findings 

will be presented to the MAP during the 

MAP feedback loop meeting in fall 

2017. The proposed measure is 

consistent with the information 

submitted to the MAP, and the original 

MAP submission and our continued 

refinements support its scientific 

acceptability for use in quality reporting 

programs. Facility-level testing showed 

significant variation in unplanned 

hospital visits among ASCs after 

adjusting for case-mix differences, 

which suggests variation in quality of 

care. Our testing found moderate 

measure score reliability 159 for this 

measure, which is consistent with 

existing measures of patient outcomes 

in the ASC setting, such as ASC–12: 

Facility Seven-Day Risk-Standardized 

Hospital Visit Rate after Outpatient 

Colonoscopy (described in the CY 2015 

OPPS/ASC final rule with comment 

period at 79 FR 66973). Validity testing 

demonstrated that the measure scores 


sradovich on DSK3GMQ082PROD with RULES2
59464 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

160 Yale New Haven Health Services 

Corporation—Center for Outcomes Research and 

Evaluation (CORE). Public Comment Summary 

Report: Development of Facility-Level Quality 

Measures of Unplanned Hospital Visits after 

Selected Ambulatory Surgical Center Procedures. 

Fall 2016. Available at: https://www.cms.gov/ 

Medicare/Quality-Initiatives-Patient-AssessmentInstruments/MMS/CallforPublicComment.html. 

161National Quality Forum. ‘‘MAP 2017 

Considerations for Implementing Measures in 

Federal Programs: Hospitals.’’ Report. 2017. 

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

under ‘‘Hospitals—Final Report.’’ 

162Centers for Medicare and Medicaid Services. 

‘‘Ambulatory Surgical Center (ASC) Payment: 

Addenda Updates.’’ Available at: https://

www.cms.gov/medicare/medicare-fee-for-servicepayment/ascpayment/11_addenda_updates.html. 

identify differences in quality across 

facilities. Detailed testing results are 

available in the technical report for this 

measure, located at: https://

www.cms.gov/medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/ 

Measure-Methodology.html. 

Sections 1833(i)(7)(B) and 

1833(t)(17)(C)(i) of the Act, when read 

together, require the Secretary, except as 

the Secretary may otherwise provide, to 

develop measures appropriate for the 

measurement of the quality of care 

furnished by ASCs that reflect 

consensus among affected parties and, 

to the extent feasible and practicable, 

that include measures set forth by one 

or more national consensus building 

entities. However, we note that section 

1833(i)(7)(B) of the Act does not require 

that each measure we adopt for the 

ASCQR Program be endorsed by a 

national consensus building entity, or 

by the NQF specifically. Further, under 

section 1833(i)(7)(B) of the Act, section 

1833(t)(17)(C)(i) of the Act applies to the 

ASCQR Program, except as the Secretary 

may otherwise provide. Under this 

provision, the Secretary has further 

authority to adopt non-endorsed 

measures. As stated in the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74465 and 74505), we 

believe that consensus among affected 

parties can be reflected through means 

other than NQF endorsement, including 

consensus achieved during the measure 

development process, consensus shown 

through broad acceptance and use of 

measures, and consensus through public 

comment. We believe this proposed 

measure meets these statutory 

requirements. 

The proposed ASC–18: Hospital Visits 

after Urology Ambulatory Surgical 

Center Procedures measure is not 

currently NQF-endorsed. However, we 

intend to submit this measure for review 

and endorsement by the NQF once an 

appropriate measure endorsement 

project has a call for measures. We 

believe that this measure is appropriate 

for the measurement of quality care 

furnished by ASCs because urology 

procedures are becoming increasingly 

common in ASCs and, as discussed 

above, can signify unanticipated 

admissions after care provided in ASCs. 

Such visits are an unexpected and 

potentially preventable outcome for 

patients with a low anticipated 

perioperative risk. We also believe this 

measure depicts consensus among 

affected parties, as it was developed 

with stakeholder input from both a 

Technical Expert Panel convened by a 

contractor as well as the measure 

development public comment period.160

During the MAP and measure 

development processes, public 

commenters supported the measure’s 

focus on assessing patient outcomes 

after urology ASC and agreed that the 

measure would be meaningful and 

improve quality of care. In addition, the 

ASC–18: Hospital Visits after Urology 

Ambulatory Surgical Center Procedures 

measure addresses the MAP-identified 

priority measure area of surgical 

complications for the ASCQR 

Program.161 Therefore, we believe it is 

appropriate to incorporate this measure 

into the ASCQR Program measure set 

because collecting and publicly 

reporting this data will improve 

transparency, inform patients and 

providers, and foster quality 

improvement efforts. 

(3) Data Sources 

This measure is claims-based and 

uses Part A and Part B Medicare 

administrative claims and Medicare 

enrollment data to calculate the 

measure. 

We proposed that the data collection 

period for the proposed ASC–18: 

Hospital Visits after Urology 

Ambulatory Surgical Center Procedures 

measure would be the 2 calendar years 

ending 2 years prior to the applicable 

payment determination year. For 

example, for the CY 2022 payment 

determination, the data collection 

period would be CY 2019 to 2020. 

Because these measure data are 

collected via claims, ASCs will not need 

to submit any additional data directly to 

CMS. We refer readers to section 

XIV.D.4. of this final rule with comment 

period for a more detailed discussion of 

the requirements for data submitted via 

claims. 

(4) Measure Calculations 

The measure outcome is all-cause, 

unplanned hospital visit occurring 

within seven days of the urology 

procedure performed at an ASC. For the 

purpose of this measure, ‘‘hospital 

visits’’ include emergency department 

visits, observation stays, and unplanned 

inpatient admissions. When there are 

two or more qualifying surgical 

procedures within a 7-day period, the 

measure considers all procedures as 

index procedures. However, the 

timeframe for outcome assessment is 

defined as the interval between 

procedures (including the day of the 

next procedure) and then 7 days after 

the last procedure. 

The facility-level score is a riskstandardized hospital visit rate, 

calculated by multiplying the ratio of 

the predicted to the expected number of 

postsurgical hospital visits among the 

given ASC’s patients by the national 

observed hospital visit rate for all ASCs. 

For each ASC, the numerator of the ratio 

is the number of hospital visits 

predicted for the ASC’s patients 

accounting for its observed rate, the 

number of the urology procedures 

performed at the ASCs, the case-mix, 

and the surgical complexity mix. The 

denominator of the ratio is the expected 

number of hospital visits given the 

ASC’s case-mix and surgical complexity 

mix. A ratio of less than one indicates 

the ASC facility’s patients were 

estimated as having fewer post-surgical 

visits than expected compared to ASCs 

with similar surgical complexity and 

patients; and a ratio of greater than one 

indicates the ASC facility’s patients 

were estimated as having more visits 

than expected. The national observed 

hospital visit rate is the national 

unadjusted proportion of patients who 

had a hospital visit following a urology 

ASC surgery. For more information on 

measure calculations, we refer readers 

to: https://www.cms.gov/medicare/ 

Quality-Initiatives-Patient-AssessmentInstruments/HospitalQualityInits/ 

Measure-Methodology.html. 

(5) Cohort 

The patient cohort for the proposed 

ASC–18: Hospital Visits after Urology 

Ambulatory Surgical Center Procedures 

measure includes all Medicare 

beneficiaries ages 65 and older 

undergoing outpatient urology 

procedures at an ASC who have 12 prior 

months of Medicare fee-for-service Parts 

A and B enrollment. The target group of 

procedures are those that: (1) Are 

routinely performed at ASCs; (2) involve 

increased risk of post-surgery hospital 

visits; and (3) are routinely performed 

by urologists. 

Procedures included in the measure 

cohort are on Medicare’s list of covered 

ambulatory surgical center (ASC) 

procedures.162 Medicare developed this 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59465 

163 Ibid. 164 Ibid. 

165Healthcare Cost and Utilization Project. 

Clinical Classifications Software for Services and 

Procedures. Available at: https://www.hcupus.ahrq.gov/toolssoftware/ccs_svcsproc/ 

ccssvcproc.jsp. 

166S. Coberly. The Basics; Relative Value Units 

(RVUs). National Health Policy Forum. January 12, 

2015. Available at: http://www.nhpf.org/library/thebasics/Basics_RVUs_01-12-15.pdf. 

167 Yale New Haven Health Services Corporation. 

Hospital Visits after Orthopedic Ambulatory 

Surgical Center Procedures (Version 1.0). May 2017. 

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

Quality-Initiatives-Patient-Assessment-Instruments/ 

HospitalQualityInits/Downloads/Version-10_

Hospital-Visits_Orthopedic-ASC-Procedures_

Measure-Technical-Report_052017.pdf. 

168Landis JR, Koch GG. The Measurement of 

Observer Agreement for Categorical Data. 

Biometrics. 1977;33(1):159–174. 

169 Ibid. 

list to identify surgeries have a low to 

moderate risk profile. Surgeries on the 

ASC list of covered procedures do not 

involve or require major or prolonged 

invasion of body cavities, extensive 

blood loss, major blood vessels, or care 

that is either emergent or life 

threatening.163 Medicare annually 

reviews and updates this list, and 

includes a transparent public comment 

submission and review process for 

addition and/or removal of procedures 

codes.164 The current list is accessible 

in the Downloads section at: https://

www.cms.gov/medicare/medicare-feefor-service-payment/ascpayment/11_

addenda_updates.html. In addition, to 

focus the measure only on the subset of 

surgeries on Medicare’s list of covered 

ASC procedures that impose a 

meaningful risk of post-urology ASC 

surgery hospital visits, the measure 

includes only ‘‘major’’ and ‘‘minor’’ 

procedures, as indicated by the MPFS 

global surgery indicator (GSI) values of 

090 and 010, respectively, and 

therapeutic cystoscopy procedures. This 

list of GSI values is publicly available 

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

Medicare-fee-for-service-payment/ 

physicianfeesched/pfs-federalregulation-notices-items/cms-1590- 

fc.html (download Addendum B). 

Moreover, to identify the subset of ASC 

procedures typically performed by 

urologists, we used the Clinical 

Classifications Software (CCS) 

developed by the Agency for Healthcare 

Research and Quality (AHRQ) and 

include in this measure procedures from 

two of AHRQ’s categories, ‘‘operations 

on the urinary system’’ and ‘‘operations 

on the male genital organs.’’ 165 For 

more cohort details, we refer readers to 

the measure technical report located at: 

https://www.cms.gov/medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/ 

Measure-Methodology.html. 

The measure excludes patients who 

survived at least 7 days following a 

urology procedure at an ASC, but were 

not continuously enrolled in Medicare 

fee-for-service Parts A and B in the 7 

days after surgery. These patients are 

excluded to ensure all patients captured 

under this measure have full data 

available for outcome assessment. There 

are no additional inclusion or exclusion 

criteria for the proposed ASC–18 

measure. Additional methodology and 

measure development details are 

available at: https://www.cms.gov/ 

medicare/Quality-Initiatives-PatientAssessment-Instruments/Hospital

QualityInits/MeasureMethodology.html. 

(6) Risk Adjustment 

The statistical risk-adjustment model 

includes nine clinically relevant riskadjustment variables that are strongly 

associated with risk of hospital visits 

within seven days following ASC 

urology surgery. The measure risk 

adjusts for age, six comorbidities, 

number of qualifying procedures, and 

work Relative Value Units (RVUs) to 

adjust for surgical complexity.166

Additional risk adjustment details are 

available in the technical report at: 

https://www.cms.gov/medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/ 

Measure-Methodology.html. 

(7) Public Reporting 

As stated above, facility-level testing 

showed variation in unplanned hospital 

visits among ASCs after adjusting for 

case-mix differences, which suggests 

variation in quality of care and 

opportunities for quality 

improvement.167 Reliability testing 

showed fair measure score reliability.168

As expected, the reliability increased for 

ASCs with more patients; ASCs with at 

least 250 cases showed moderate 

reliability, consistent with other 

publicly reported Medicare claimsbased, risk-adjusted outcome measures. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33694), we noted that if this 

measure is adopted, we proposed to 

publicly report results only for facilities 

with sufficient case numbers to meet 

moderate reliability standards.169 CMS 

will determine the case size cutoff for 

meeting moderate reliability standards 

using the intraclass correlation (ICC) 

during the measure dry run (discussed 

below) by testing the reliability of the 

scores at different case sizes in the dry 

run data. However, we would also 

provide confidential performance data 

directly to smaller facilities which do 

not meet the criteria for sufficient case 

numbers for reliability considerations 

that would benefit from seeing their 

measure results and individual patientlevel outcomes, as these data are 

currently largely unknown to ASCs and 

providers. The validity testing results 

demonstrated that the measure scores 

are valid and useful measures of ASC 

urology surgical quality of care and will 

provide ASCs with information that can 

be used to improve their quality of care. 

Detailed testing results are available in 

the technical report for this measure, 

located at: https://www.cms.gov/ 

medicare/Quality-Initiatives-PatientAssessment-Instruments/Hospital

QualityInits/MeasureMethodology.html. 

(8) Provision of Facility-Specific 

Information Prior to Public Reporting 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33694), we noted that if this 

proposed measure is finalized, but 

before the official data collection period 

or public reporting for the proposed 

ASC–18 measure, we intend to conduct 

a dry run. A dry run is a period of 

confidential feedback during which 

ASCs may review their dry-run measure 

results, and in addition, further 

familiarize themselves with the measure 

methodology, and ask questions. For the 

dry-run, we intend to use the most 

current 2-year set of complete claims 

(usually 12 months prior to the start 

date) available at the time of dry run. 

For example, if the dry run began in 

June 2018, the most current 2-year set of 

data available would likely be July 2015 

to June 2017. Because we use paid, final 

action Medicare claims, ASCs would 

not need to submit any additional data 

for the dry run. The dry run would 

generate confidential feedback reports 

for ASCs, including patient-level data 

indicating whether the patient had a 

hospital visit and, if so, the type of visit 

(emergency department visit, 

observation stay, or unplanned inpatient 

admission), the admitting facility, and 

the principal discharge diagnosis. 

Further, the dry run would enable ASCs 

to see their risk-standardized hospital 

visit rate prior to the measure being 

implemented. General information 

about the dry run as well as confidential 

facility-specific reports would be made 

available for ASCs to review on their 

accounts at: http://www.qualitynet.org. 

We intend to continue to generate these 

reports for ASCs after we implement the 

measure so ASCs can use the 

information to identify performance 

gaps and develop quality improvement 

strategies. 

The confidential dry run results are 

not publicly reported and do not affect 

payment. We expect the dry run to take 


sradovich on DSK3GMQ082PROD with RULES2
59466 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

170Spreadsheet of MAP 2017 Final 

Recommendations. February 1, 2017. Available at: 

http://www.qualityforum.org/WorkArea/linkit.aspx?

LinkIdentifier=id&ItemID=84452. 

171MAP 2017 Considerations for Implementing 

Measures in Federal Programs: Hospitals. Final 

Report. February 15, 2017. Available at: http://

www.qualityforum.org/Publications/2017/02/2017_

Considerations_for_Implementing_Measures_Final_

Report_-_Hospitals.aspx. 

172 Yale New Haven Health Services 

Corporation—Center for Outcomes Research and 

Evaluation (CORE). Measure Technical Report: 

Hospital Visits after Urology Ambulatory Surgical 

Center Procedures (Version 1.0). May 2017. 

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

Quality-Initiatives-Patient-Assessment-Instruments/ 

HospitalQualityInits/Downloads/Version-10_

Hospital-Visits_Urology-ASC-Procedures_MeasureTechnical-Report_052017.pdf. 

173Horwitz, Leora I., et al. ‘‘Development and 

validation of an algorithm to identify planned 

readmissions from claims data.’’ Journal of hospital 

medicine 10.10 (2015): 670–677. 

174Ranasinghe, Isuru, et al. ‘‘Differences in 

colonoscopy quality among facilities: development 

of a post-colonoscopy risk-standardized rate of 

unplanned hospital visits.’’ Gastroenterology 150.1 

(2016): 103–113. 

approximately one month to conduct, 

during which facilities would be 

provided the confidential report and the 

opportunity to review their performance 

and provide feedback to us. However, 

after the dry run, measure results would 

have a payment impact and would be 

publicly reported beginning with the CY 

2022 payment determination and for 

subsequent years as proposed. Although 

not previously stated in the CY 2018 

OPPS/ASC proposed rule (82 FR 33694), 

we note that the primary purpose of the 

records maintained in the National 

Claims History system of records (SOR) 

is for evaluating and studying the 

operation and effectiveness of the 

Medicare program, which aligns with 

the purposes of the ASCQR Program and 

a permissible use of beneficiary 

information. In addition, under 45 CFR 

164.506(c)(4) of the HIPAA Privacy 

Rule, we may disclose protected health 

information to another covered entity, 

such as the ASCs, provided that both 

the ASC and CMS have or had a 

relationship with each individual who 

is the subject of the PHI being requested, 

the PHI pertains to such relationship, 

and the disclosure is for the purposes of 

conducting quality assessment and 

improvement activities listed in 

paragraph (1) or (2) of the definition of 

‘‘health care operations’’ at 45 CFR 

164.501. We believe that this provision 

is extensive enough to cover the uses 

that we would expect an ASC to make 

of the PHI. 

We invited public comment on our 

proposal to adopt the ASC–18: Hospital 

Visits after Urology Ambulatory 

Surgical Center Procedures measure 

beginning with the CY 2022 payment 

determination as discussed above. 

Comment: A few commenters 

supported the proposed adoption of the 

ASC–18: Hospital Visits after Urology 

Ambulatory Surgical Center Procedures 

measure in the ASCQR Program. One of 

the commenters noted that the measure 

will provide patients with valuable data 

and address clinical areas critical to 

providers. 

Response: We thank the commenters 

for their support. We agree that 

measuring quality of care associated 

with urology procedures performed at 

ASCs is patient-centered and is an 

important clinical care area to evaluate. 

Comment: A few commenters 

believed that the measure should be 

refined and resubmitted prior to 

rulemaking, as suggested by the MAP. 

Several commenters noted or were 

concerned that the measure lacks NQF 

endorsement. A few commenters also 

suggested that CMS seek input from the 

MAP on the finalized measure prior to 

proposing for inclusion in the program. 

Response: Section 1833(h)(7)(B) of the 

Act does not require that each measure 

we adopt for the ASCQR Program be 

endorsed by a national consensus 

building entity, or the NQF specifically. 

Under this provision, the Secretary has 

further authority to adopt non-endorsed 

measures. As stated in the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74465 and 74505), we 

believe the requirement that measures 

reflect consensus among affected parties 

can be achieved in other ways, 

including through the measure 

development process, broad acceptance 

and use of the measure, and public 

comments. As part of the measure 

development process, a national 

Technical Expert Panel (TEP), clinical 

experts, and stakeholders provided 

input at multiple points during 

development. We believe the ASC–18 

measure meets these statutory 

requirements. 

We strive to adopt NQF-endorsed 

measures when possible. Although 

ASC–18 is not currently NQF-endorsed, 

our research and analysis conducted 

during development demonstrate that 

the measure is accurate, valid, and 

actionable. We refer readers to the 

technical report for more information 

about the measure and testing results: 

https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/ 

Downloads/Version-10_Hospital-Visits_

Urology-ASC-Procedures_MeasureTechnical-Report_052017.pdf. We will 

submit this measure, with complete 

evidence, specifications, and testing 

results, to NQF for endorsement when 

an appropriate NQF project has a call 

for the measure. 

In addition, in December 2016, the 

MAP Hospital Workgroup reviewed and 

classified the measure as ‘‘Refine and 

Resubmit Prior to Rulemaking.’’ 170 We 

understand that the measure received 

this classification because: (1) The 

measure was still undergoing field 

testing at the time, and (2) the MAP also 

recommended that the measure be 

submitted to the NQF for review and 

endorsement. Between that initial MAP 

review in December 2016 and the CY 

2018 OPPS/ASC proposed rule, we 

completed field testing and refined the 

measure.171 The final methodology 

report, which was presented in the 

proposed rule, included the final results 

of measure testing and completed 

measure specifications that occurred 

between the MAP’s review in December 

2016 and CMS’ proposal to adopt the 

measure in the ASCQR Program.172 We 

also intend to update the MAP at the 

next appropriate opportunity. As stated 

above, we also intend to submit the 

measure to the NQF for endorsement 

during the next appropriate call for 

measures. 

Comment: A commenter expressed 

concern about the attribution of 

outcomes. Specifically, the commenter 

flagged eight of the top reasons for 

hospital visits within 7 days of urologic 

procedures that likely reflect routine 

follow-up rather than quality of care as 

intended by the measure. Another 

commenter suggested that CMS develop 

a numerator exclusion for unrelated 

hospital visits. 

Response: We acknowledge that the 

rate of hospital visits is not expected to 

be zero, since some patients will have 

visits for reasons unrelated to the 

procedure. In designing the measure, we 

narrowed the measure to include 

surgical procedures that: (1) Are 

routinely performed at ASCs; (2) involve 

increased risk of post-surgery hospital 

visits; and (3) are routinely performed 

by urologists. In addition, the measure 

is risk-adjusted for patient 

demographics, clinical characteristics, 

and surgical procedural complexity, so 

that facilities that experience more 

unrelated visits due to a generally 

higher-risk patient mix will not be 

disadvantaged. We refer readers to the 

methods section in the measure 

specifications for more information 

about the risk-adjustment methodology. 

In addition, we only measure the rate 

of unplanned hospital admissions; ED 

visits and observation stays are never 

considered planned.173 174 This 

approach removes from the outcome 

admissions that are not a signal of 

quality of care, because they represent: 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59467 

175 Yale New Haven Health Services 

Corporation—Center for Outcomes Research and 

Evaluation (CORE). Measure Technical Report: 

Hospital Visits after Urology Ambulatory Surgical 

Center Procedures (Version 1.0). May 2017. 

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

Quality-Initiatives-Patient-Assessment-Instruments/ 

HospitalQualityInits/Downloads/Version-10_

Hospital-Visits_Urology-ASC-Procedures_MeasureTechnical-Report_052017.pdf. 

176Fleisher LA, Pasternak LR, Herbert R, 

Anderson GF. Inpatient hospital admission and 

death after outpatient surgery in elderly patients: 

Importance of patient and system characteristics 

and location of care. Archives of Surgery. 

2004;139(1):67–72. 

177Mattila K, Toivonen J, Janhunen L, Rosenberg 

PH, Hynynen M. Postdischarge symptoms after 

ambulatory surgery: First-week incidence, intensity, 

and risk factors. Anesthesia and Analgesia. 

2005;101(6):1643–1650. 

178Parry, Nicola. ‘‘7-Day Readmissions: Better 

Indicators of Patient Care.’’ Medscape, 2016. 

179Centers for Medicare & Medicaid Services. 

Ambulatory Surgical Center Quality Reporting 

Specifications Manual Release Notes Version: 6.0. 

2016; Available at: http://qualitynet.org/dcs/ 

ContentServer?c=Page&pagename=QnetPublic

%2FPage%2FQnetTier2&cid=1228772475754. 

(1) A condition or diagnosis that is 

considered to be always planned (such 

as transplants or maintenance 

chemotherapy); or (2) that are 

considered potentially planned (such as 

cardiovascular procedures) and are not 

accompanied by an acute diagnosis. The 

planned admission algorithm is based 

on CMS’ widely-used Planned 

Readmission Algorithm v4.0.175 We 

refer readers to the measure 

methodology report at: https://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/

Measure-Methodology.html for more 

details. 

Regarding the commenter’s concerns 

about the attribution of outcomes, and 

whether hospital visit within 7 days of 

ASC procedure is a sign of poor quality, 

we believe that the measure captures the 

full range of potentially serious adverse 

events related to urologic procedures 

performed at ASCs. We designed the 

outcome timeframe to encompass the 

first 7 days for capture of hospital visits 

(ED visits, observation stays, and 

unplanned admissions), because 

existing literature suggests that the vast 

majority of adverse events after an 

urology procedure occur within the first 

7 days following the procedure 176 177

and because the highest rates of hospital 

visits were observed in claims data 

within 7 days following the procedure. 

A 7-day timeframe helps to ensure that 

the measure will capture adverse events 

following the procedure, but will not 

capture events impacted by factors 

unrelated to the care patients 

received.178 We appreciate the 

commenter’s careful review of the top 

hospital visit diagnoses within seven 

days of urologic procedures. We 

welcome specific examples of 

potentially planned admissions 

following outpatient urologic 

procedures. 

In response to a commenter’s 

suggestion that we develop a numerator 

exclusion for unrelated hospital visits, 

this measure was intentionally designed 

to broadly evaluate all-cause hospital 

visits to capture serious adverse events 

experience by patients after undergoing 

urologic ASC procedures, rather than a 

narrow set of identifiable complications, 

for many reasons. The outcome of allcause hospital visits is consistent with 

a patient-centric view of care that is 

designed to prompt ASC providers to 

minimize the risk and reduce the need 

for a broad range of outcomes after 

undergoing urologic ASC procedures, 

including the risk of dehydration, 

nausea and vomiting, dizziness, and 

urinary retention. Measuring only 

hospital visits that are overtly related to 

a procedure, such as visits for pain and 

bleeding, would limit the measure’s 

intended broad impact on quality 

improvement efforts. These are common 

problems that may or may not be related 

to a recent ASC procedure. Thus, the 

measure is structured so that facilities 

that most effectively minimize patient 

risk of these outcomes will perform 

better on the measure. 

Comment: A commenter suggested 

that CMS provide a detailed clinical 

review of all the measure results by 

several seasoned urologists to ensure the 

measure algorithm is appropriate. 

Response: In developing the measure, 

we incorporated significant input from 

various experts and stakeholders. In 

addition to the MUC and MAP 

processes described above, a 

multidisciplinary team of clinicians, 

health services researchers, and 

statisticians were informed, in part, by 

a national TEP consisting of patients, 

methodologists, researchers, and 

providers, including urologists who 

conducted a detailed clinical review of 

all the measure results to ensure the 

measure algorithm is appropriate. We 

also held a public comment period 

soliciting stakeholder input on the 

measure methodology, including the 

planned admission algorithm. However, 

we will continue to evaluate the 

measure, as our goal is to ensure that the 

measure accurately reflects the quality 

of care provided in ASCs. 

We appreciate the commenter’s 

careful review of the top hospital visit 

diagnoses within seven days of urology 

procedures. We welcome specific 

examples of potentially planned 

admissions following outpatient 

urologic procedures. 

Comment: Several commenters were 

concerned that ASCs may not have 

actionable information generated from 

ASC–18. Specifically, some commenters 

did not support adoption of the 

measure, because measure score 

calculation relies on retrospective 

claims data. The commenters expressed 

concerns that the delay in providing 

data to facilities would provide limited 

usefulness for quality improvement or 

for consumers in choosing an ASC 

facility. Regarding a similar measure, 

ASC–12 Facility Risk-Standardized Visit 

Rate after Outpatient Colonoscopy, one 

commenter noted that in their members’ 

experience with the confidential 

feedback reports, facilities were already 

aware of most of the visits in the claims 

detail report and did not review the 

reports unless the facilities were 

categorized as underperforming. The 

commenter also questioned the 

usefulness of the measure to make 

distinctions among facilities and to 

consumers, because the performance for 

the overwhelming majority of the ASCs 

would be no different than expected. 

Response: We acknowledge the 

commenters’ concerns regarding the use 

of claims data for the ASC–18 measure; 

however, the measure would provide 

facilities with the most recently 

available, patient-level data to help 

guide quality improvement efforts that 

would also be low burden. 

Further, we believe that measures of 

hospital events following specific types 

of surgical procedures fully based on 

Medicare FFS claims recently adopted 

(for example, ASC–12: Facility 7-Day 

Risk Standardized Hospital Visit Rate 

after Outpatient Colonoscopy Measure) 

and including those newly finalized in 

this final rule that is, ASC–17: Hospital 

Visits after Orthopedic Ambulatory 

Surgical Center Procedures and ASC– 

18: Hospital Visits after Urology 

Ambulatory Surgical Center Procedures) 

will better inform Medicare 

beneficiaries and other consumers about 

post-procedure complication rates. 

Existing ASC quality measures tend to 

focus on very rare, patient safety-related 

events. For example, ASC–3 counts 

cases in which a wrong site, wrong side, 

wrong patient, wrong procedure, or 

wrong implant event occurred (76 FR 

74499).179 Measures designed to capture 

more common adverse outcomes that 

patients experience, such as urinary 

retention, urinary tract infection, pain, 

and other complications prompting 

acute care hospital visits or admissions 


sradovich on DSK3GMQ082PROD with RULES2
59468 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

180Mezei G, Chung F. Return hospital visits and 

hospital readmissions after ambulatory surgery. 

Annals of Surgery. 1999;230(5):721–727. 

181 Yale New Haven Health Services 

Corporation—Center for Outcomes Research and 

Evaluation (CORE). Measure Technical Report: 

Hospital Visits after Urology Ambulatory Surgical 

Center Procedures (Version 1.0). May 2017. 

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

Quality-Initiatives-Patient-Assessment-Instruments/ 

HospitalQualityInits/Downloads/Version-10_

Hospital-Visits_Urology-ASC-Procedures_MeasureTechnical-Report_052017.pdf. 

182 Ibid. 183HCUP CCS Fact Sheet. Healthcare Cost and 

Utilization Project (HCUP). January 2012. Agency 

for Healthcare Research and Quality, Rockville, MD. 

https://www.hcup-us.ahrq.gov/toolssoftware/ccs/ 

ccsfactsheet.jsp. 

184Crew JP, Turner KJ, Millar J, Cranston DW. Is 

day case surgery in urology associated with high 

admission rates? Annals of The Royal College of 

Surgeons of England. 1997;79(6):416–419. 

185Fleisher LA, Pasternak LR, Herbert R, 

Anderson GF. Inpatient hospital admission and 

death after outpatient surgery in elderly patients: 

Importance of patient and system characteristics 

and location of care. Archives of Surgery. 

2004;139(1):67–72. 

186Paez A, Redondo E, Linares A, Rios E, Vallejo 

J, Sanchez-Castilla M. Adverse events and 

readmissions after day-case urological surgery. 

International Brazilian Journal of Urology. 

2007;33(3):330–338. 

187 Yale New Haven Health Services Corporation. 

Hospital Visits after Orthopedic Ambulatory 

Surgical Center Procedures (Version 1.0). May 2017. 

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

Quality-Initiatives-Patient-Assessment-Instruments/ 

HospitalQualityInits/Downloads/Version-10_

Hospital-Visits_Orthopedic-ASC-Procedures_

Measure-Technical-Report_052017.pdf. 

are lacking at this time, and this is what 

this measure is intended to accomplish. 

While we appreciate the commenter’s 

feedback that some ASCs were already 

aware of most of the visits in the claims 

detail report and did not review the 

reports unless the facilities were 

categorized as underperforming, that is 

not always the case. Providers at ASCs 

are more often unaware of patients’ 

subsequent acute care visits given that 

separate providers (for example, 

emergency department physicians) tend 

to provide post-urological care when it 

is required.180 This measure is intended 

to bring greater awareness to a larger 

number of ASCs and patients, in 

addition to actionable information to 

lower the rate of preventable adverse 

events and to improve the quality of 

care following procedures performed at 

an ASC. 

Although the majority of ASCs would 

be expected to have risk-standardized 

rates that would be classified as ‘‘no 

different than the national rate’’ on 

Hospital Compare, we believe that the 

measure will be able to make distinction 

among facilities and to consumers 

because the variation in riskstandardized hospital visit rates across 

ASCs nationally suggests that there is 

still room for quality improvement. 

Hospital Compare will also report 

facilities’ risk-standardized rates, and 

facilities will receive confidential 

feedback reports to support quality 

improvement efforts. Furthermore, 

feedback from national TEP members 

showed that the ASC–18 measure, as 

specified, can be used to distinguish 

between better and worse quality 

facilities.181 This shows TEP agreement 

with the overall face validity of the 

measure. 

Comment: A few commenters 

expressed concerns about risk 

adjustment. A commenter noted that the 

measure is not risk adjusted to account 

for socioeconomic status and other 

factors beyond a hospitals’ control. 

Another commenter expressed concern 

about including condition category (CC 

82), Respirator dependence/ 

tracheostomy status, on the list of 

condition categories that are not riskadjusted if the condition occurs only at 

the time of the procedure. The 

commenter noted that this type of 

condition is not something that 

develops acutely within the timeframe 

of an ASC procedure, but rather is 

reflective of a more chronic patient 

condition. 

Response: We understand the 

important role that factors outside of an 

ASC’s control, for example, 

socioeconomic and sociodemographic 

status, play in the care of patients. 

Although the risk-adjustment 

methodology does not stratify by social 

risk factors, it does account for risk by 

adjusting for risk factors associated with 

increased risk for hospital visits after 

surgery. In developing this measure, we 

evaluated the potential effects of risk 

adjusting for three socioeconomic status 

(SES) factors that are available in CMS 

claims (Medicaid dual-eligibility status, 

African-American race, and the AHRQ 

SES index). Our results show that 

adjusting for these three factors at the 

patient level do not change the measure 

scores. We assessed the relationship of 

SES to hospital visits at the patient and 

facility levels. Unadjusted and adjusted 

ASC-level risk-standardized hospital 

visit rates were highly correlated 

(Spearman correlation coefficients of 

nearly 1.0) when calculated with and 

without the addition of the three SES 

variables (Medicaid dual-eligibility 

status, African-American race, and the 

AHRQ SES index). This indicates that 

including SES variables in ASC-level 

risk-adjusted measure score will result 

in limited differences in measure results 

after accounting for other risk factors, 

such as age and comorbidities. We refer 

readers to the methodology in the 

measure specifications for more 

information about SES testing for this 

measure at: https://www.cms.gov/ 

Medicare/Quality-Initiatives-PatientAssessment-Instruments/Hospital

QualityInits/MeasureMethodology.html. We also refer readers 

to section XIV.B.2. of this final rule with 

comment period where we discuss 

social risk factors in the ASCQR 

Program in more detail. 

Furthermore, we appreciate the 

commenter’s concern about including 

condition category (CC) 82 on the list of 

condition categories that are not riskadjusted for if they occur only at the 

time of the procedure.182 Condition 

categories are used to classify diagnoses 

into clinically coherent groups.183 We 

consolidated like risk factors into 

candidate variables, which were the 

variables that we considered for the 

risk-adjustment model. We agree with 

the commenter for noting that CC 82 is 

unlikely to develop acutely during the 

timeframe of a procedure; we will 

review this group of codes and will 

consider revising the list of CCs that are 

not risk-adjusted for if the condition 

occurs at the time of the procedure. As 

explained above, this measure was 

reviewed using a consensus-driven 

approach, with input from a national 

TEP and surgeons, including urologists, 

providing care in the ASC setting. 

Potential candidate risk factors and 

condition categories were identified 

from related quality measures and the 

literature;184 185 186 a preliminary list of 

risk factors was developed and then 

revised based on national TEP and 

clinical expert review that included 

several urologists. These risk variables 

were further released and reviewed 

during the measure development public 

comment period prior to the selection of 

the final model.187 This consensusbased approach was used to achieve 

clinical face validity prior to the model 

selection. 

Comment: One commenter noted that 

low-volume situations tend to produce 

measure scores that lack reliability. The 

commenter noted that the measure is 

only ‘‘fairly’’ reliable and suggested the 

reliability for a measure intended for 

public reporting should be substantially 

reliable, or have an ICC of 0.61 to 0.80. 

Furthermore, the commenter noted that 

the measure also suffers from limited 

discriminatory power because the 

number of underperforming facilities is 

very small. The commenter urged CMS 

to ensure that the publicly reported 

scores are reliable. 

Response: We thank the commenter 

for their feedback about the measure 

reliability. We disagree with the 

commenter and believe that ASC–18 is 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59469 

188Landis J, Koch G. The measurement of 

observer agreement for categorical data, Biometrics 

1977;33:159–174. 

189The NQF considers ICC values ranging from 

0.01–0.20 as ‘‘slight’’ reliability, 0.21–0.40 as ‘‘fair’’ 

reliability, 0.41 to 0.60 as ‘‘moderate’’ reliability, 

and 0.61 to 0.80 as ‘‘strong’’ reliability. Avalable at: 

http://www.qualityforum.org/Measuring_

Performance/Improving_NQF_Process/Measure_

Testing_Task_Force_Final_Report.aspx. 

190Landis J, Koch G. The measurement of 

observer agreement for categorical data, Biometrics 

1977;33:159–174. 

191See the Risk-Standardized Hospital Visits 

within 7 Days After Hospital Outpatient Surgery 

Measure. For ICC score of 0.50: Available at: https:// 

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

Downloads/Hospital-Visits-after-HospitalOutpatient-Surgery-Measure.pdf. 

sufficiently reliable to be included in 

the ASCQR Program. Our calculated 

intraclass correlation coefficient 

(ICC),188 a measure of reliability or the 

degree to which the measure can 

produce accurate and consistent results 

across multiple measurements of the 

same entities in a time period, for this 

measure was 0.45, indicating 

‘‘moderate’’ reliability.189 The NQF 

considers ICC values ranging from 0.01– 

0.20 as ‘‘slight’’ reliability, 0.21–0.40 as 

‘‘fair’’ reliability, 0.41 to 0.60 as 

‘‘moderate’’ reliability, and 0.61 to 0.80 

as ‘‘strong’’ reliability.190 We disagree 

that the measure reliability should be 

‘‘substantially’’ reliable or have an ICC 

of 0.61 to 0.80, and believe the publicly 

reported scores will be sufficiently 

reliable. The results of reliability testing 

are consistent with existing measures of 

patient outcomes in the ambulatory 

surgery setting.191 Therefore, we believe 

the measure is sufficiently reliable. 

Regarding the comment about lack of 

discriminatory power, we agree that the 

many small-volume ASCs will limit the 

ability to make distinctions in 

performance between facilities. ASCs 

with few cases in a given year limit our 

ability to capture variation in ASC-level 

measure scores because our modeling 

methodology is conservative and will 

estimate measure scores toward the 

national mean for facilities with small 

volumes. Specifically, hospitals with 

relatively few cases in the performance 

period may have a true rate that is 

worse/better than the national average. 

However, the model estimates their rate 

as close to the mean because their low 

volume does not provide enough 

information to accurately estimate a 

value near their true rate. As a result, 

the model may capture less variation 

than truly exits due to low case sizes. To 

improve the measure’s ability to detect 

quality differences, we crafted our 

proposal to use 2 years of data for public 

reporting to expand the number of cases 

available for estimating rates across all 

facilities and to increase both the 

reliability of the measure score and the 

ability to discriminate performance 

across facilities. Furthermore, ASC 

facilities that have too few cases to 

reliably estimate a measure score 

(moderate reliability as discussed in the 

prior paragraph) would be treated in the 

same way as other facilities with too few 

cases and would not have their scores 

posted on Hospital Compare; their data 

would be replaced with a footnote. We 

discuss our Hospital Compare footnotes 

at: https://www.medicare.gov/hospital

compare/data/Footnotes.html. 

However, these facilities will still 

receive confidential feedback reports/ 

facility-specific reports providing 

valuable information about post-surgery 

events. We refer readers to section 

XIV.B.6.c.(7) of this final rule with 

comment period for more details about 

public reporting of this measure. We 

expect that smaller ASCs will still 

benefit from confidentially reviewing 

their measure results and individual 

patient-level outcomes in the facilityspecific report, as these data are 

currently largely unknown to ASCs and 

providers. 

Comment: One commenter requested 

that the dry run results be aggregated 

and made available in its entirety to the 

public for review and comment if the 

measure is finalized. The commenter 

also suggested that CMS conduct pilot 

testing for the measure with volunteer 

ASCs rather than conduct national dry 

runs. Another commenter suggested that 

CMS pilot test the measure prior to 

implementation to ensure that the 

measure adequately account for the 

nuances related to urologic surgery. 

Response: We refer readers to section 

XIV.B.6.c.(7) of this final rule with 

comment period where we discuss our 

dry run. The intent of the dry run is to 

test production of the measure and for 

ASCs to familiarize themselves with the 

measure and provide feedback to CMS. 

The dry run will generate confidential 

reports for ASCs on measure 

performance and risk-standardized 

hospital visit rates, among other data. 

We plan to perform a dry run of the 

measure prior to implementation. The 

confidential dry run results will not be 

publicly reported or used for payment 

determination. We believe a dry run 

will be more beneficial than pilot 

testing. The dry run will include all 

ASCs rather than just a subset of 

volunteer ASCs and will enable all 

ASCs to gain familiarity with the 

measure and processes, as well as 

provide feedback to CMS on both the 

measure itself and the reports. This will 

also enable CMS to learn about any 

unanticipated nuances associated with 

measure implementation. 

As proposed we will not publicly 

report data for this measure until the CY 

2022 payment determination and 

subsequent years. We do not believe 

publicly reporting data from the dry run 

is appropriate as we might still be 

working out unanticipated nuances; the 

data is preliminary and is therefore 

subject to change based on feedback 

provided by ASCs. 

Comment: One commenter noted that 

although CMS believes that there would 

not be any additional burden because 

ASCs are not required to submit 

additional data, reviewing claims detail 

reports and measure scores would be 

associated with additional burden for 

someone at ASCs, likely a clinician. 

Response: We thank the commenter 

for providing this input and 

acknowledge that this measure will be 

calculated completely from data already 

obtained from paid Medicare FFS 

claims submitted by ASCs, hospitals, 

and physicians for billing purposes. 

Because claims data are used, there is 

no burden on the part of ASCs to submit 

additional data for measure calculation. 

We strongly suggest that facilities 

allocate time to review their feedback 

reports, because they contain actionable 

information to identify performance 

gaps and further develop quality 

improvement strategies. However, we 

note that these activities do not 

represent burden related to program 

requirements. 

Comment: One commenter expressed 

concern over the measure specifications, 

including the accuracy of background 

data on the number of unplanned 

hospital visits. 

Response: We interpret commenter to 

be referring to Table 4 in the ASC–18 

Measure Technical Report published in 

May 2017 and located at: https://

www.cms.gov/medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/ 

Measure-Methodology.html. In the 

technical report for this measure, the 

column labeled ‘‘number of unplanned 

hospital visits’’ was incorrectly labeled 

and should read ‘‘number of procedure 

performed.’’ The remainder of the table 

is correct. We will address this 

discrepancy in future technical 

documentation. We thank the 

commenter for pointing out the 

inconsistency. 

After consideration of the public 

comments we received, we are 

finalizing the proposal to adopt the 

ASC–18: Hospital Visits after Urology 

Ambulatory Surgical Center Procedures 

measure in the ASCQR Program for the 


sradovich on DSK3GMQ082PROD with RULES2
59470 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

192Magill SS, Edwards JR, Bamberg W, Beldavs 

ZG, Dumyati G, Kainer MA. Multistate PointPrevalence Survey of Health Care-Associated 

Infections. NEJM. 2014;370:1198–1208. 

193 Ibid. 194This statement is based on an analysis of data 

reported to the National Healthcare Safety Network 

(NHSN). Out of 67,150 ASC procedures report to 

NHSN from 2010 to 2013, 30,787 (45.9 percent) 

were breast procedures. Out of the 142 surgical site 

infections reported from ASCs during the same time 

period, 78 (54.9 percent) were related to breast 

procedures, indicating an SSI risk of 0.25 percent. 

This was the highest volume and SSI risk out of all 

outpatient ASC procedures reported in the 

timeframe. 

195 Vilar-Compte D, Jacquemin B, Robles-Vidal C, 

and Volkow P. Surgical Site Infections in Breast 

Surgery: Case-Control Study. World Journal of 

Surgery. 2004;28(3):242–246; Mannien J., Wille JC, 

Snoeren RL, van den Hof S. Impact of Postdischarge 

Surveillance on Surgical Site Infection Rates for 

Several Surgical Procedures: Results from the 

Nosocomial Surveillance Network in the 

Netherlands. Infection Control and Hospital 

Epidemiology. 2006;27:809–816; Vilar-Compte D., 

Rosales S., Hernandez-Mello N, Maafs E and 

Volkow P. Surveillance, Control, and Prevention of 

Surgical Site Infections in Breast Cancer Surgery: A 

CY 2022 payment determination and 

subsequent years, as proposed. 

d. Summary of Previously Adopted 

Measures and Newly Finalized ASCQR 

Program Measures for the CY 2022 

Payment Determination and Subsequent 

Years 

The measure set for the ASCQR 

Program CY 2022 payment 

determination and subsequent years is 

listed below. 

ASCQR PROGRAM MEASURE SET WITH PREVIOUSLY AND NEWLY FINALIZED MEASURES FOR THE CY 2022 PAYMENT

DETERMINATION AND SUBSEQUENT YEARS

ASC No. NQF No. Measure name 

ASC–1 ............ 0263 ............... Patient Burn. 

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

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

ASC–4 ............ 0265 † ............ All-Cause Hospital Transfer/Admission. 

ASC–8 ............ 0431 ............... Influenza Vaccination Coverage among Healthcare Personnel. 

ASC–9 ............ 0658 ............... Endoscopy/Polyp Surveillance: Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk Patients. 

ASC–10 .......... 0659 ............... Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous PolypsAvoidance of Inappropriate Use. 

ASC–11 .......... 1536 ............... Cataracts: Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery.* 

ASC–12 .......... 2539 ............... Facility 7-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy. 

ASC–13 .......... None .............. Normothermia Outcome. 

ASC–14 .......... None .............. Unplanned Anterior Vitrectomy. 

ASC–15a ........ None .............. OAS CAHPS—About Facilities and Staff.** 

ASC–15b ........ None .............. OAS CAHPS—Communication About Procedure.** 

ASC–15c ........ None .............. OAS CAHPS—Preparation for Discharge and Recovery.** 

ASC–15d ........ None .............. OAS CAHPS—Overall Rating of Facility.** 

ASC–15e ........ None .............. OAS CAHPS—Recommendation of Facility.** 

ASC–17 .......... None .............. Hospital Visits after Orthopedic Ambulatory Surgical Center Procedures.*** 

ASC–18 .......... None .............. Hospital Visits after Urology Ambulatory Surgical Center Procedures.*** 

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

* Measure voluntarily collected effective beginning with the CY 2017 payment determination as set forth in section XIV.E.3.c. of the CY 2015 

OPPS/ASC final rule with comment period (79 FR 66984 through 66985). 

** Measure finalized for delay beginning with CY 2018 reporting until further action in future rulemaking as discussed in section XIV.B.4. of this 

final rule with comment period. 

*** New measure finalized for the CY 2022 payment determination and subsequent years. 

7. ASCQR Program Measures and 

Topics for Future Consideration 

In the CY 2013 OPPS/ASC final rule 

with comment period (77 FR 68493 

through 68494), we set forth our 

considerations in the selection of 

ASCQR Program quality measures. We 

seek to develop a comprehensive set of 

quality measures to be available for 

widespread use for making informed 

decisions and quality improvement in 

the ASC setting (77 FR 68496). We also 

seek to align these quality measures 

with the National Quality Strategy 

(NQS), the CMS Strategic Plan (which 

includes the CMS Quality Strategy), and 

our other quality reporting and valuebased purchasing (VBP) programs, as 

appropriate. Accordingly, as we stated 

in the CY 2015 OPPS/ASC final rule 

with comment period (79 FR 66979), in 

considering future ASCQR Program 

measures, we are focusing on the 

following NQS and CMS Quality 

Strategy measure domains: Make care 

safer by reducing harm caused in the 

delivery of care; strengthen person and 

family engagement as partners in their 

care; promote effective communication 

and coordination of care; promote 

effective prevention and treatment of 

chronic disease; work with communities 

to promote best practices of healthy 

living; and make care affordable. 

We invited public comment on one 

measure developed by the CDC for 

potential inclusion in the ASCQR 

Program in future rulemaking, the 

Ambulatory Breast Procedure Surgical 

Site Infection (SSI) Outcome measure 

(NQF #3025). This potential measure is 

discussed in more detail below. 

Healthcare-associated infections 

(HAIs) are a major cause of morbidity 

and mortality in healthcare settings in 

the United States, with the most recent 

prevalence surveys of HAIs estimating 

that approximately four percent of 

inpatients in acute care settings have 

developed at least one HAI, translating 

to 721,800 infections in 648,000 patients 

in 2011.192 Surgical site infection (SSI) 

is one of the most common HAIs, 

comprising approximately 22 percent of 

all HAIs, and contribute greatly to the 

mortality and cost burden of HAIs.193

Breast SSIs represent a substantial 

proportion of SSIs overall in inpatient 

settings, and have one of the highest 

infection risks of any procedure type in 

outpatient settings.194 While SSI rates 

following breast procedures vary from 

one percent to over 30 percent 

depending on procedure type,195 the 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59471 

5-year Experience. American Journal of Infection 

Control. 2009;37(8):674–679. 

196Anderson DJ, Podgorny K, Berrı ́os-Torres S, et 

al. Strategies to Prevent Surgical Site Infections in 

Acute Care Hospitals: 2014 Update. Infection 

Control and Hospital Epidemiology. 2014;35:605– 

627; Mangram AJ, Horan TC, Pearson ML, Silver 

LC, Jarvis WR. Guideline for Prevention of Surgical 

Site Infection. Hospital Infection Control Practices 

Advisory Committee. Infection Control and 

Hospital Epidemiology. 1999; 20:250–278; Gaynes 

R, Richards C, Edwards JR, et al. Feeding Back 

Surveillance Data to Prevent Hospital-Acquired 

Infections. Emerging Infectious Diseases. 

2001;7:295–298. 

197Mu Y, et al. Improving Risk-Adjusted 

Measures of Surgical Site Infection for the National 

Healthcare Safety Network. Infection Control and 

Hospital Epidemiology. 2011;32(10):970–986. 

198 Ibid. 

199Cullen KA, Hall MJ, Golosinskiy A, Statistics 

NFcH. Ambulatory Surgery in the United States, 

2006. National Health Statistics Report; 2009. 

200National Quality Forum. ‘‘MAP 2017 

Considerations for Implementing Measures in 

Federal Programs: Hospitals.’’ Report. 2017. 

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

under ‘‘Hospitals—Final Report.’’ 

201Available at: http://www.qualityforum.org/ 

Setting_Priorities/Partnership/Measure_

Applications_Partnership.aspx, under ‘‘2016 

Measures Under Consideration List (PDF).’’ 

202National Quality Forum. 2016–2017 

Spreadsheet of Final Recommendations to HHS and 

CMS, available at: https://www.qualityforum.org/ 

WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=

81593. 

203 Ibid. 

204National Quality Forum. Endorsed measure 

specification available at: http://

www.qualityforum.org/QPS/3025. 

205Centers for Disease Control and Prevention. 

‘‘Surgical Site Infection (SSI) Event. Available at: 

https://www.cdc.gov/nhsn/pdfs/pscmanual/9pscssi

current.pdf. 

trend in surgery transitioning to 

outpatient and ambulatory surgery 

settings due to advances in surgical 

techniques and economic incentives for 

ambulatory surgery make these events 

an outcome of interest for the ASCQR 

Program. 

Numerous individual studies and 

systematic reviews provide strong 

evidence that measurement and 

feedback of surgical site infections leads 

to lower SSI rates in the long term.196

Although standardized metrics have 

been developed to measure SSI rates for 

inpatient surgeries in the hospital 

setting,197 these have not yet been 

developed for outpatient surgeries in 

ASCs, which comprise a fast-growing 

proportion of all surgeries performed in 

the United States.198 We believe this 

measure, if adopted in the future, could 

serve as a quantitative guide for ASCs, 

enabling them to benchmark SSI rates in 

their facilities against nationally 

aggregated data and set targets for 

improvement. 

This issue is of interest to the ASCQR 

Program because breast procedures are 

becoming increasingly common at 

ASCs.199 In addition, the Ambulatory 

Breast Procedure Surgical Site Infection 

Outcome measure addresses the MAPidentified measure gap area of surgical 

quality measures, including surgical site 

infection measures, for the ASCQR 

Program.200

The Ambulatory Breast Procedure 

Surgical Site Infection (SSI) Outcome 

measure was included on the 2016 MUC 

list 201 and reviewed by the MAP. The 

MAP conditionally supported the 

measure (MUC16–155), noting the rapid 

shift of care to the ambulatory surgery 

setting and the need to ensure 

transparency about the safety of 

ambulatory surgery centers.202 The MAP 

further noted that this measure should 

be submitted for NQF review and 

endorsement.203 A summary of the MAP 

recommendations can be found at: 

https://www.qualityforum.org/ 

WorkArea/linkit.aspx?LinkIdentifier=

id&ItemID=81593. We note that this 

measure received NQF endorsement in 

January 2017, and therefore satisfies the 

MAP’s condition for support.204

The Ambulatory Breast Procedure 

Surgical Site Infection Outcome 

measure is used to assess the riskadjusted Standardized Infection Ratio 

(SIR) for all SSIs following breast 

procedures conducted at ASCs among 

adult patients and reported to the CDC’s 

National Healthcare Safety Network. 

The measure compares the reported 

number of SSIs observed at an ASC with 

a predicted value based on nationally 

aggregated data. The numerator for this 

measure is all SSIs during the 30-day 

and 90-day postoperative periods 

following breast procedures in ASCs. 

The term SSI as used in this measure is 

defined in accordance with the CDC 

NHSN’s surveillance protocol as an 

infection, following a breast procedure, 

of either the skin, subcutaneous tissue 

and breast parenchyma at the incision 

site (superficial incisional SSI), deep 

soft tissues of the incision site (deep 

incisional SSI), or any part of the body 

deeper than the fascial/muscle layers 

that is opened or manipulated during 

the operative procedure (organ/space 

SSI).205 The denominator for this 

measure is all adult patients (defined as 

patients ages 18 to 108 years) 

undergoing breast procedures, as 

specified by the operative codes that 

comprise the breast procedure category 

of the NHSN Patient Safety Component 

Protocol, at an ASC. This measure 

cohort excludes hospital inpatient and 

outpatient departments, pediatric 

patients (patients younger than 18 years) 

and very elderly patients (older than 

108 years), and brain-dead patients 

whose organs are being removed for 

donor purposes. The specifications for 

this measure for the ASC setting can be 

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

QPS/ after searching ‘‘Ambulatory 

Breast Procedure Surgical Site Infection 

Outcome Measure.’’ 

We invited public comment on the 

possible inclusion of this measure in the 

ASCQR Program measure set in the 

future. 

Comment: Several commenters 

supported the inclusion of the 

Ambulatory Breast Procedure Surgical 

Site Infection (SSI) Outcome measure 

(NQF #3025) in the ASCQR Program in 

future rulemaking, noting that the 

measure is fully developed, was tested 

in the ASC setting, and addresses an 

important area of care. One commenter 

recommended that CMS consider 

refining this and other measures so that 

data is collected at the NPI level, rather 

than by CCN. One commenter agreed 

that breast procedure SSI outcomes are 

a concern, but noted that significant 

development and testing may be 

required before the Ambulatory Breast 

Procedure Surgical Site Infection (SSI) 

Outcome measure (NQF #3025) is ready 

for implementation due to the difficulty 

of capturing data on whether an SSI has 

occurred. One commenter expressed 

concern that the measure could lead to 

unintended consequences related to the 

administration of perioperative 

antibiotics across breast procedures. 

Response: We thank commenters for 

their support and recommendations. We 

will consider the suggestions and 

concerns as we craft future policy. In 

addition, we note that our goal is to 

develop a parsimonious measure set 

made up of meaningful measures that 

fill important gaps with consideration of 

the impact on burden in the ASCQR 

Program. 

8. Maintenance of Technical 

Specifications for Quality Measures 

We refer readers to the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74513 through 74514), 

where we finalized our proposal to 

follow the same process for updating the 

ASCQR Program measures that we 

adopted for the Hospital OQR Program 

measures, including the subregulatory 

process for making updates to the 

adopted measures. In the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68496 through 68497), the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75131), and the 

CY 2015 OPPS/ASC final rule with 

comment period (79 FR 66981), we 

provided additional clarification 

regarding the ASCQR Program policy in 

the context of the previously finalized 

Hospital OQR Program policy, including 

the processes for addressing 


sradovich on DSK3GMQ082PROD with RULES2
59472 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

nonsubstantive and substantive changes 

to adopted measures. In the CY 2016 

OPPS/ASC final rule with comment 

period (80 FR 70531), we provided 

clarification regarding our decision to 

not display the technical specifications 

for the ASCQR Program on the CMS 

Web site, but stated that we will 

continue to display the technical 

specifications for the ASCQR Program 

on the QualityNet Web site. In addition, 

our policies regarding the maintenance 

of technical specifications for the 

ASCQR Program are codified at 42 CFR 

416.325. We did not propose any 

changes to our policies regarding the 

maintenance of technical specifications 

for the ASCQR Program. 

9. Public Reporting of ASCQR Program 

Data 

In the CY 2012 OPPS/ASC final rule 

with comment period (76 FR 74514 

through 74515), we finalized a policy to 

make data that an ASC submitted for the 

ASCQR Program publicly available on a 

CMS Web site after providing an ASC an 

opportunity to review the data to be 

made public. In the CY 2016 OPPS/ASC 

final rule with comment period (80 FR 

70531 through 70533), we finalized our 

policy to publicly display data by the 

National Provider Identifier (NPI) when 

the data are submitted by the NPI and 

to publicly display data by the CCN 

when the data are submitted by the 

CCN. In addition, we codified our 

policies regarding the public reporting 

of ASCQR Program data at 42 CFR 

416.315 (80 FR 70533). In the CY 2017 

OPPS/ASC final rule with comment 

period, we formalized our current 

public display practices regarding 

timing of public display and the 

preview period by finalizing our 

proposals to publicly display data on 

the Hospital Compare Web site, or other 

CMS Web site as soon as practicable 

after measure data have been submitted 

to CMS; to generally provide ASCs with 

approximately 30 days to review their 

data before publicly reporting the data; 

and to announce the timeframes for 

each preview period starting with the 

CY 2018 payment determination on a 

CMS Web site and/or on our applicable 

listservs (81 FR 79819 through 79820). 

We did not propose any changes to 

these policies. However, we note that in 

section XIV.B.6.b. and c. of this final 

rule with comment period, we are 

finalizing two new measures: ASC–17: 

Hospital Visits after Orthopedic 

Ambulatory Surgical Center Procedures, 

and ASC–18: Hospital Visits after 

Urology Ambulatory Surgical Center 

Procedures, beginning with the CY 2022 

payment determination, and specific 

public reporting policies associated 

with these measures. 

C. Administrative Requirements 

1. Requirements Regarding QualityNet 

Account and Security Administrator 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75132 through 75133) for 

a detailed discussion of the QualityNet 

security administrator requirements, 

including setting up a QualityNet 

account, and the associated timelines, 

for the CY 2014 payment determination 

and subsequent years. In the CY 2016 

OPPS/ASC final rule with comment 

period (80 FR 70533), we codified the 

administrative requirements regarding 

maintenance of a QualityNet account 

and security administrator for the 

ASCQR Program at 42 CFR 

416.310(c)(1)(i). We refer readers to 

section XIV.D.3.b.1. of this final rule 

with comment period where we are 

finalizing our proposals to expand 

submission via the CMS online tool to 

also allow for batch data submission 

and make corresponding changes to the 

42 CFR 416.310(c)(1)(i). 

2. Requirements Regarding Participation 

Status 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75133 through 75135) for 

a complete discussion of the 

participation status requirements for the 

CY 2014 payment determination and 

subsequent years. In the CY 2016 OPPS/ 

ASC final rule with comment period (80 

FR 70533 and 70534), we codified these 

requirements regarding participation 

status for the ASCQR Program at 42 CFR 

416.305. We did not propose any 

changes to these policies. 

D. Form, Manner, and Timing of Data 

Submitted for the ASCQR Program 

1. Requirements Regarding Data 

Processing and Collection Periods for 

Claims-Based Measures Using Quality 

Data Codes (QDCs) 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75135) for a complete 

summary of the data processing and 

collection periods for the claims-based 

measures using QDCs for the CY 2014 

payment determination and subsequent 

years. In the CY 2016 OPPS/ASC final 

rule with comment period (80 FR 

70534), we codified the requirements 

regarding data processing and collection 

periods for claims-based measures using 

QDCs for the ASCQR Program at 42 CFR 

416.310(a)(1) and (2). We did not 

propose any changes to these 

requirements. 

We note that, in section XIV.B.3.b.(1) 

of this final rule with comment period, 

we are finalizing a proposal to remove 

one claims-based measure using QDCs, 

ASC–5: Prophylactic Intravenous (IV) 

Antibiotic Timing, beginning with the 

CY 2019 payment determination. The 

following previously finalized claimsbased measures using QDCs will be 

collected for the CY 2020 payment 

determination and subsequent years: 

• ASC–1: Patient Burn; 

• ASC–2: Patient Fall; 

• ASC–3: Wrong Site, Wrong Side, 

Wrong Patient, Wrong Procedure, 

Wrong Implant; and 

• ASC–4: Hospital Transfer/ 

Admission. 

2. Minimum Threshold, Minimum Case 

Volume, and Data Completeness for 

Claims-Based Measures Using QDCs 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75135 through 75137), the 

CY 2016 OPPS/ASC final rule with 

comment period (80 FR 70534 through 

70535) as well as 42 CFR 416.310(a)(3) 

and 42 CFR 416.305(c) for our policies 

about minimum threshold, minimum 

case volume, and data completeness for 

claims-based measures using QDCs. We 

did not propose any changes to these 

policies. 

3. Requirements for Data Submitted via 

an Online Data Submission Tool 

We refer readers to the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74505 through 74509); CY 

2014 OPPS/ASC final rule with 

comment period (78 FR 75137 through 

75140); CY 2015 OPPS/ASC final rule 

with comment period (79 FR 66983 

through 66986); CY 2016 OPPS/ASC 

final rule with comment period (80 FR 

70535 through 70536); CY 2017 OPPS/ 

ASC final rule with comment period (81 

FR 79820 through 79822); and 42 CFR 

416.310(c) for our previously finalized 

policies for data submitted via an online 

data submission tool. For more 

information on data submission using 

QualityNet, we refer readers to: https:// 

www.qualitynet.org/dcs/Content

Server?c=Page&pagename=Qnet

Public%2FPage%2FQnetTier2&cid=

1228773314768. We note that we are 

finalizing proposals to remove two 

measures submitted via a CMS online 

data submission tool, ASC–6 and ASC– 

7, in section XIV.B.3.b.(2) and 

XIV.B.3.b.(3) of this final rule with 

comment period. We are not finalizing 

our proposal to adopt one measure 

submitted via a CMS online data 

submission tool, as described in section 

XIV.B.6.a. of this final rule with 

comment period. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59473 

206We note that the ASC–11 measure is 

voluntarily collected effective beginning with the 

CY 2017 payment determination, as set forth in 

section XIV.E.3.c. of the CY 2015 OPPS/ASC final 

rule with comment period (79 FR 66984 through 

66985). 

a. Requirements for Data Submitted via 

a Non-CMS Online Data Submission 

Tool 

We refer readers to CY 2014 OPPS/ 

ASC final rule with comment period (78 

FR 75139 through 75140) and CY 2015 

OPPS/ASC final rule with comment 

period (79 FR 66985 through 66986) for 

our requirements regarding data 

submitted via a non-CMS online data 

submission tool (CDC NHSN Web site). 

We codified our existing policies 

regarding the data collection time 

periods for measures involving online 

data submission and the deadline for 

data submission via a non-CMS online 

data submission tool at 42 CFR 

416.310(c)(2). Currently, we only have 

one measure (ASC–8: Influenza 

Vaccination Coverage among Healthcare 

Personnel) that is submitted via a nonCMS online data submission tool. 

We did not propose any changes to 

the reporting requirements for this 

measure. 

b. Requirements for Data Submitted via 

a CMS Online Data Submission Tool 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75137 through 75139), CY 

2016 OPPS/ASC final rule with 

comment period (80 FR 70535 through 

70536), CY 2017 OPPS/ASC final rule 

with comment period (81 FR 79821 

through 79822), and 42 CFR 

416.310(c)(1) for our requirements 

regarding data submitted via a CMS 

online data submission tool. We are 

currently using the QualityNet Web site 

as our CMS online data submission tool: 

https://www.qualitynet.org/dcs/Content

Server?c=Page&pagename=

QnetPublic%2FPage%2FQnetHome

page&cid=1120143435383. In the CY 

2018 OPPS/ASC proposed rule (82 FR 

33701), we made one proposal to 

expand the method of data submission 

via a CMS online data submission tool. 

(1) Batch Submission 

We did not propose any changes to 

our policies regarding data submitted 

via a CMS online data submission tool 

when data is entered for individual 

facilities. Currently, for individual 

facility data entry, users must have a 

QualityNet account and use one 

Hospital Quality Reporting (HQR) 

External File per facility that is 

uploaded into the QualityNet secure 

portal. However, using one HQR 

External File that only allows data entry 

for one facility can be burdensome for 

entities responsible for submitting such 

data for multiple facilities, such as 

multi-facility ASCs. Therefore, in an 

effort to streamline the process, we 

proposed to expand the CMS online tool 

to also allow for batch submission 

beginning with data submitted during 

CY 2018 for the CY 2020 payment 

determination and subsequent years. 

Batch submission is submission of 

data for multiple facilities 

simultaneously using a single, 

electronic file containing data from 

multiple facilities submitted via one 

agent QualityNet account. Under the 

batch submission process, ASC agents 

(for example, a corporate representative 

for a corporate entity consisting of 

multiple ASC facilities with separate 

NPIs) would be assigned a vendor ID 

and an ASC’s representative would 

submit the Security Administrator (SA) 

form with the assigned vendor ID for the 

agent to establish their own QualityNet 

account. Once approved, the agent may 

submit data for any ASC associated with 

that ID, individually or in a batch, and 

access data reports for the same ASCs. 

Agents would only have access to data 

reports for facilities that have 

authorized them to have access. For 

batch submission, agents would be 

provided the HQR external file layout 

with which to upload their associated 

ASCs’ data under the agents’ QualityNet 

account. In order to submit batch data, 

agents would need to meet all 

QualityNet account requirements, such 

as establishing a QualityNet account 

and maintaining a QualityNet security 

administrator. Additional details 

regarding logistics of batch data 

submission would be included in future 

guidance in the Specifications Manual. 

In addition, we proposed to make 

corresponding changes to 42 CFR 

416.310(c)(1)(i) to reflect this proposal 

and replace the term ‘‘ASCs’’ with the 

phrase ‘‘ASCs, and any agents 

submitting data on an ASC’s behalf.’’ 

We invited public comment on our 

proposals, as discussed above, to: (1) 

Expand the CMS online tool to also 

allow for batch submission of measure 

data beginning with data submitted 

during CY 2018, and (2) make 

corresponding changes to modify 42 

CFR 416.310(c)(1)(i) to reflect the 

aforementioned proposal. 

Comment: Several commenters 

supported the proposal to allow batch 

submission, noting that it will increase 

submission efficiency and decrease 

administrative burden. One commenter 

requested that the process for batch 

submission be determined in a timely 

fashion to allow ASCs to use this option 

prior to the 2018 data submission 

deadline. 

Response: We thank the commenters 

for their support and agree that batch 

submission will increase efficiency and 

decrease administrative burden. In 

addition, as noted above, we proposed 

to expand the CMS online tool to allow 

for batch submission beginning with 

data submitted during CY 2018 for the 

CY 2020 payment determination and 

subsequent years, such that the option 

will be available prior to the 2018 data 

submission deadline. 

After consideration of the public 

comments we received, we are 

finalizing our proposals to: (1) Expand 

the CMS online tool to also allow for 

batch submission of measure data 

beginning with data submitted during 

CY 2018, and (2) make corresponding 

changes to modify 42 CFR 

416.310(c)(1)(i). 

(2) Measures Using the CMS Online 

Data Submission Tool for the CY 2020 

Payment Determination and Subsequent 

Years 

In sections XIV.B.3.b.(2) and 

XIV.B.3.b.(3) of this final rule with 

comment period, respectively, we are 

finalizing proposals to remove two 

measures collected via a CMS online 

data submission tool—ASC–6: Safe 

Survey Checklist Use and ASC–7: ASC 

Facility Volume Data on Selected 

Surgical Procedures—beginning with 

the CY 2019 payment determination. 

The following previously finalized 

measures will require data to be 

submitted via a CMS online data 

submission tool for the CY 2020 

payment determination and subsequent 

years: 

• ASC–9: Endoscopy/Polyp 

Surveillance: Appropriate Follow-Up 

Interval for Normal Colonoscopy in 

Average Risk Patients; 

• ASC–10: Endoscopy/Polyp 

Surveillance: Colonoscopy Interval for 

Patients with a History of Adenomatous 

Polyps—Avoidance of Inappropriate 

Use; and 

• ASC–11: Cataracts: Improvement in 

Patients’ Visual Function within 90 

Days Following Cataract Surgery.206

We are not finalizing our proposal to 

adopt one new measure collected via a 

CMS online data submission tool, ASC– 

16: Toxic Anterior Segment Syndrome, 

beginning with the CY 2021 payment 

determination, as described in section 

XIV.B.6.a. of this final rule with 

comment period. 

4. Requirements for Non-QDC Based, 

Claims-Based Measure Data 

We refer readers to the CY 2015 

OPPS/ASC final rule with comment 


sradovich on DSK3GMQ082PROD with RULES2
59474 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

207 In the CY 2015 OPPS/ASC final rule with 

comment period (79 FR 66987), we stated that we 

will refer to the process as the ‘‘Extraordinary 

Circumstances Extensions or Exemptions’’ process 

rather than the ‘‘Extraordinary Circumstances 

Extensions or Waivers’’ process. 

period (79 FR 66985) and the CY 2016 

OPPS/ASC final rule with comment 

period (80 FR 70536) for our previously 

adopted policies regarding data 

processing and collection periods for 

claims-based measures for the CY 2018 

payment determination and subsequent 

years. In addition, in the CY 2016 

OPPS/ASC final rule with comment 

period (80 FR 70536), we codified these 

policies at 42 CFR 416.310(b). We did 

not propose any changes to these 

requirements. 

We note that one previously finalized 

measure, ASC–12: Facility 7-Day RiskStandardized Hospital Visit Rate after 

Outpatient Colonoscopy, will be 

collected via claims for the CY 2020 

payment determination and subsequent 

years (79 FR 66970 through 66978). In 

addition, in sections XIV.B.6.b. and c., 

respectively, of this final rule with 

comment period, we are finalizing our 

proposals to adopt two new claimsbased measures—ASC–17: Hospital 

Visits after Orthopedic Ambulatory 

Surgical Center Procedures, and ASC– 

18: Hospital Visits after Urology 

Ambulatory Surgical Center 

Procedures—beginning with the CY 

2022 payment determination. 

5. Requirements for Data Submission for 

ASC–15a–e: Outpatient and Ambulatory 

Surgery Consumer Assessment of 

Healthcare Providers and Systems (OAS 

CAHPS) Survey-Based Measures 

We refer readers to the CY 2017 

OPPS/ASC final rule with comment 

period (81 FR 79822 through 79824) for 

our previously finalized policies 

regarding survey administration and 

vendor requirements for the CY 2020 

payment determination and subsequent 

years. In addition, we codified these 

policies at 42 CFR 416.310(e). However, 

in section XIV.B.4. of this final rule with 

comment period, we are finalizing a 

proposal to delay implementation of the 

ASC–15a–e: OAS CAHPS Survey-based 

measures beginning with the CY 2020 

payment determination (CY 2018 data 

submission) until further action in 

future rulemaking and refer readers to 

that section for more details. 

As noted in the CY 2017 OPPS/ASC 

final rule with comment period (81 FR 

79815), some commenters suggested 

shortening sections of the survey, such 

as the ‘‘About You’’ section. We 

continue to evaluate the utility of 

individual questions as we collect new 

data from the survey’s voluntary 

national implementation, and will 

consider different options for shortening 

the OAS CAHPS Survey without the 

loss of important data in the future. 

Specifically, we continue to consider 

the removal of two demographic 

questions—the ‘‘gender’’ and ‘‘age’’ 

questions—from the OAS CAHPS 

Survey in a future update. 

Comment: A few commenters 

supported removal of the gender and 

age questions from the survey. 

Response: We thank the commenters 

for their suggestions. We will take these 

comments under consideration as we 

craft policies for the OAS CAHPS 

Survey. 

6. Extraordinary Circumstances 

Extensions or Exemptions for the CY 

2019 Payment Determination and 

Subsequent Years 

a. Background 

We refer readers to the FY 2013 IPPS/ 

LTCH PPS final rule (77 FR 53642 

through 53643), the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

75140 through 75141), the CY 2017 

OPPS/ASC final rule with comment 

period (81 FR 79824 through 79825), 

and 42 CFR 416.310(d) for the ASCQR 

Program’s policies for extraordinary 

circumstance extensions or exemptions 

(ECE) requests.207

Many of our quality reporting and 

value-based purchasing programs share 

a common process for requesting an 

exception from program reporting due 

to an extraordinary circumstance not 

within a provider’s control. We refer 

readers to the Hospital IQR Program (76 

FR 51615 through 51652, 78 FR 50836 

through 50837, 79 FR 50277, 81 FR 

57181 through 57182, and 42 CFR 

412.140(c)(2)), the Hospital OQR 

Program (77 FR 68489, 78 FR 75119 

through 75120, 79 FR 66966, and 80 FR 

70524), the IPFQR Program (77 FR 

53659 through 53660 and 79 FR 45978), 

and the PCHQR Program (78 FR 50848), 

as well as the HAC Reduction Program 

(80 FR 49542 through 49543) and the 

Hospital Readmissions Reduction 

Program (80 FR 49542 through 49543), 

for program-specific information about 

extraordinary circumstances exemption 

requests. As noted below, some of these 

policies were updated in the FY 2018 

IPPS/LTCH PPS final rule. 

In reviewing the policies for these 

programs, we recognized that there are 

five areas in which these programs have 

variances regarding ECE requests. These 

are: (1) Allowing the facilities or 

hospitals to submit a form signed by the 

facility’s or hospital’s CEO versus CEO 

or designated personnel; (2) requiring 

the form be submitted within 30 days 

following the date that the extraordinary 

circumstance occurred versus within 90 

days following the date the 

extraordinary circumstance occurred; 

(3) inconsistency regarding specification 

of a timeline for us to provide our 

formal response notifying the facility or 

hospital of our decision; (4) 

inconsistency regarding specification of 

our authority to grant ECEs due to CMS 

data system issues; and (5) referring to 

the program as ‘‘extraordinary 

extensions/exemptions’’ versus as 

‘‘extraordinary circumstances 

exceptions.’’ We believe addressing 

these five areas, as appropriate, can 

improve administrative efficiencies for 

affected facilities or hospitals. We note 

that, in the FY 2018 IPPS/LTCH PPS 

final rule, we examined our policies in 

these areas for the Hospital 

Readmissions Reduction Program, the 

HAC Reduction Program, the Hospital 

IQR Program, the PCHQR Program and 

the IPFQR Program (82 FR 38240, 

38277, 38410, 38425 and 38473 through 

38474, respectively) and finalized 

proposals to address differences in these 

areas for those programs. In section 

XIII.D.8. of this final rule with comment 

period, we are also finalizing revisions 

to our ECE policies for the Hospital 

OQR Program. 

With the exception of the terminology 

used to describe these processes (item 5 

above), the ASCQR Program is aligned 

with other quality reporting programs. 

As a result, in the CY 2018 OPPS/ASC 

proposed rule (82 FR 33702), we 

proposed to rename the process as the 

extraordinary circumstances exceptions 

(ECE) policy and make conforming 

changes to 42 CFR 416.310(d). These are 

discussed below. 

b. ECE Policy Nomenclature 

We have observed that while all 

quality programs listed above have 

developed similar policies to provide 

exceptions from program requirements 

to facilities that have experienced 

extraordinary circumstances, such as 

natural disasters, these programs refer to 

these policies using inconsistent 

terminology. Some programs refer to 

these policies as ‘‘extraordinary 

circumstances extensions/exemptions’’ 

while others refer to the set of policies 

as ‘‘extraordinary circumstances 

exceptions.’’ Several programs 

(specifically, the Hospital VBP Program, 

the HAC Reduction Program, and the 

Hospital Readmissions Reduction 

Program) are not able to grant 

extensions to required data reporting 

timelines due to their reliance on data 

external to their program, and thus the 

term, ‘‘extraordinary circumstances 

extensions/exemptions’’ is not 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59475 

applicable to all programs. However, all 

of the described programs are able to 

offer exceptions from their reporting 

requirements. Therefore, in an effort to 

align across CMS quality programs, we 

proposed to change the name of this 

policy from ‘‘extraordinary 

circumstances extensions or exemption’’ 

to ‘‘extraordinary circumstances 

exceptions’’ for the ASCQR Program, 

beginning January 1, 2018, and to revise 

§ 416.310(d) of our regulations to reflect 

this change. 

We invited public comment on these 

proposals as discussed above. 

Comment: A few commenters 

supported the proposal to align the ECE 

policy with other quality reporting 

programs. 

Response: We thank commenters for 

their support. 

After consideration of the public 

comments we received, we are 

finalizing the proposals to rename the 

process as the extraordinary 

circumstances exceptions (ECE) policy 

and make conforming changes to 42 

CFR 416.310(d). 

c. Timeline for CMS Response to ECE 

Requests 

We also note that we believe it is 

important for facilities to receive timely 

feedback regarding the status of ECE 

requests. We strive to complete our 

review of each ECE request as quickly 

as possible. However, we recognize that 

the number of requests we receive, and 

the complexity of the information 

provided impacts the actual timeframe 

to make ECE determinations. To 

improve transparency of our process, we 

believe it is appropriate to clarify that 

we will strive to complete our review of 

each request within 90 days of receipt. 

7. ASCQR Program Reconsideration 

Procedures 

We refer readers to the FY 2013 IPPS/ 

LTCH PPS final rule (77 FR 53643 

through 53644), the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

75141), the CY 2016 OPPS/ASC final 

rule with comment period (80 FR 

70537), and 42 CFR 416.330 for the 

ASCQR Program’s reconsideration 

policy. We did not propose any changes 

to this policy. 

E. Payment Reduction for ASCs That 

Fail To Meet the ASCQR Program 

Requirements 

1. Statutory Background 

We refer readers to section XVI.D.1. of 

the CY 2013 OPPS/ASC final rule with 

comment period (77 FR 68499) for a 

detailed discussion of the statutory 

background regarding payment 

reductions for ASCs that fail to meet the 

ASCQR Program requirements. 

2. Reduction to the ASC Payment Rates 

for ASCs That Fail To Meet the ASCQR 

Program Requirements for a Payment 

Determination Year 

The national unadjusted payment 

rates for many services paid under the 

ASC payment system equal the product 

of the ASC conversion factor and the 

scaled relative payment weight for the 

APC to which the service is assigned. 

Currently, the ASC conversion factor is 

equal to the conversion factor calculated 

for the previous year updated by the 

multifactor productivity (MFP)-adjusted 

CPI–U update factor, which is the 

adjustment set forth in section 

1833(i)(2)(D)(v) of the Act. The MFPadjusted CPI–U update factor is the 

Consumer Price Index for all urban 

consumers (CPI–U), which currently is 

the annual update for the ASC payment 

system, minus the MFP adjustment. As 

discussed in the CY 2011 MPFS final 

rule with comment period (75 FR 

73397), if the CPI–U is a negative 

number, the CPI–U would be held to 

zero. Under the ASCQR Program in 

accordance with section 1833(i)(7)(A) of 

the Act and as discussed in the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68499), any annual 

increase shall be reduced by 2.0 

percentage points for ASCs that fail to 

meet the reporting requirements of the 

ASCQR Program. This reduction 

applied beginning with the CY 2014 

payment rates (77 FR 68500). For a 

complete discussion of the calculation 

of the ASC conversion factor, we refer 

readers to section XII.G. of this final rule 

with comment period. 

In the CY 2013 OPPS/ASC final rule 

with comment period (77 FR 68499 

through 68500), in order to implement 

the requirement to reduce the annual 

update for ASCs that fail to meet the 

ASCQR Program requirements, we 

finalized our proposal that we would 

calculate two conversion factors: A full 

update conversion factor and an ASCQR 

Program reduced update conversion 

factor. We finalized our proposal to 

calculate the reduced national 

unadjusted payment rates using the 

ASCQR Program reduced update 

conversion factor that would apply to 

ASCs that fail to meet their quality 

reporting requirements for that calendar 

year payment determination. We 

finalized our proposal that application 

of the 2.0 percentage point reduction to 

the annual update may result in the 

update to the ASC payment system 

being less than zero prior to the 

application of the MFP adjustment. 

The ASC conversion factor is used to 

calculate the ASC payment rate for 

services with the following payment 

indicators (listed in Addenda AA and 

BB to the proposed rule, which are 

available via the Internet on the CMS 

Web site): ‘‘A2’’, ‘‘G2’’, ‘‘P2’’, ‘‘R2’’ and 

‘‘Z2’’, as well as the service portion of 

device-intensive procedures identified 

by ‘‘J8’’ (77 FR 68500). We finalized our 

proposal that payment for all services 

assigned the payment indicators listed 

above would be subject to the reduction 

of the national unadjusted payment 

rates for applicable ASCs using the 

ASCQR Program reduced update 

conversion factor (77 FR 68500). 

The conversion factor is not used to 

calculate the ASC payment rates for 

separately payable services that are 

assigned status indicators other than 

payment indicators ‘‘A2’’, ‘‘G2’’, ‘‘J8’’, 

‘‘P2’’, ‘‘R2’’ and ‘‘Z2.’’ These services 

include separately payable drugs and 

biologicals, pass-through devices that 

are contractor-priced, brachytherapy 

sources that are paid based on the OPPS 

payment rates, and certain office-based 

procedures, certain radiology services 

and diagnostic tests where payment is 

based on the MPFS nonfacility PE RVUbased amount, and a few other specific 

services that receive cost-based payment 

(77 FR 68500). As a result, we also 

finalized our proposal that the ASC 

payment rates for these services would 

not be reduced for failure to meet the 

ASCQR Program requirements because 

the payment rates for these services are 

not calculated using the ASC conversion 

factor and, therefore, not affected by 

reductions to the annual update (77 FR 

68500). 

Office-based surgical procedures 

(performed more than 50 percent of the 

time in physicians’ offices) and 

separately paid radiology services 

(excluding covered ancillary radiology 

services involving certain nuclear 

medicine procedures or involving the 

use of contrast agents) are paid at the 

lesser of the MPFS nonfacility PE RVUbased amounts or the amount calculated 

under the standard ASC ratesetting 

methodology. Similarly, in section 

XII.D.2.b. of the CY 2015 OPPS/ASC 

final rule with comment period (79 FR 

66933 through 66934), we finalized our 

proposal that payment for the new 

category of covered ancillary services 

(that is, certain diagnostic test codes 

within the medical range of CPT codes 

for which separate payment is allowed 

under the OPPS and when they are 

integral to covered ASC surgical 

procedures) will be at the lower of the 

MPFS nonfacility PE RVU-based (or 

technical component) amount or the 

rate calculated according to the standard 


sradovich on DSK3GMQ082PROD with RULES2
59476 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

ASC ratesetting methodology. In the CY 

2013 OPPS/ASC final rule with 

comment period (77 FR 68500), we 

finalized our proposal that the standard 

ASC ratesetting methodology for this 

type of comparison would use the ASC 

conversion factor that has been 

calculated using the full ASC update 

adjusted for productivity. This is 

necessary so that the resulting ASC 

payment indicator, based on the 

comparison, assigned to these 

procedures or services is consistent for 

each HCPCS code, regardless of whether 

payment is based on the full update 

conversion factor or the reduced update 

conversion factor. 

For ASCs that receive the reduced 

ASC payment for failure to meet the 

ASCQR Program requirements, we 

believe that it is both equitable and 

appropriate that a reduction in the 

payment for a service should result in 

proportionately reduced coinsurance 

liability for beneficiaries (77 FR 68500). 

Therefore, in the CY 2013 OPPS/ASC 

final rule with comment period (77 FR 

68500), we finalized our proposal that 

the Medicare beneficiary’s national 

unadjusted coinsurance for a service to 

which a reduced national unadjusted 

payment rate applies will be based on 

the reduced national unadjusted 

payment rate. 

In that final rule with comment 

period, we finalized our proposal that 

all other applicable adjustments to the 

ASC national unadjusted payment rates 

would apply in those cases when the 

annual update is reduced for ASCs that 

fail to meet the requirements of the 

ASCQR Program (77 FR 68500). For 

example, the following standard 

adjustments would apply to the reduced 

national unadjusted payment rates: The 

wage index adjustment; the multiple 

procedure adjustment; the interrupted 

procedure adjustment; and the 

adjustment for devices furnished with 

full or partial credit or without cost (77 

FR 68500). We believe that these 

adjustments continue to be equally 

applicable to payment for ASCs that do 

not meet the ASCQR Program 

requirements (77 FR 68500). 

In the CY 2015, CY 2016 and CY 2017 

OPPS/ASC final rules with comment 

period (79 FR 66981 through 66982; 80 

FR 70537 through 70538; and 81 FR 

79825 through 79826, respectively), we 

did not make any other changes to these 

policies. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33702 through 33703), we 

did not propose any changes to these 

policies for CY 2018. 

XV. Files Available to the Public via the 

Internet 

The Addenda to the OPPS/ASC 

proposed rules and the final rules with 

comment period are published and 

available only via the Internet on the 

CMS Web site. To view the Addenda to 

this final rule with comment period 

pertaining to CY 2018 payments under 

the OPPS, we refer readers to the CMS 

Web site at: http://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/ 

Hospital-Outpatient-Regulations-andNotices.html; select ‘‘1678–FC’’ from the 

list of regulations. All OPPS Addenda to 

this final rule with comment period are 

contained in the zipped folder entitled 

‘‘2018 OPPS 1678–FC Addenda’’ at the 

bottom of the page. To view the 

Addenda to this final rule with 

comment period pertaining to CY 2018 

payments under the ASC payment 

system, we refer readers to the CMS 

Web site at: http://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/ASCPayment/ASCRegulations-and-Notices.html; select 

‘‘1678–FC’’ from the list of regulations. 

All ASC Addenda to this final rule with 

comment period are contained in the 

zipped folders entitled ‘‘Addendum AA, 

BB, DD1, DD2, and EE.’’ 

XVI. Collection of Information 

Requirements 

A. Statutory Requirement for 

Solicitation of Comments 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 60- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

3506(c)(2)(A) of the Paperwork 

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33705 through 33710), we 

solicited public comment on each of 

these issues for the following sections of 

this document that contain information 

collection requirements (ICRs). 

B. ICRs for the Hospital OQR Program 

1. Background 

The Hospital OQR Program is 

generally aligned with the CMS quality 

reporting program for hospital inpatient 

services known as the Hospital IQR 

Program (82 FR 20031 through 20075). 

We refer readers to the CY 2011 through 

CY 2017 OPPS/ASC final rules with 

comment periods (75 FR 72111 through 

72114; 76 FR 74549 through 74554; 77 

FR 68527 through 68532; 78 FR 75170 

through 75172; 79 FR 67012 through 

67015; 80 FR 70580 through 70582; and 

81 FR 79862 through 79863, 

respectively) for detailed discussions of 

Hospital OQR Program information 

collection requirements we have 

previously finalized. The information 

collection requirements associated with 

the Hospital OQR Program are currently 

approved under OMB control number 

0938–1109. 

In section XIII.B.4.c. of this final rule 

with comment period, we are finalizing 

the removal of six measures. 

Specifically, beginning with the CY 

2020 payment determination, we are 

finalizing, as proposed, to remove: (1) 

OP–21: Median Time to Pain 

Management for Long Bone Fracture; 

and (2) OP–26: Hospital Outpatient 

Volume Data on Selected Outpatient 

Surgical Procedures. Also, while we 

proposed to remove: (1) OP–1: Median 

Time to Fibrinolysis, (2) OP–4: Aspirin 

at Arrival, (3) OP–20: Door to Diagnostic 

Evaluation by a Qualified Medical 

Professional, and (4) OP–25: Safe 

Surgery Checklist beginning with the 

CY 2021 payment determination, we are 

finalizing removal of these measures 

with modification so that removal 

begins with the CY 2020 payment 

determination, one year earlier than 

proposed. To summarize, the following 

measures will be removed for the CY 

2020 payment determination: (1) OP–1: 

Median Time to Fibrinolysis; (2) OP–4: 

Aspirin at Arrival; (3) OP–20: Door to 

Diagnostic Evaluation by a Qualified 

Medical Professional; (4) OP–21: 

Median Time to Pain Management for 

Long Bone Fracture; (5) OP–25: Safe 

Surgery Checklist; and (6) OP–26: 

Hospital Outpatient Volume Data on 

Selected Outpatient Surgical 

Procedures. We expect these finalized 

proposals will reduce the burden of 

reporting for the Hospital OQR Program, 

as discussed in more detail below. We 

note that we discuss only the changes in 

burden resulting from the provisions in 

this final rule with comment period. 

In section XIII.B.10.b. of this final rule 

with comment period, we are finalizing 

our proposal, with modification, to 

publicly report OP–18c using data 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59477 

208BLS Occupational Employment Statistics; May 

2016. Available at: https://www.bls.gov/oes/current/ 

oes292071.htm. 

209http://www.bls.gov/bls/infohome.htm. 

210 Ibid. 

211BLS Occupational Employment Statistics; May 

2016. Available at: https://www.bls.gov/oes/current/ 

oes292071.htm. 212 Ibid. 

beginning with patient encounters 

during the third quarter of CY 2017. 

However, we do not expect our 

modifications to affect the burden 

estimates made in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33705 

through 33708), as discussed below. 

In section XIII.B.5. of this final rule 

with comment period, we are finalizing 

our proposal to delay the OP–37a–e: 

Outpatient and Ambulatory Surgery 

Consumer Assessment of Healthcare 

Providers and Systems (OAS CAHPS) 

Survey-based measures beginning with 

the CY 2020 payment determination (CY 

2018 data collection period) until 

further notice in future rulemaking. 

In addition, in this final rule with 

comment period, beginning with the CY 

2020 payment determination, we are 

finalizing our proposals: (1) To codify at 

§ 419.46(e) our previously finalized 

process for targeting hospitals for 

validation of chart-abstracted measures 

(section XIII.D.7.b. of this final rule with 

comment period); (2) to formalize the 

educational review process and use it to 

correct incorrect validation results for 

chart-abstracted measures (section 

XIII.D.7.c. of this final rule with 

comment period); (3) to align the first 

quarter for which hospitals must submit 

data for all hospitals that did not 

participate in the previous year’s 

Hospital OQR Program, and make 

corresponding revisions at 42 CFR 

419.46(c)(3) (section XIII.D.1. of this 

final rule with comment period); and (4) 

to align the naming of the Extraordinary 

Circumstances Exceptions (ECE) policy 

and make conforming changes to the 

CFR (section XIII.D.8.a. of this final rule 

with comment period). We are not 

finalizing our proposal to change the 

NOP submission deadlines such that 

hospitals are required to submit the 

NOP any time prior to registering on the 

QualityNet Web site and to make 

conforming revisions at 42 CFR 

419.46(a) (section XIII.C.2.b. of this final 

rule with comment period). We do not 

believe that these changes will affect our 

burden estimates, as further discussed 

below. 

2. Newly Finalized Change in Hourly 

Labor Cost for Burden Calculation for 

the Hospital OQR Program 

In previous rules (80 FR 70581), we 

estimated that a hospital pays an 

individual approximately $30 per hour 

to abstract and submit clinical data. We 

previously did not specify whether our 

wage estimate of $30 included overhead 

and fringe benefit costs. However, 

although we did not specify that this 

estimate included fringe benefit costs, in 

previous rules (80 FR 70581), we used 

$30 to calculate the total cost to 

hospitals to pay for staff that abstract 

and submit clinical data. In CY 2018 

OPPS/ASC proposed rule (82 FR 33705), 

we proposed a new cost to hospitals and 

specified that this cost included both 

wage and overhead and fringe benefit 

costs. Specifically, we proposed to 

estimate that reporting data for the 

Hospital OQR Program can be 

accomplished by staff with a median 

hourly wage of $18.29 per hour.208 This 

labor rate is based on the Bureau of 

Labor Statistics (BLS) median hourly 

wage for a medical records and health 

information technician. The BLS is the 

principal Federal agency responsible for 

measuring labor market activity, 

working conditions, and price changes 

in the economy.209 Acting as an 

independent agency, the BLS provides 

objective information for not only the 

government, but also for the public.210

The BLS describes medical records and 

health information technicians as those 

responsible for processing and 

maintaining health information data.211

Therefore, we believe is reasonable to 

assume that these individuals would be 

tasked with abstracting clinical data for 

the Hospital OQR Program measures. 

We also proposed to calculate the cost 

of overhead, including fringe benefits, at 

100 percent of the mean hourly wage. 

This is necessarily a rough adjustment, 

both because fringe benefits and 

overhead costs vary significantly from 

employer to employer and because 

methods of estimating these costs vary 

widely from study to study. 

Nonetheless, we believe that doubling 

the hourly wage rate ($18.29 × 2 = 

$36.58) to estimate total cost is a 

reasonably accurate estimation method. 

Accordingly, we calculate cost burden 

to hospitals using a wage plus benefits 

estimate of $36.58 throughout the 

discussion below for the Hospital OQR 

Program. 

We invited public comment on these 

proposals. 

Comment: One commenter expressed 

concern that a medical records and 

health information technician with a 

wage of $18.29 per hour is not 

appropriate to complete chartabstraction and requested that we not 

reduce the estimated hourly wage rate 

from previous years. 

Response: We note that we believe the 

wage for a medical records and health 

information technician is appropriate 

for use in this program, because such a 

technician is described as an individual 

who compiles, processes, and maintains 

medical records of hospital and clinic 

patients in a manner consistent with 

medical, administrative, ethical, legal, 

and regulatory requirements of the 

health care system.212 We previously 

estimated a total cost to hospitals of $30 

per hour (80 FR 70581), though we have 

not previously specified whether that 

rate included overhead and fringe 

benefits as well as wage. We note that 

our current calculations result in a 

higher estimate of total hourly cost for 

hospitals, as we proposed to use a 

median hourly wage of $18.29 per hour 

and double it to account for overhead 

and fringe benefits ($18.29 × 2 = 

$36.58), resulting in a higher hourly cost 

to hospitals of $36.58 per hour 

(compared to $30 per hour) to estimate 

burden in the Hospital OQR Program. 

After consideration of the public 

comment we received, we are finalizing 

our estimates, as presented in the 

proposed rule to: (1) Estimate that 

reporting data for the Hospital OQR 

Program can be accomplished by staff 

with a median hourly wage of $18.29 

per hour, and (2) calculate the cost of 

overhead, including fringe benefits, at 

100 percent of the mean hourly wage. 

These result in a wage plus benefits 

estimate of $36.58 for the Hospital OQR 

Program. 

3. Estimated Burden Due to Newly 

Finalized Proposal To Delay OP–37a–e: 

Outpatient and Ambulatory Surgery 

Consumer Assessment of Healthcare 

Providers and Systems (OAS CAHPS) 

Survey-Based Measures Beginning With 

the CY 2020 Payment Determination 

As described in section XIII.B.5. of 

this final rule with comment period, we 

are finalizing our proposal to delay OP– 

37a–e: Outpatient and Ambulatory 

Surgery Consumer Assessment of 

Healthcare Providers and Systems (OAS 

CAHPS) Survey-based measures 

beginning with the CY 2020 payment 

determination (CY 2018 data collection 

period). As we stated in the CY 2017 

OPPS/ASC final rule with comment 

period (81 FR 79863), the information 

collection requirements associated with 

the five OAS CAHPS Survey-based 

measures (OP–37a, OP–37b, OP–37c, 

OP–37d, and OP–37e) are currently 

approved under OMB Control Number 

0938–1240. For this reason, in the CY 

2017 OPPS/ASC final rule with 

comment period (81 FR 79863), we did 

not provide an independent estimate of 

the burden associated with OAS CAHPS 

Survey based measures for the Hospital 


sradovich on DSK3GMQ082PROD with RULES2
59478 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

OQR Program. Similarly, our finalized 

proposal to delay implementation of 

these measures does not affect our 

current burden estimates. 

4. Estimated Burden Due to Proposal to 

Publicly Report OP–18c: Median Time 

From Emergency Department Arrival to 

Emergency Department Departure for 

Discharged Emergency Department 

Patients—Psychiatric/Mental Health 

Patients 

In section XIII.B.10.b. of this final rule 

with comment period, we are finalizing, 

with modifications, our proposal to 

publicly report 18c: Median Time from 

Emergency Department Arrival to 

Emergency Department Departure for 

Discharged Emergency Department 

Patients—Psychiatric/Mental Health 

Patients beginning with patient 

encounters from the third quarter of 

2017. As noted in that section, the data 

required for public reporting of OP–18c 

are already collected as part of the 

existing Hospital OQR Program 

requirements. Accordingly, we did not 

estimate changes to burden due to this 

proposal, and we do not expect the 

modifications we are finalizing to affect 

burden. 

5. Estimated Burden Due to Newly 

Finalized Proposals for the CY 2020 

Payment Determination and Subsequent 

Years 

a. Burden Due to Measure Removals 

In section XIII.B.4.c. of this final rule 

with comment period, we are finalizing 

the removal of six measures from the 

Hospital OQR Program. Specifically, 

beginning with the CY 2020 payment 

determination, we are finalizing, as 

proposed, to remove: (1) OP–21: Median 

Time to Pain Management for Long 

Bone Fracture; and (2) OP–26: Hospital 

Outpatient Volume Data on Selected 

Outpatient Surgical Procedures. Also, 

while we proposed to remove: (1) OP– 

1: Median Time to Fibrinolysis, (2) OP– 

4: Aspirin at Arrival, (3) OP–20: Door to 

Diagnostic Evaluation by a Qualified 

Medical Professional, and (4) OP–25: 

Safe Surgery Checklist beginning with 

the CY 2021 payment determination, we 

are finalizing removal of these measures 

with modification so that removal 

begins with the CY 2020 payment 

determination, one year earlier than 

proposed. In summary, we are finalizing 

removal of six measures beginning with 

the CY 2020 payment determination. 

We note that we have modified our 

estimates from the proposed rule (82 FR 

33673) in order to streamline our 

discussion in light of the modification. 

Specifically, we are finalizing the 

removal of four chart-abstracted 

measures ((1) OP–1: Median Time to 

Fibrinolysis; (2) OP–4: Aspirin at 

Arrival; (3) OP–20: Door to Diagnostic 

Evaluation by a Qualified Medical 

Professional; and (4) OP–21: Median 

Time to Pain Management for Long 

Bone Fracture) and two web-based 

measures ((1) OP–25: Safe Surgery 

Checklist Use; and (2) OP–26: Hospital 

Outpatient Volume Data on Selected 

Outpatient Surgical Procedures). In 

total, we expect these finalized 

proposals will reduce burden by 

457,490 hours and $16.7 million for the 

CY 2020 payment determination. These 

estimates are described in detail below. 

We calculated the burden reduction 

associated with the removal of chartabstracted measures by considering the 

time per case to report chart-abstracted 

measures (submitted using a web-based 

tool) as well as the number of cases per 

hospital and the number of participating 

hospitals. In the CY 2016 OPPS/ASC 

final rule with comment period (80 FR 

70582), we estimated the burden to 

collect chart-abstracted data for a single 

web-based measure, including OP–21, 

to be 2.92 minutes. In this final rule 

with comment period, we estimate that 

3,300 outpatient hospitals report data 

under the Hospital OQR Program. Based 

on the most recent data from CY 2015 

reporting, we also estimate that 947 

cases are reported per hospital for each 

chart-abstracted measure. We note that 

although OP–1: Median Time to 

Fibrinolysis is a chart-abstracted 

measure, we do not expect removing 

this measure will reduce burden, as the 

data collected for this measure is 

required to calculate another program 

measure in the AMI measure set (OP–2: 

Fibrinolytic Therapy Received Within 

30 Minutes of ED Arrival) and, 

therefore, will continue to be collected 

as an underlying part of OP–2 even 

though we are finalizing the proposal to 

remove OP–1. Accordingly, there is no 

change in burden associated with the 

finalized removal of this measure 

included in our calculations below. 

Accordingly, we estimate a total 

burden reduction of 138.3 hours per 

outpatient hospital due to the removal 

of chart-abstracted measures (2.92 

minutes per measure/60 minutes per 

hour × 3 measure × 947 cases per 

hospital). In total, across 3,300 

outpatient hospitals, we estimate a 

burden reduction of 456,390 hours 

(138.3 hours per hospital × 3,300 

hospitals) and $16,694,746 (456,390 

total hours × $36.58 per hour) for the CY 

2020 payment determination due to the 

finalized removal of (1) OP–1: Median 

Time to Fibrinolysis; (2) OP–4: Aspirin 

at Arrival; (3) OP–20: Door to Diagnostic 

Evaluation by a Qualified Medical 

Professional; and (4) OP–21: Median 

Time to Pain Management for Long 

Bone Fracture. 

We calculated the burden reduction 

associated with the finalized removal of 

two web-based measures (OP–25: Safe 

Surgery Checklist Use and OP–26: 

Hospital Outpatient Volume Data on 

Selected Outpatient Surgical 

Procedures) by considering the time per 

measure to report web-based measures 

as well as the number of participating 

hospitals. As we previously stated in the 

CY 2016 OPPS/ASC final rule with 

comment period (80 FR 70582), we 

estimate that hospitals spend 

approximately 10 minutes per measure 

to report web-based measures and that 

3,300 outpatient hospitals report data 

under the Hospital OQR Program. 

Accordingly, for the CY 2020 payment 

determination, we estimate a total 

burden reduction of 1,100 hours across 

3,300 outpatient hospitals due to the 

removal of two web-based measures (10 

minutes per measure/60 minutes per 

hour × 2 measures × 3,300 hospitals). 

We further estimate a cost reduction of 

$40,238 due to this finalized proposal 

(1,100 total hours × $36.58 per hour). 

In total, we expect these finalized 

proposals will reduce burden by 

457,490 hours (456,390 + 1,100) and 

$16,734,984 ($16,694,746 + $40,238) for 

the CY 2020 payment determination. 

b. Burden Due to Updates to Previously 

Finalized Chart-Abstracted Measure 

Validation Procedures and the 

Educational Review Process 

We previously estimated the burden 

associated with validation of chartabstracted measures in the CY 2013 and 

CY 2014 OPPS/ASC final rules with 

comment period (77 FR 68531 and 78 

FR 75172, respectively). In section 

XIII.D.7.a. of this final rule with 

comment period, we are providing 

clarification on our procedures for 

validation of chart-abstracted measures 

to note that the 50 poorest performing 

outlier hospitals will be targeted for 

validation. We do not expect this 

clarification to affect burden because it 

does not alter the number of hospitals 

selected for validation or the 

requirements for those hospitals that are 

selected. 

In addition, in section XIII.D.7.c. of 

this final rule with comment period, we 

are finalizing our proposal to formalize 

the process of allowing hospitals to use 

an educational review process to correct 

incorrect validation results for the first 

three quarters of validation for chartabstracted measures. We also are 

finalizing our proposal to update the 

process to specify that if the results of 

an educational review indicate that we 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59479 

incorrectly scored a hospital’s medical 

records selected for validation, the 

corrected quarterly validation score will 

be used to compute the hospital’s final 

validation score at the end of the 

calendar year. Under this policy, the 

educational review request process 

remains the same for the CY 2020 

payment determination and subsequent 

years, except that revised scores 

identified through an educational 

review will be used to correct a 

hospital’s validation score. As a result, 

we do not expect this policy to affect the 

burden experienced by hospitals, as our 

changes to this policy result in a change 

in the way we address educational 

review requests and not a change to the 

process hospitals must follow to request 

an education review. 

As we stated in the CY 2014 OPPS/ 

ASC final rule with comment period (78 

FR 75171), we believe there is a burden 

associated with successful participation 

in the Hospital OQR Program, where 

successful participation results in a full 

annual payment update (APU) for a 

particular payment determination. This 

burden includes, but is not limited to, 

maintaining familiarity with the 

Hospital OQR Program requirements, 

which includes checking feedback 

reports to indicate a facility’s current 

status or performance (78 FR 75171). 

The overall administrative burden was 

estimated at 42 hours per hospital (78 

FR 75171). As stated above, we do not 

believe this burden will change with the 

finalization of our policy to update the 

educational review process to include 

corrections because no additional 

activity on the part of hospitals is 

required. 

c. Burden Due to Proposal To Update to 

NOP Submission Deadline 

We previously estimated the burden 

associated with Hospital OQR Program 

participation and requirements in the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75171). In 

section XIII.C.2. of this final rule with 

comment period, we are not finalizing 

our proposal to revise the NOP 

submission deadlines such that 

hospitals are required to submit the 

NOP any time prior to registering on the 

QualityNet Web site. We estimated that 

this proposal would have a negligible 

effect on the time and cost of 

completing the participation 

requirements. As a result, our decision 

not to finalize the proposal to revise the 

NOP submission deadline does not 

impact our burden estimates. 

d. Burden Due To Aligning the First 

Quarter for Which Hospitals Must 

Submit Data for All Hospitals That Did 

Not Participate in the Previous Year’s 

Hospital OQR Program 

In section XIII.D.1 of this final rule 

with comment period, we are finalizing 

our proposals to align the timeline 

specifying the initial quarter for which 

hospitals must submit data for all 

hospitals that did not participate in the 

previous year’s Hospital OQR Program, 

rather than specifying different 

timelines for hospitals with Medicare 

acceptance dates before versus after 

January 1 of the year prior to an affected 

annual payment update. Although this 

finalized proposal alters the timeline for 

hospitals to begin submitting data for 

the Hospital OQR Program, it does not 

alter program requirements. As a result, 

we do not anticipate that this proposal 

will affect burden. 

e. Burden Due to Updates to the 

Previously Finalized ECE Policy 

We previously estimated the burden 

associated with general and 

administrative Hospital OQR Program 

requirements in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

75171). In section XIII.D.8. of this final 

rule with comment period, we discuss 

our finalized alignment of the naming of 

this exception policy and finalized 

proposal to update 42 CFR 419.46(d) to 

reflect our current ECE policies. We also 

are clarifying the timing of our response 

to ECE requests. Because we do not seek 

any new or additional information in 

our finalized ECE proposals, we believe 

the updates will have no effect on 

burden for hospitals. 

C. ICRs for the ASCQR Program 

1. Background 

We refer readers to the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74554), the FY 2013 IPPS/ 

LTCH PPS final rule (77 FR 53672), and 

the CY 2013, CY 2014, CY 2015, CY 

2016, and CY 2017 OPPS/ASC final 

rules with comment periods (77 FR 

68532 through 68533; 78 FR 75172 

through 75174; 79 FR 67015 through 

67016; 80 FR 70582 through 70584; and 

81 FR 79863 through 79865, 

respectively) for detailed discussions of 

the ASCQR Program information 

collection requirements we have 

previously finalized. The information 

collection requirements associated with 

the ASCQR Program are currently 

approved under OMB control number 

0938–1270. Below we discuss only the 

changes in burden that will result from 

the newly finalized provisions in this 

final rule with comment period. 

In section XIV.B.3.b. of this final rule 

with comment period, we are finalizing 

our proposals, beginning with the CY 

2019 payment determination, to remove 

three measures (ASC–5: Prophylactic 

Intravenous (IV) Antibiotic Timing, 

ASC–6: Safe Surgery Checklist Use, and 

ASC–7: Ambulatory Surgical Center 

Facility Volume Data on Selected 

Ambulatory Surgical Center Surgical 

Procedures) from the ASCQR Program 

measure set. In section XIV.B.6.a. of this 

final rule with comment period, we are 

not finalizing our proposal, beginning 

with the CY 2021 payment 

determination, to adopt one new 

measure, ASC–16: Toxic Anterior 

Segment Syndrome. In section 

XIV.B.6.b. and c. of this final rule with 

comment period, we are finalizing our 

proposals, beginning with the CY 2022 

payment determination, to adopt two 

new measures collected via claims 

(ASC–17: Hospital Visits after 

Orthopedic Ambulatory Surgical Center 

Procedures and ASC–18: Hospital Visits 

after Urology Ambulatory Surgical 

Center Procedures). We expect these 

finalized proposals will reduce the 

overall burden of reporting data for the 

ASCQR Program, as discussed below. 

In this final rule with comment 

period, we also are finalizing our 

proposals: (1) To delay ASC–15a–e: 

OAS CAHPS survey-based measures 

beginning with the CY 2020 payment 

determination (CY 2018 data collection) 

(section XIV.B.4. of this final rule with 

comment period); (2) to expand the 

CMS online tool to also allow for batch 

submission beginning with data 

submitted during CY 2018 and to make 

corresponding revisions to the CFR 

(section XIV.D.3.b. of this final rule with 

comment period); and, (3) to align the 

naming of the Extraordinary 

Circumstances Exceptions (ECE) policy 

beginning with CY 2018 and to make 

conforming changes to the CFR (section 

XIV.D.6.b. of this final rule with 

comment period). As discussed below, 

we do not expect these finalized 

proposals to affect our burden estimates. 

2. Newly Finalized Change in Hourly 

Labor Cost for Burden Calculation for 

the ASCQR Program 

To better align this program with our 

other quality reporting and value-based 

purchasing programs, we are finalizing 

our proposal to update our burden 

calculation methodology to standardize 

elements within our burden calculation. 

Specifically, we are finalizing our 

proposal to utilize an updated standard 

hourly labor cost for data reporting 

activities. 

In the CY 2017 OPPS/ASC final rule 

with comment period (81 FR 79863 


sradovich on DSK3GMQ082PROD with RULES2
59480 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

213Available at: http://www.bls.gov/ooh/ 

healthcare/medical-records-and-healthinformation-technicians.htm. 

214Available at: http://www.bls.gov/bls/ 

infohome.htm. 

215 Ibid. 

216BLS Occupational Employment Statistics; May 

2016. Available at: https://www.bls.gov/oes/current/ 

oes292071.htm. 

217Available at: https://www.bls.gov/ooh/ 

healthcare/medical-records-and-healthinformation-technicians.htm. 

through 79864), we finalized our 

proposal to use the hourly labor cost of 

$32.84 (hourly wage plus fringe and 

overhead, discussed in more detail 

below) in estimating the labor costs 

associated with abstracting clinical data. 

This labor rate was based on the Bureau 

of Labor Statistics (BLS) median hourly 

wage for a medical records and health 

information technician of $16.42 per 

hour.213 The BLS is the principal 

Federal agency responsible for 

measuring labor market activity, 

working conditions, and price changes 

in the economy.214 Acting as an 

independent agency, the BLS provides 

objective information for not only the 

government, but also for the public.215

The BLS describes medical records and 

health information technicians as those 

responsible for processing and 

maintaining health information data.216

Therefore, we believe it is reasonable to 

assume that these individuals will be 

tasked with abstracting clinical data for 

ASCQR Program measures. 

The BLS recently released updated 

wage estimates for Medical Records and 

Health Information Technicians. These 

updates increased the median hourly 

wage from $16.42 per hour to $18.29 per 

hour.217 Applying the same 100 percent 

overhead cost estimate finalized in the 

CY 2017 OPPS/ASC final rule with 

comment period (81 FR 79863 through 

79864) to estimate the elements 

assigned as ‘‘indirect’’ or ‘‘overhead’’ 

costs, we estimate an updated total 

hourly cost to ASCs of $36.58. 

Therefore, we proposed to apply an 

updated hourly labor cost of $36.58 

($18.29 base salary + $18.29 fringe and 

overhead) to our burden calculations for 

chart abstraction. 

We invited public comment on this 

proposal. We did not receive any public 

comments and are finalizing our 

proposal to apply an updated hourly 

labor cost of $36.58 ($18.29 base salary 

+ $18.29 fringe and overhead) to our 

burden calculations for chart 

abstraction. 

3. Estimated Burden of Newly Finalized 

ASCQR Program Proposals Beginning 

With CY 2018 

In section XIV.B.4. of this final rule 

with comment period, we are finalizing 

our proposal to delay ASC–15a–e: OAS 

CAHPS Survey-based measures 

beginning with the CY 2020 payment 

determination (CY 2018 data collection) 

until further notice in future 

rulemaking. As described in the CY 

2017 OPPS/ASC final rule with 

comment period (81 FR 79864), the 

information collection requirements 

associated with the five OAS CAHPS 

Survey based measures (ASC–15a, ASC– 

15b, ASC–15c, ASC–15d, and ASC–15e) 

are currently approved under OMB 

Control Number 0938–1240. For this 

reason, we did not provide an 

independent estimate of the burden 

associated with OAS CAHPS Survey 

administration for the ASCQR Program 

in the CY 2017 OPPS/ASC final rule 

with comment period (81 FR 79864). 

Similarly, our finalized proposal to 

delay reporting on these measures does 

not affect our current burden estimates. 

In section XIV.D.3. of this final rule 

with comment period, we are finalizing 

our proposals to expand the CMS online 

tool to also allow for batch submission 

beginning with data submitted during 

the CY 2018 reporting period and to 

make corresponding revisions to the 

CFR. We expect this finalized proposal 

to increase the efficiency of data 

submission via the CMS online tool. 

However, the finalized proposal does 

not change our data reporting 

requirements, and therefore, we do not 

expect a change in the burden 

experienced by ASCs. 

In section XIV.D.6. of this final rule 

with comment period, we are finalizing 

our proposals to align the naming of the 

Extraordinary Circumstances Exceptions 

(ECE) policy beginning with CY 2018 

and to make conforming changes to the 

CFR. We are also clarifying the timing 

of our response to ECE requests. 

Because we do not seek any new or 

additional information in our ECE 

finalized proposals, we believe the 

updates will have no effect on burden 

for hospitals. 

4. Estimated Burden of Newly Finalized 

ASCQR Program Proposals for the CY 

2019 Payment Determination 

In section XIV.B.3.b. of this final rule 

with comment period, we are finalizing 

our proposals, beginning with the CY 

2019 payment determination, to remove 

three measures from the ASCQR 

Program. These measures include one 

claims-based measure (ASC–5: 

Prophylactic Intravenous (IV) Antibiotic 

Timing) and two collected via a CMS 

online data submission tool (ASC–6: 

Safe Surgery Checklist Use and ASC–7: 

Ambulatory Surgical Center Facility 

Volume Data on Selected Ambulatory 

Surgical Center Surgical Procedures). 

Data for ASC–5 is submitted via CMS 

claims using Quality Data Codes, which 

impose only a nominal burden on 

providers because these claims are 

already submitted for the purposes of 

payment. Therefore, we estimate a 

nominal reduction in burden associated 

with our finalized proposal to remove 

the ASC–5 measure from the ASCQR 

Program measure set beginning with the 

CY 2019 payment determination. 

We believe 3,937 ASCs will 

experience a reduction in burden 

associated with our finalized proposals 

to remove ASC–6 and ASC–7 from the 

ASCQR Program measure set. In the CY 

2014 OPPS/ASC final rule with 

comment period (78 FR 75173), we 

finalized our estimates that each 

participating ASC will spend 10 

minutes per measure per year to collect 

and submit the required data for the 

ASC–6 and ASC–7 measures, making 

the total estimated annual burden 

associated with each of these measures 

657 hours (3,937 ASCs × 0.167 hours 

per ASC) and $24,033 (657 hours × 

$36.58 per hour). Therefore, we estimate 

a total reduction in burden of 1,314 (657 

hours × 2 measures) hours and $48,066 

(1,314 hours × $36.58 per hour) for all 

ASCs as a result of our finalized 

proposals to remove ASC–6 and ASC– 

7 from the ASCQR Program measure set. 

The reduction in burden associated with 

these requirements is available for 

review and comment under OMB 

Control Number 0938–1270. 

5. Estimated Burden of ASCQR Program 

for the CY 2021 Payment Determination 

In section XIV.B.6.a. of this final rule 

with comment period, we are not 

finalizing our proposal to adopt one 

new measure collected via a CMS online 

data submission tool, ASC–16: Toxic 

Anterior Segment Syndrome, beginning 

with the CY 2021 payment 

determination. Therefore, the initially 

estimated burden from the CY 2018 

OPPS/ASC proposed rule (82 FR 33709) 

does not apply. 

6. Estimated Burden of ASCQR Program 

Newly Finalized Proposals for the CY 

2022 Payment Determination 

In section XIV.B.6.b. and c. of this 

final rule with comment period, we are 

finalizing our proposals, beginning with 

the CY 2022 payment determination, to 

adopt two measures collected via 

claims: (1) ASC–17: Hospital Visits after 

Orthopedic Ambulatory Surgical Center 

Procedures; and (2) ASC–18: Hospital 

Visits after Urology Ambulatory 

Surgical Center Procedures. Data used to 

calculate scores for these measures is 

collected via Part A and Part B Medicare 

administrative claims and Medicare 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59481 

enrollment data, and therefore does not 

require ASCs to report any additional 

data. Because these measures do not 

require ASCs to submit any additional 

data, we do not believe there will be any 

additional burden associated with these 

proposals. 

XVII. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this final rule with comment period, 

and, when we proceed with a 

subsequent document(s), we will 

respond to those comments in the 

preamble to that document. 

XVIII. Economic Analyses 

A. Regulatory Impact Analysis 

1. Introduction 

We have examined the impacts of this 

final rule with comment period, as 

required by Executive Order 12866 on 

Regulatory Planning and Review 

(September 30, 1993), Executive Order 

13563 on Improving Regulation and 

Regulatory Review (January 18, 2011), 

the Regulatory Flexibility Act (RFA) 

(September 19, 1980, Pub. L. 96–354), 

section 1102(b) of the Social Security 

Act, section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

(March 22, 1995, Pub. L. 104–4), 

Executive Order 13132 on Federalism 

(August 4, 1999), the Congressional 

Review Act (5 U.S.C. 804(2)), and 

Executive Order 13771 on Reducing 

Regulation and Controlling Regulatory 

Costs (January 30, 2017). This section of 

this final rule with comment period 

contains the impact and other economic 

analyses for the provisions that we are 

making for CY 2018. 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This final 

rule with comment period has been 

designated as an economically 

significant rule under section 3(f)(1) of 

Executive Order 12866 and a major rule 

under the Congressional Review Act. 

Accordingly, this final rule with 

comment period has been reviewed by 

the Office of Management and Budget. 

We have prepared a regulatory impact 

analysis that, to the best of our ability, 

presents the costs and benefits of this 

final rule with comment period. In the 

CY 2018 OPPS/ASC proposed rule (82 

FR 33710), we solicited public 

comments on the regulatory impact 

analysis in the proposed rule, and we 

are addressing any public comments we 

received in this final rule with comment 

period as appropriate. 

2. Statement of Need 

This final rule with comment period 

is necessary to make updates to the 

Medicare hospital OPPS rates. It is 

necessary to make changes to the 

payment policies and rates for 

outpatient services furnished by 

hospitals and CMHCs in CY 2018. We 

are required under section 

1833(t)(3)(C)(ii) of the Act to update 

annually the OPPS conversion factor 

used to determine the payment rates for 

APCs. We also are required under 

section 1833(t)(9)(A) of the Act to 

review, not less often than annually, 

and revise the groups, the relative 

payment weights, and the wage and 

other adjustments described in section 

1833(t)(2) of the Act. We must review 

the clinical integrity of payment groups 

and relative payment weights at least 

annually. We are revising the APC 

relative payment weights using claims 

data for services furnished on and after 

January 1, 2016, through and including 

December 31, 2016, and processed 

through June 30, 2017, and updated cost 

report information. 

This final rule with comment period 

also is necessary to make updates to the 

ASC payment rates for CY 2018, 

enabling CMS to make changes to 

payment policies and payment rates for 

covered surgical procedures and 

covered ancillary services that are 

performed in an ASC in CY 2018. 

Because ASC payment rates are based 

on the OPPS relative payment weights 

for the majority of the procedures 

performed in ASCs, the ASC payment 

rates are updated annually to reflect 

annual changes to the OPPS relative 

payment weights. In addition, we are 

required under section 1833(i)(1) of the 

Act to review and update the list of 

surgical procedures that can be 

performed in an ASC not less frequently 

than every 2 years. 

3. Overall Impacts for the OPPS and 

ASC Payment Provisions 

We estimate that the total increase in 

Federal government expenditures under 

the OPPS for CY 2018, compared to CY 

2017, due only to the changes to OPPS 

finalized in this final rule with 

comment period, will be approximately 

$690 million. Taking into account our 

estimated changes in enrollment, 

utilization, and case-mix for CY 2018, 

we estimate that the OPPS expenditures, 

including beneficiary cost-sharing, for 

CY 2018 will be approximately $69.9 

billion; approximately $5.8 billion 

higher than estimated OPPS 

expenditures in CY 2017. Because this 

final rule with comment period is 

economically significant as measured by 

the threshold of an additional $100 

million in expenditures in 1 year, we 

have prepared this regulatory impact 

analysis that, to the best of our ability, 

presents its costs and benefits. Table 88 

displays the distributional impact of the 

CY 2018 changes in OPPS payment to 

various groups of hospitals and for 

CMHCs. 

We estimate that the update to the 

conversion factor and other adjustments 

(not including the effects of outlier 

payments, the pass-through estimates, 

and the application of the frontier State 

wage adjustment for CY 2017) will 

increase total OPPS payments by 1.3 

percent in CY 2018. The changes to the 

APC relative payment weights, the 

changes to the wage indexes, the 

continuation of a payment adjustment 

for rural SCHs, including EACHs, and 

the payment adjustment for cancer 

hospitals will not increase OPPS 

payments because these changes to the 

OPPS are budget neutral. However, 

these updates will change the 

distribution of payments within the 

budget neutral system. We estimate that 

the total change in payments between 

CY 2017 and CY 2018, considering all 

payments, changes in estimated total 

outlier payments, pass-through 

payments, and the application of the 

frontier State wage adjustment outside 

of budget neutrality, in addition to the 

application of the OPD fee schedule 

increase factor after all adjustments 

required by sections 1833(t)(3)(F), 

1833(t)(3)(G), and 1833(t)(17) of the Act, 

will increase total estimated OPPS 

payments by 1.4 percent. 

We estimate the total increase (from 

changes to the ASC provisions in this 

final rule with comment period as well 

as from enrollment, utilization, and 

case-mix changes) in Medicare 

expenditures under the ASC payment 

system for CY 2018 compared to CY 

2017 to be approximately $130 million. 

Because the provisions for the ASC 

payment system are part of a final rule 

that is economically significant as 

measured by the $100 million threshold, 

we have prepared a regulatory impact 

analysis of the changes to the ASC 

payment system that, to the best of our 


sradovich on DSK3GMQ082PROD with RULES2
59482 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

ability, presents the costs and benefits of 

this portion of this final rule with 

comment period. Table 89 and 90 of this 

final rule with comment period display 

the redistributive impact of the CY 2018 

changes regarding ASC payments, 

grouped by specialty area and then 

grouped by procedures with the greatest 

ASC expenditures, respectively. 

4. Regulatory Review Costs 

If regulations impose administrative 

costs on private entities, such as the 

time needed to read and interpret this 

final rule with comment period, we 

should estimate the cost associated with 

regulatory review. Due to the 

uncertainty involved with accurately 

quantifying the number of entities that 

will review the rule, we assume that the 

total number of unique commenters on 

this year’s proposed rule will be the 

number of reviewers of this final rule 

with comment period. We acknowledge 

that this assumption may understate or 

overstate the costs of reviewing this 

rule. It is possible that not all 

commenters reviewed this year’s 

proposed rule in detail, and it is also 

possible that some reviewers chose not 

to comment on the proposed rule. For 

these reasons, we believe that the 

number of past commenters would be a 

fair estimate of the number of reviewers 

of this final rule with comment period. 

In the CY 2018 OPPS/ASC proposed 

rule (82 FR 33711), we welcomed any 

comments on the approach in 

estimating the number of entities that 

will review the proposed rule. However, 

we did not receive any comments on 

our approach. 

We also recognize that different types 

of entities are in many cases affected by 

mutually exclusive sections of this final 

rule with comment period, and 

therefore for the purposes of our 

estimate, we assume that each reviewer 

reads approximately 50 percent of the 

rule. In the CY 2018 OPPS/ASC 

proposed rule, we also sought public 

comments on this assumption, but we 

did not receive any comments. 

Using the wage information from the 

BLS for medical and health service 

managers (Code 11–9111), we estimate 

that the cost of reviewing this rule is 

$105.16 per hour, including overhead 

and fringe benefits (https://www.bls.gov/ 

oes/2016/may/naics4_621100.htm). 

Assuming an average reading speed, we 

estimate that it will take approximately 

8 hours for the staff to review half of 

this final rule with comment period. For 

each facility that reviews the rule, the 

estimated cost is $841.28 (8 hours × 

$105.16). Therefore, we estimate that 

the total cost of reviewing this 

regulation is $2,851,939 ($841.28 × 

3,390 reviewers). 

5. Detailed Economic Analyses 

a. Estimated Effects of OPPS Changes in 

This Final Rule With Comment Period 

(1) Limitations of Our Analysis 

The distributional impacts presented 

here are the projected effects of the CY 

2018 policy changes on various hospital 

groups. We post on the CMS Web site 

our hospital-specific estimated 

payments for CY 2018 with the other 

supporting documentation for this final 

rule with comment period. To view the 

hospital-specific estimates, we refer 

readers to the CMS Web site at: http:// 

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

PPS/index.html. At the Web site, select 

‘‘regulations and notices’’ from the left 

side of the page and then select ‘‘CMS– 

1678–FC’’ from the list of regulations 

and notices. The hospital-specific file 

layout and the hospital-specific file are 

listed with the other supporting 

documentation for this final rule with 

comment period. We show hospitalspecific data only for hospitals whose 

claims were used for modeling the 

impacts shown in Table 88 below. We 

do not show hospital-specific impacts 

for hospitals whose claims we were 

unable to use. We refer readers to 

section II.A. of this final rule with 

comment period for a discussion of the 

hospitals whose claims we do not use 

for ratesetting and impact purposes. 

We estimate the effects of the 

individual policy changes by estimating 

payments per service, while holding all 

other payment policies constant. We use 

the best data available, but do not 

attempt to predict behavioral responses 

to our policy changes. In addition, we 

have not made adjustments for future 

changes in variables such as service 

volume, service-mix, or number of 

encounters. 

In the CY 2018 OPPS/ASC proposed 

rule, we solicited public comment and 

information about the anticipated effects 

of the proposed changes included in the 

proposed rule on providers and our 

methodology for estimating them. Any 

public comments that we receive are 

addressed in the applicable sections of 

this final rule with comment period that 

discuss the specific policies. 

(2) Estimated Effects of OPPS Changes 

to Part B Drug Payment on 340B Eligible 

Hospitals Paid Under the OPPS 

In section V.B.7. of this final rule with 

comment period, we discuss our 

finalized policies to reduce the payment 

for nonpass-through, separately payable 

drugs purchased by certain 340Bparticipating hospitals through the 340B 

Program. Rural SCHs, children’s 

hospitals, and PPS-exempt cancer 

hospitals are excepted from this 

payment policy in CY 2018. 

Specifically, in this final rule with 

comment period, for CY 2018, for 

hospitals paid under the OPPS (other 

than those that are excepted for CY 

2018), we are paying for separately 

payable drugs and biologicals that are 

obtained with a 340B discount, 

excluding those on pass-through 

payment status and vaccines, at ASP 

minus 22.5 percent instead of ASP+6 

percent. For context, based on CY 2016 

claims data, the total OPPS Part B drug 

payment is approximately $10.2 billion. 

We recognize that it may be difficult 

to determine precisely what the impact 

on Medicare spending will be because 

OPPS claims data do not currently 

indicate if the drug being provided was 

purchased with a 340B discount. 

Furthermore, a list of outpatient drugs 

covered under the 340B program is not 

publicly available. Accordingly, for 

purposes of estimating the impact for 

this final rule with comment period, as 

we did in the CY 2018 OPPS/ASC 

proposed rule, we assumed that all 

applicable drugs purchased by hospitals 

eligible to participate in the 340B 

Program were purchased at a discounted 

price under the 340B program. While 

we recognize that certain newly covered 

entities do not have access to 340B drug 

pricing for designated orphan drugs, we 

believe that our CY 2018 policy to 

except newly covered entity types such 

as rural SCHs, PPS-exempt cancer 

hospitals, and children’s hospitals, 

largely mitigates the 340B drug spend 

attributable to orphan drugs and 

therefore does not dramatically affect 

our final estimate. In addition, for this 

final rule with comment period, we 

utilized the HRSA covered entity 

database to identify 340B participating 

hospitals and cross-checked these 

providers with the CY 2018 OPPS 

facility impact public use file to 

determine which 340B hospitals are 

paid under the OPPS. The HRSA 

covered entity database is available via 

the Internet at https://

340bopais.hrsa.gov/coveredentity

search. Using this database, we found 

1,338 OPPS hospitals in the 340B 

program (compared to the 954 estimated 

for the proposed rule). Of these, 270 

were rural SCHs, 47 were children’s 

hospitals, and 3 were PPS-exempt 

cancer hospitals. We did not assume 

changes in the quantity of 340B 

purchased drugs provided by hospitals 

participating in the 340B program 

(thereby affecting unit volume) or 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59483 

changes in the number of hospitals 

participating in the 340B program that 

may occur due to the payment 

reduction. 

While we acknowledge that there are 

some limitations in Medicare’s ability to 

prospectively calculate a precise 

estimate for purposes of this final rule 

with comment period, we note that each 

hospital has the ability to calculate how 

this policy will change its Medicare 

payments for separately payable drugs 

in CY 2018. Specifically, each hospital 

that is not participating in the 340B 

program or that is excepted from the 

policy to pay for drugs acquired under 

the 340B Program at ASP minus 22.5 

percent in CY 2018 will know that its 

Medicare payments for drugs will be 

unaffected by this finalized policy; 

whereas each hospital participating in 

the 340B Program has access to 340B 

ceiling prices (and subceiling prices if it 

participates in the Prime Vendor 

Program), knows the volume of 340B 

drugs that it has historically billed to 

Medicare, and can generally project the 

specific covered 340B drugs (and 

volume thereof) for which it expects to 

bill Medicare in CY 2018. Accordingly, 

a hospital participating in the 340B 

Program is able to estimate the 

difference in payment that it will 

receive if Medicare pays ASP minus 

22.5 percent instead of ASP+6 percent 

for 340B drugs. 

Using the list of participating 340B 

providers (derived from the HRSA 

database) and updated CY 2016 claims 

data available for this final rule with 

comment period for the applicable 

separately payable drugs and 

biologicals, excluding those on passthrough payment status and vaccines, 

billed by hospitals eligible to participate 

in the 340B Program, except for those 

hospital types that are excepted from 

this policy in CY 2018, we estimate that 

OPPS payments for separately payable 

drugs, including beneficiary 

copayments, will decrease by 

approximately $1.6 billion under this 

finalized policy, which reflects an 

additional estimated reduction of $700 

million over the proposed rule estimate 

of $900 million. If PPS-exempt cancer 

hospitals, children’s hospitals, and rural 

SCHs had not been excluded from the 

reduced drug payment in CY 2018, drug 

payments to PPS-exempt cancer 

hospitals would have been reduced by 

approximately $29 million, to children’s 

hospitals by approximately $2 million, 

and to rural SCHs by approximately 

$199 million—this would have resulted 

in a total savings estimate of 

approximately $1.8 billion. Because we 

are implementing this payment 

reduction in a budget neutral manner 

within the OPPS, the reduced payments 

for separately payable drugs purchased 

through the 340B Program will increase 

payment rates for other non-drug items 

and services paid under the OPPS by an 

offsetting aggregate amount. 

Because data on drugs that are 

purchased with a 340B discount are not 

publicly available, we do not believe it 

is possible to more accurately estimate 

the amount of the aggregate payment 

reduction and the offsetting amount of 

the adjustment that is necessary to 

ensure budget neutrality through higher 

payment rates for other services. 

Furthermore, there are potential 

offsetting factors, including possible 

changes in provider behavior and 

overall market changes that would 

likely lower the impact of the payment 

reduction. As a result, we may need to 

make an adjustment in future years to 

revise the conversion factor once we 

have received more accurate data on 

drugs purchased with a 340B discount 

within the OPPS, similar to the 

adjustment we made for clinical 

diagnostic laboratory test packaging 

policy in the CY 2016 OPPS/ASC final 

rule with comment period (80 FR 70352 

through 70357). 

In this final rule, we project that 

reducing payment for 340B drugs to 

ASP minus 22.5 percent will increase 

OPPS payment rates for non-drug items 

and services by approximately 3.2 

percent in CY 2018. The estimated 

impacts of this policy are displayed in 

Table 88 below. We note that the 

payment rates included in Addendum A 

and Addendum B of this final rule with 

comment period do not reflect the 

reduced payments for drugs purchased 

under the 340B Program; however, they 

do include the increase to payments 

rates for non-drug items and services 

due to the corresponding increase in the 

conversion factor. In the proposed rule 

(82 FR 33712), we reminded 

commenters that this estimate could 

change in the final rule based on a 

number of factors, including other 

policies that are adopted in the final 

rule and the availability of updated data 

and/or method of assessing the impact 

in the final rule. We sought public 

comment on our estimate and stated 

that we were especially interested in 

whether commenters believe there are 

other publicly available data sources or 

proxies that can be used for determining 

which drugs billed by hospitals paid 

under the OPPS were acquired under 

the 340B Program. 

We proposed that the reduced 

payments for separately payable drugs 

and biologicals purchased under the 

340B Program would be included in the 

budget neutrality adjustments, under 

the requirements in section 1833(t)(9)(B) 

of the Act, and that the budget neutral 

weight scalar would not be applied in 

determining payments for these 

separately paid drugs and biologicals 

purchased under the 340B Program. 

In addition, we solicited public 

comment on whether we should apply 

all or part of the savings generated by 

this payment reduction to increase 

payments for specific services paid 

under the OPPS, or under Part B 

generally, in CY 2018, rather than 

simply increasing the conversion factor. 

In particular, we sought public 

comment on whether and how the 

offsetting increase could be targeted to 

hospitals that treat a large share of 

indigent patients, especially those 

patients who are uninsured. Finally, we 

sought public comment on whether the 

redistribution of savings associated with 

the proposal would result in 

unnecessary increases in the volume of 

covered services paid under the OPPS 

that should be adjusted in accordance 

with section 1833(t)(2)(F) of the Act. 

Comment: Several commenters stated 

that if the 340B drug payment policy 

was finalized, the funds should be 

redistributed across the OPPS, as has 

been the case for the application of 

budget neutrality in the past. One 

commenter supported CMS’ proposal to 

implement the savings attributed to the 

340B payment reduction in a budget 

neutral manner within the OPPS. 

Commenters noted that the budget 

neutrality requirement upon which 

CMS relied in the proposed rule at 

section 1833(t)(9)(B) of the Act has 

historically been interpreted by CMS as 

requiring budget neutrality within the 

OPPS. Commenters strongly urged CMS 

to follow its longstanding interpretation 

of section 1833(t)(9)(B) of the Act and 

offset the full amount of the aggregate 

340B payment reduction through 

offsetting payment increases within the 

OPPS. 

MedPAC reiterated its March 2016 

recommendation that that payments be 

distributed in proportion to the amount 

of uncompensated care that hospitals 

provide, ‘‘to make sure that dollars in 

the uncompensated care pool actually 

go to the hospitals providing the most 

uncompensated care.’’ MedPAC 

commented that the 340B Program is 

not well targeted to hospitals that 

provide high levels of uncompensated 

care and noted that 40 percent of 340B 

hospitals provide less than the median 

level of uncompensated care. MedPAC 

stated that it believed that legislation 

would be needed to direct the savings 

to the uncompensated care pool because 

current law would require that the 

savings be retained within the OPPS to 


sradovich on DSK3GMQ082PROD with RULES2
59484 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

make it budget neutral. However, 

MedPAC encouraged CMS to request 

that Congress enact the legislation 

necessary to allow CMS to implement 

its recommendation. MedPAC further 

noted that legislation would also allow 

CMS to apply the policy to all 

separately payable drugs, including 

those that are separately payable as a 

result of their pass-through status. 

Response: We thank the commenters 

for their feedback. After consideration of 

the public comments we received, we 

are finalizing our proposal to fully 

redistribute the savings associated with 

adoption of the alternative payment 

methodology for drugs acquired under 

the 340B Program within the OPPS to 

non-drug items and services. That is, we 

will redistribute $1.6 billion dollars in 

estimated lower payment for OPPS 

drugs by increasing the conversion 

factor for all OPPS non-drug items and 

services by 3.2 percent. We may revisit 

how the funds should be targeted in the 

future. 

Comment: Some commenters 

challenged the accuracy of the $900 

million estimate CMS calculated in the 

proposed rule. According to these 

commenters, their analysis of the 

proposal would have an estimated 

impact in the range of $1.2 billion to 

$1.65 billion. As a result, these 

commenters asserted that if the 

proposed payment reductions are 

applied in a budget neutral manner 

within the OPPS through an offsetting 

increase in the conversion factor, their 

analysis showed that payments for nondrug APCs would increase across 

hospitals by about 3.7 percent (in 

contrast to CMS’s estimate of 1.4 

percent) based on the proposed rule 

data. Moreover, based on their analysis, 

the commenters believed the 

redistribution of the savings would 

result in a net decrease in payments to 

340B hospitals of approximately 2.6 

percent, or approximately $800 

million—funding that they stated was 

intended to support the congressionallymandated mission of 340B hospitals— 

not be redistributed to other hospitals 

that do not participate in the 340B 

Program. 

Response: We stated in the proposed 

rule that the estimate of the 340B 

payment reductions would likely 

change in the final rule based on 

updated data, revised assumptions, and 

final policies. For this final rule with 

comment period, as discussed in detail 

earlier, we used updated CY 2016 

claims data and an updated list of 340B 

eligible providers to calculate an 

estimated impact of $1.6 billion based 

on the final policy. As shown in Table 

88 below this reflects a reduction of 

about $1.5 billion to urban hospitals and 

$86 million to rural hospitals. We are 

redistributing the savings from this 

payment reduction in a budget neutral 

manner within the OPPS through an 

offsetting increase in the conversion 

factor. This increase to the conversion 

factor increases all OPPS non-drug 

payment rates to all providers under the 

OPPS by 3.2 percent. With respect to 

comments on the redistribution of the 

340B savings to non-340B participating 

hospitals, we note that 340B hospitals 

will also receive the conversion factor 

increase. 

Comment: In response to the 

comment solicitation on whether the 

savings generated by the reduced 

payment on 340B drugs should be used 

to increase payments for specific 

services paid under the OPPS or under 

Part B generally in CY 2018, 

commenters generally objected to the 

notion that CMS has authority to 

redistribute savings outside of OPPS. 

One commenter stated that CMS did not 

provide any analysis or justification to 

support a reading that section 

1833(t)(9)(B) of the Act establishes a 

budget neutrality concept for the 

Medicare Part B Trust Fund. Another 

commenter stated that CMS should not 

redistribute the savings gained by the 

340B proposal based on Medicare DSH 

metrics (that is, insured low-income 

days) because such metrics are not well 

correlated with uncompensated care 

costs. This commenter also expressed 

concern regarding the suitability of 

using uncompensated care as a metric 

‘‘to identify hospitals that provide the 

most help to needy patients because it 

includes bad debt as well as charity 

care.’’ The commenter stated that bad 

debt is the amount that hospitals billed 

but did not collect, and therefore is not 

a measure of hospital assistance to the 

poor. Several commenters challenged 

the logic of reducing 340B payments to 

participating 340B hospitals, only to 

return the savings to the very same 

hospitals. 

Response: We appreciate the 

feedback. Because the OPPS is a budget 

neutral payment system, historically 

CMS has maintained budget neutrality 

through offsetting estimated payment 

decreases/increases within the OPPS, 

such as by increasing/decreasing the 

conversion factor by an equal offsetting 

amount. We have articulated the policy 

justification for reducing drug payment 

to ASP minus 22.5 percent for 340Bacquired drugs in section V.B.7. of this 

final rule with comment period and are 

redistributing the resulting dollars 

within the OPPS to maintain budget 

neutrality for CY 2018. Therefore, we 

are finalizing our proposal to 

redistribute the estimated reduction in 

payment for 340B-acquired drugs and 

biologicals by increasing the conversion 

factor, and we are not targeting the 

savings to specific services paid under 

the OPPS or under Part B generally. We 

continue to be interested in exploring 

ways that funds from a subsequent 

proposal could be targeted in future 

years to hospitals that serve a high share 

of low-income or uninsured patients. 

Comment: Many commenters noted 

that CMS’ proposal to redistribute the 

savings that result from the 340B 

reduction in a budget neutral manner 

within the OPPS would increase 

beneficiary copayments on non-drug 

services. Accordingly, the commenters 

stated that most patients would not 

directly receive the benefit of the 340B 

copayment reduction even if reduced 

payments for 340B drugs lower 

coinsurance amounts for these drugs. 

The commenters stated the proposal 

will likely increase costs for uninsured 

patients because 340B hospitals provide 

a disproportionate amount of care to 

that population and participating 340B 

hospitals may no longer be able to 

provide ‘‘discounts to low-income 

patients’’ or other uncompensated care. 

One commenter suggested that CMS, 

with stakeholder input, develop an 

outpatient hospital charity care metric 

that could be used to redistribute the 

340B savings based on the level of 

outpatient charity care provided by the 

hospital. 

Response: We appreciate the 

stakeholders’ concerns. We believe that 

reducing payments on 340B purchased 

drugs to better align with hospital 

acquisition costs directly lowers drug 

costs for those beneficiaries who receive 

a covered outpatient drug from a 340B 

participating hospital. Further, to the 

extent that studies have found that 340B 

participating hospitals tend to use more 

high costs drugs, we believe that this 

340B payment policy helps address 

drug pricing in the hospital outpatient 

setting by lessening the incentive for 

unnecessary utilization of costly drugs. 

In addition, even though many 

beneficiaries have supplemental 

coverage, those plans make coinsurance 

payments on behalf of beneficiaries. 

Thus, to the extent this policy lessens 

the coinsurance amount such 

supplemental plans would have to 

make, we would expect the price of 

such plans could decrease or otherwise 

reflect these lower costs in the future. 

In summary, to maintain budget 

neutrality within the OPPS, the 

estimated $1.6 billion in reduced drug 

payments from adoption of this final 

340B payment methodology will be 

redistributed in an equal offsetting 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59485 

amount to all hospitals paid under the 

OPPS through increasing the payment 

rates by 3.2 percent for nondrug items 

and services furnished by all hospitals 

paid under the OPPS for CY 2018. 

(3) Estimated Effects of OPPS Changes 

on Hospitals 

Table 88 below shows the estimated 

impact of this final rule with comment 

period on hospitals. Historically, the 

first line of the impact table, which 

estimates the change in payments to all 

facilities, has always included cancer 

and children’s hospitals, which are held 

harmless to their pre-BBA amount. We 

also include CMHCs in the first line that 

includes all providers. We now include 

a second line for all hospitals, excluding 

permanently held harmless hospitals 

and CMHCs. 

We present separate impacts for 

CMHCs in Table 88, and we discuss 

them separately below, because CMHCs 

are paid only for partial hospitalization 

services under the OPPS and are a 

different provider type from hospitals. 

In CY 2018, we are paying CMHCs for 

partial hospitalization services under 

APC 5853 (Partial Hospitalization for 

CMHCs), and we are paying hospitals 

for partial hospitalization services under 

APC 5863 (Partial Hospitalization for 

Hospital-Based PHPs). 

The estimated increase in the total 

payments made under the OPPS is 

determined largely by the increase to 

the conversion factor under the 

statutory methodology. The 

distributional impacts presented do not 

include assumptions about changes in 

volume and service-mix. The 

conversion factor is updated annually 

by the OPD fee schedule increase factor 

as discussed in detail in section II.B. of 

this final rule with comment period. 

Section 1833(t)(3)(C)(iv) of the Act 

provides that the OPD fee schedule 

increase factor is equal to the market 

basket percentage increase applicable 

under section 1886(b)(3)(B)(iii) of the 

Act, which we refer to as the IPPS 

market basket percentage increase. The 

IPPS market basket percentage increase 

for FY 2018 is 2.7 percent (82 FR 

38177). Section 1833(t)(3)(F)(i) of the 

Act reduces that 2.7 percent by the 

multifactor productivity adjustment 

described in section 1886(b)(3)(B)(xi)(II) 

of the Act, which is 0.6 percentage point 

for FY 2018 (which is also the MFP 

adjustment for FY 2018 in the FY 2018 

IPPS/LTCH PPS final rule (82 FR 38177 

through 38178)), and sections 

1833(t)(3)(F)(ii) and 1833(t)(3)(G)(v) of 

the Act further reduce the market basket 

percentage increase by 0.75 percentage 

point, resulting in the OPD fee schedule 

increase factor of 1.35 percent. We are 

using the OPD fee schedule increase 

factor of 1.35 percent in the calculation 

of the CY 2018 OPPS conversion factor. 

Section 10324 of the Affordable Care 

Act, as amended by HCERA, further 

authorized additional expenditures 

outside budget neutrality for hospitals 

in certain frontier States that have a 

wage index less than 1.0000. The 

amounts attributable to this frontier 

State wage index adjustment are 

incorporated in the CY 2018 estimates 

in Table 88. 

To illustrate the impact of the CY 

2018 changes, our analysis begins with 

a baseline simulation model that uses 

the CY 2017 relative payment weights, 

the FY 2017 final IPPS wage indexes 

that include reclassifications, and the 

final CY 2017 conversion factor. Table 

88 shows the estimated redistribution of 

the increase or decrease in payments for 

CY 2018 over CY 2017 payments to 

hospitals and CMHCs as a result of the 

following factors: the impact of the APC 

reconfiguration and recalibration 

changes between CY 2017 and CY 2018 

(Column 2); the wage indexes and the 

provider adjustments (Column 3); the 

combined impact of all of the changes 

described in the preceding columns 

plus the 1.35 percent OPD fee schedule 

increase factor update to the conversion 

factor; and the estimated impact taking 

into account all payments for CY 2018 

relative to all payments for CY 2017, 

including the impact of changes in 

estimated outlier payments, the frontier 

State wage adjustment, and changes to 

the pass-through payment estimate 

(Column 6). 

We did not model an explicit budget 

neutrality adjustment for the rural 

adjustment for SCHs because we are 

maintaining the current adjustment 

percentage for CY 2018. Because the 

updates to the conversion factor 

(including the update of the OPD fee 

schedule increase factor), the estimated 

cost of the rural adjustment, and the 

estimated cost of projected pass-through 

payment for CY 2018 are applied 

uniformly across services, observed 

redistributions of payments in the 

impact table for hospitals largely 

depend on the mix of services furnished 

by a hospital (for example, how the 

APCs for the hospital’s most frequently 

furnished services will change), and the 

impact of the wage index changes on the 

hospital. However, total payments made 

under this system and the extent to 

which this final rule with comment 

period will redistribute money during 

implementation also will depend on 

changes in volume, practice patterns, 

and the mix of services billed between 

CY 2017 and CY 2018 by various groups 

of hospitals, which CMS cannot 

forecast. 

In CY 2016, we excluded all 

molecular pathology laboratory tests 

from our packaging policy, and in CY 

2017, we expanded the laboratory 

packaging exception to apply to all 

advanced diagnostic laboratory tests 

(ADLTs) that meet the criteria of section 

1834A(d)(5)(A) of the Act. For CY 2018, 

we sought public comments on whether 

laboratories (instead of hospitals) 

should be permitted to bill Medicare 

directly for molecular pathology tests 

and ADLTs that meet the criteria of 

section 1834A(d)(5)(A) of the Act (and 

are granted ADLT status by CMS), that 

are ordered less than 14 days following 

the date of a hospital outpatient’s 

discharge from the hospital outpatient 

department. 

The laboratory date of service (DOS) 

issue is discussed in section X.F. of this 

final rule with comment period. 

Because there are currently no 

laboratory tests designated as ADLTs 

and because the payment rate for 

laboratory tests excluded from our 

packaging policy billed by a hospital 

would have been the applicable rate for 

the laboratory test under the CLFS, any 

aspect of this discussion that is finalized 

in this final rule with comment period 

will not result in a net costs or savings 

to the program. Accordingly, section 

X.F. of this final rule with comment 

period is not included in the impact 

table in the regulatory impact analysis. 

Overall, we estimate that the rates for 

CY 2018 will increase Medicare OPPS 

payments by an estimated 1.4 percent. 

Removing payments to cancer and 

children’s hospitals because their 

payments are held harmless to the preOPPS ratio between payment and cost 

and removing payments to CMHCs 

results in an estimated 1.5 percent 

increase in Medicare payments to all 

other hospitals. These estimated 

payments will not significantly impact 

other providers. 

Column 1: Total Number of Hospitals 

The first line in Column 1 in Table 88 

shows the total number of facilities 

(3,878), including designated cancer and 

children’s hospitals and CMHCs, for 

which we were able to use CY 2016 

hospital outpatient and CMHC claims 

data to model CY 2017 and CY 2018 

payments, by classes of hospitals, for 

CMHCs and for dedicated cancer 

hospitals. We excluded all hospitals and 

CMHCs for which we could not 

plausibly estimate CY 2017 or CY 2018 

payment and entities that are not paid 

under the OPPS. The latter entities 

include CAHs, all-inclusive hospitals, 

and hospitals located in Guam, the U.S. 


sradovich on DSK3GMQ082PROD with RULES2
59486 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

Virgin Islands, Northern Mariana 

Islands, American Samoa, and the State 

of Maryland. This process is discussed 

in greater detail in section II.A. of this 

final rule with comment period. At this 

time, we are unable to calculate a DSH 

variable for hospitals that are not also 

paid under the IPPS because DSH 

payments are only made to hospitals 

paid under the IPPS. Hospitals for 

which we do not have a DSH variable 

are grouped separately and generally 

include freestanding psychiatric 

hospitals, rehabilitation hospitals, and 

long-term care hospitals. We show the 

total number of OPPS hospitals (3,765), 

excluding the hold-harmless cancer and 

children’s hospitals and CMHCs, on the 

second line of the table. We excluded 

cancer and children’s hospitals because 

section 1833(t)(7)(D) of the Act 

permanently holds harmless cancer 

hospitals and children’s hospitals to 

their ‘‘pre-BBA amount’’ as specified 

under the terms of the statute, and 

therefore, we removed them from our 

impact analyses. We show the isolated 

impact on the 49 CMHCs at the bottom 

of the impact table and discuss that 

impact separately below. 

Column 2: APC Recalibration—All 

Changes 

Column 2 shows the estimated effect 

of APC recalibration. Column 2 also 

reflects any changes in multiple 

procedure discount patterns or 

conditional packaging that occur as a 

result of the changes in the relative 

magnitude of payment weights. As a 

result of APC recalibration, we estimate 

that urban hospitals will experience an 

increase of 0.1 percent, with the impact 

ranging from an increase of 0.1 percent 

to no change, depending on the number 

of beds. Rural hospitals will experience 

a decrease of 0.3 percent, with the 

impact ranging from a decrease of 0.2 

percent to a decrease of 0.5 percent, 

depending on the number of beds. Major 

teaching hospitals will experience an 

increase of 0.1 percent. 

Column 3: Wage Indexes and the Effect 

of the Provider Adjustments 

Column 3 demonstrates the combined 

budget neutral impact of the APC 

recalibration; the updates for the wage 

indexes with the FY 2018 IPPS postreclassification wage indexes; the rural 

adjustment; and the cancer hospital 

payment adjustment. We modeled the 

independent effect of the budget 

neutrality adjustments and the OPD fee 

schedule increase factor by using the 

relative payment weights and wage 

indexes for each year, and using a CY 

2017 conversion factor that included the 

OPD fee schedule increase and a budget 

neutrality adjustment for differences in 

wage indexes. 

Column 3 reflects the independent 

effects of the updated wage indexes, 

including the application of budget 

neutrality for the rural floor policy on a 

nationwide basis. This column excludes 

the effects of the frontier State wage 

index adjustment, which is not budget 

neutral and is included in Column 6. 

We did not model a budget neutrality 

adjustment for the rural adjustment for 

SCHs because we are continuing the 

rural payment adjustment of 7.1 percent 

to rural SCHs for CY 2018, as described 

in section II.E. of this final rule with 

comment period. 

We modeled the independent effect of 

updating the wage indexes by varying 

only the wage indexes, holding APC 

relative payment weights, service-mix, 

and the rural adjustment constant and 

using the CY 2018 scaled weights and 

a CY 2017 conversion factor that 

included a budget neutrality adjustment 

for the effect of the changes to the wage 

indexes between CY 2017 and CY 2018. 

The FY 2018 wage policy results in 

modest redistributions. 

There is a slight increase of less than 

0.1 in Column 3 for the CY 2018 cancer 

hospital payment adjustment budget 

neutrality calculation because we are 

using a payment-to-cost ratio target for 

the cancer hospital payment adjustment 

in CY 2018 of 0.88, compared to the CY 

2017 OPPS/ASC final rule with 

comment period (81 FR 79869) 

payment-to-cost ratio target of 0.91. We 

note that, in accordance with section 

16002 of the 21st Century Cures Act, we 

are applying a budget neutrality factor 

calculated as if the cancer hospital 

adjustment target payment-to-cost ratio 

was 0.89, not the 0.88 target paymentto-cost ratio we are applying in section 

II.F. of this final rule with comment 

period. 

Column 4: Effect of the Reduced 

Payment for 340B Drugs 

Column 4 demonstrates the total 

payment effect of the finalized 

reduction in payment for drugs 

purchased under the 340B Program from 

ASP+6 percent to ASP minus 22.5 

percent. This column includes both the 

reduced payment for 340B acquired 

drugs and the increase to the conversion 

factor for budget neutrality purposes, 

which increases payment for all nondrug services. For rural sole community 

hospitals, this column shows a 2.6 

percent increase, reflecting a 0.0 percent 

increase for drugs (because these 

providers are exempt from these 

reductions) and a 3.2 percent increase 

for non-drug services. 

Column 5: All Budget Neutrality 

Changes Combined With the Market 

Basket Update 

Column 5 demonstrates the combined 

impact of all of the changes previously 

described and the update to the 

conversion factor of 1.35 percent. 

Overall, these changes will increase 

payments to urban hospitals by 1.2 

percent and to rural hospitals by 2.5 

percent. Urban hospitals will receive an 

increase in line with the 1.3 percent 

overall increase for all facilities after the 

update is applied to the proposed 

budget neutrality adjustments. The 

increase for classes of rural hospitals is 

more variable with sole community 

hospitals receiving a 3.9 percent 

increase and other rural hospitals 

receiving an increase of 0.8 percent. 

Column 6: All Changes for CY 2018 

Column 6 depicts the full impact of 

the CY 2018 policies on each hospital 

group by including the effect of all of 

the changes for CY 2018 and comparing 

them to all estimated payments in CY 

2017. Column 6 shows the combined 

budget neutral effects of Columns 2 

through 4; the OPD fee schedule 

increase; the impact of the frontier State 

wage index adjustment; the impact of 

estimated OPPS outlier payments as 

discussed in section II.G. of this final 

rule with comment period; the change 

in the Hospital OQR Program payment 

reduction for the small number of 

hospitals in our impact model that 

failed to meet the reporting 

requirements (discussed in section XIII. 

of this final rule with comment period); 

and the difference in total OPPS 

payments dedicated to transitional passthrough payments. 

Of those hospitals that failed to meet 

the Hospital OQR Program reporting 

requirements for the full CY 2017 

update (and assumed, for modeling 

purposes, to be the same number for CY 

2018), we included 33 hospitals in our 

model because they had both CY 2016 

claims data and recent cost report data. 

We estimate that the cumulative effect 

of all of the changes for CY 2018 will 

increase payments to all facilities by 1.4 

percent for CY 2018. We modeled the 

independent effect of all of the changes 

in Column 6 using the final relative 

payment weights for CY 2017 and the 

final relative payment weights for CY 

2018. We used the final conversion 

factor for CY 2017 of $75.001 and the 

final CY 2018 conversion factor of 

$78.636 discussed in section II.B. of this 

final rule with comment period. 

Column 6 contains simulated outlier 

payments for each year. We used the 1- 

year charge inflation factor used in the 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59487 

FY 2018 IPPS/LTCH PPS final rule (82 

FR 38527) of 4.6 percent (1.04574) to 

increase individual costs on the CY 

2016 claims, and we used the most 

recent overall CCR in the July 2017 

Outpatient Provider-Specific File 

(OPSF) to estimate outlier payments for 

CY 2017. Using the CY 2016 claims and 

a 4.6 percent charge inflation factor, we 

currently estimate that outlier payments 

for CY 2017, using a multiple threshold 

of 1.75 and a fixed-dollar threshold of 

$3,825 will be approximately 1.11 

percent of total payments. The 

estimated current outlier payments of 

1.11 percent are incorporated in the 

comparison in Column 6. We used the 

same set of claims and a charge inflation 

factor of 9.4 percent (1.09357) and the 

CCRs in the July 2017 OPSF, with an 

adjustment of 0.985569, to reflect 

relative changes in cost and charge 

inflation between CY 2016 and CY 2018, 

to model the CY 2018 outliers at 1.0 

percent of estimated total payments 

using a multiple threshold of 1.75 and 

a fixed-dollar threshold of $4,150. The 

charge inflation and CCR inflation 

factors are discussed in detail in the FY 

2018 IPPS/LTCH PPS final rule (82 FR 

38527). 

Overall, we estimate that facilities 

will experience an increase of 1.4 

percent under this final rule with 

comment period in CY 2018 relative to 

total spending in CY 2017. This 

projected increase (shown in Column 6) 

of Table 88 reflects the 1.35 percent 

OPD fee schedule increase factor, plus 

0.2 percent for the change in the passthrough estimate between CY 2017 and 

CY 2018, minus a decrease of 0.11 

percent for the difference in estimated 

outlier payments between CY 2017 (1.11 

percent) and CY 2018 (1.0 percent). We 

estimate that the combined effect of all 

of the changes for CY 2018 will increase 

payments to urban hospitals by 1.3 

percent. Overall, we estimate that rural 

hospitals will experience a 2.7 percent 

increase as a result of the combined 

effects of all of the changes for CY 2018. 

Among hospitals by teaching status, 

we estimate that the impacts resulting 

from the combined effects of all changes 

will include a decrease of 0.9 percent 

for major teaching hospitals and an 

increase of 2.9 percent for nonteaching 

hospitals. Minor teaching hospitals will 

experience an estimated increase of 1.7 

percent. 

In our analysis, we also have 

categorized hospitals by type of 

ownership. Based on this analysis, we 

estimate that voluntary hospitals will 

experience an increase of 1.3 percent, 

proprietary hospitals will experience an 

increase of 4.5 percent, and 

governmental hospitals will experience 

no change. 

TABLE 88—ESTIMATED IMPACT OF THE CY 2018 CHANGES FOR THE HOSPITAL OUTPATIENT PROSPECTIVE PAYMENT

SYSTEM

Number of 

hospitals 

APC 

recalibration 

(all changes) 

New wage 

index and 

provider 

adjustments 

340B 

adjustment 

All budget 

neutral 

changes 

(combined 

cols 2–4) 

with market 

basket 

update 

All changes 

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

ALL FACILITIES * .................................... 3,878 0.0 0.0 0.0 1.3 1.4 

ALL HOSPITALS (excludes hospitals 

permanently held harmless and 

CMHCs) ................................................ 3,765 0.0 0.1 ¥0.1 1.4 1.5 

URBAN HOSPITALS: 2,951 0.1 0.1 ¥0.3 1.2 1.3 

LARGE URBAN (GT 1 MILL.) .......... 1,589 0.1 0.0 ¥0.2 1.2 1.3 

OTHER URBAN (LE 1 MILL.) .......... 1,362 0.0 0.2 ¥0.3 1.3 1.4 

RURAL HOSPITALS: 814 ¥0.3 0.0 1.4 2.5 2.7 

SOLE COMMUNITY ......................... 372 ¥0.2 0.1 2.6 3.9 4.1 

OTHER RURAL ................................ 442 ¥0.4 ¥0.2 0.0 0.8 0.9 

BEDS (URBAN): 

0–99 BEDS ....................................... 1,021 0.0 0.0 1.9 3.3 3.4 

100–199 BEDS ................................. 850 0.0 0.2 1.2 2.8 2.9 

200–299 BEDS ................................. 468 0.1 0.1 0.5 2.0 2.1 

300–499 BEDS ................................. 399 0.1 0.0 ¥0.4 1.1 1.2 

500 + BEDS ...................................... 213 0.0 0.1 ¥2.2 ¥0.7 ¥0.6 

BEDS (RURAL): 

0–49 BEDS ....................................... 333 ¥0.5 ¥0.2 2.1 2.7 2.9 

50–100 BEDS ................................... 297 ¥0.2 ¥0.2 1.9 2.8 3.0 

101–149 BEDS ................................. 97 ¥0.3 0.1 1.1 2.3 2.5 

150–199 BEDS ................................. 49 ¥0.2 0.1 0.7 1.9 2.1 

200 + BEDS ...................................... 38 ¥0.3 0.4 0.8 2.4 2.5 

REGION (URBAN): 

NEW ENGLAND ............................... 144 0.2 0.4 ¥0.3 1.7 1.7 

MIDDLE ATLANTIC .......................... 348 0.1 ¥0.2 ¥0.1 1.2 1.3 

SOUTH ATLANTIC ........................... 463 0.0 0.3 ¥0.4 1.3 1.4 

EAST NORTH CENT ........................ 471 0.0 0.1 ¥0.2 1.3 1.4 

EAST SOUTH CENT ........................ 178 ¥0.1 ¥0.1 ¥1.6 ¥0.4 ¥0.3 

WEST NORTH CENT ....................... 191 0.0 0.5 ¥0.6 1.3 1.4 

WEST SOUTH CENT ....................... 513 0.0 0.3 0.9 2.5 2.6 

MOUNTAIN ....................................... 211 0.3 ¥0.9 ¥0.2 0.5 0.8 

PACIFIC ............................................ 383 0.1 0.0 ¥0.6 0.8 0.9 

PUERTO RICO ................................. 49 ¥0.2 0.2 2.9 4.3 4.4 

REGION (RURAL): 

NEW ENGLAND ............................... 21 0.1 1.5 1.2 4.2 4.2 


sradovich on DSK3GMQ082PROD with RULES2
59488 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

TABLE 88—ESTIMATED IMPACT OF THE CY 2018 CHANGES FOR THE HOSPITAL OUTPATIENT PROSPECTIVE PAYMENT

SYSTEM—Continued 

Number of 

hospitals 

APC 

recalibration 

(all changes) 

New wage 

index and 

provider 

adjustments 

340B 

adjustment 

All budget 

neutral 

changes 

(combined 

cols 2–4) 

with market 

basket 

update 

All changes 

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

MIDDLE ATLANTIC .......................... 53 0.0 ¥0.5 1.8 2.6 2.7 

SOUTH ATLANTIC ........................... 124 ¥0.4 ¥0.6 0.7 1.1 1.2 

EAST NORTH CENT ........................ 122 ¥0.2 0.0 1.5 2.7 2.8 

EAST SOUTH CENT ........................ 155 ¥0.6 ¥0.1 0.0 0.7 0.8 

WEST NORTH CENT ....................... 98 ¥0.1 0.2 2.4 3.9 4.1 

WEST SOUTH CENT ....................... 161 ¥0.6 0.3 2.6 3.6 3.7 

MOUNTAIN ....................................... 56 0.0 ¥0.3 1.9 3.0 3.3 

PACIFIC ............................................ 24 ¥0.1 0.1 1.7 3.0 3.1 

TEACHING STATUS: 

NON-TEACHING .............................. 2,655 0.0 0.1 1.3 2.8 2.9 

MINOR .............................................. 761 0.1 0.1 0.1 1.6 1.7 

MAJOR ............................................. 349 0.1 0.0 ¥2.4 ¥1.0 ¥0.9 

DSH PATIENT PERCENT: 

0 ........................................................ 10 0.0 0.2 3.2 4.8 4.9 

GT 0–0.10 ......................................... 272 0.2 ¥0.1 2.8 4.4 4.5 

0.10–0.16 .......................................... 263 0.1 0.0 2.7 4.3 4.4 

0.16–0.23 .......................................... 572 0.1 0.3 2.6 4.4 4.5 

0.23–0.35 .......................................... 1,132 0.0 0.1 ¥0.4 1.0 1.2 

GE 0.35 ............................................. 935 0.0 0.0 ¥2.2 ¥0.9 ¥0.8 

DSH NOT AVAILABLE ** .................. 581 ¥2.0 0.1 2.0 1.4 1.5 

URBAN TEACHING/DSH: 

TEACHING & DSH ........................... 1,002 0.1 0.0 ¥1.1 0.3 0.4 

NO TEACHING/DSH ........................ 1,386 0.1 0.2 1.3 3.0 3.1 

NO TEACHING/NO DSH .................. 10 0.0 0.2 3.2 4.8 4.9 

DSH NOT AVAILABLE ** .................. 553 ¥2.0 0.1 1.9 1.4 1.5 

TYPE OF OWNERSHIP: 

VOLUNTARY .................................... 1,979 0.0 0.0 ¥0.3 1.2 1.3 

PROPRIETARY ................................ 1,293 0.1 0.1 2.7 4.4 4.5 

GOVERNMENT ................................ 493 ¥0.1 0.2 ¥1.6 ¥0.1 0.0 

CMHCs ..................................................... 49 12.5 0.2 3.2 17.8 17.2 

Column (1) shows total hospitals and/or CMHCs. 

Column (2) includes all CY 2018 OPPS policies and compares those to the CY 2017 OPPS. 

Column (3) shows the budget neutral impact of updating the wage index by applying the FY 2018 hospital inpatient wage index, including all 

hold harmless policies and transitional wages. The rural adjustment continues our current policy of 7.1 percent so the budget neutrality factor is 

1. The budget neutrality adjustment for the cancer hospital adjustment is 1.0008 because the target payment-to-cost ratio changes from 0.91 in 

CY 2017 to 0.89 in CY 2018 and is further reduced by 1 percentage point to 0.88 in accordance with the 21st Century Cures Act. However, this 

reduction does not affect the budget neutrality adjustment consistent with statute. 

Column (4) shows the impact of the 340B drug payment reductions and the corresponding increase in non-drug payments. 

Column (5) shows the impact of all budget neutrality adjustments and the addition of the 1.35 percent OPD fee schedule update factor (2.7 

percent reduced by 0.6 percentage points for the productivity adjustment and further reduced by 0.75 percentage point as required by law). 

Column (6) shows the additional adjustments to the conversion factor resulting from the frontier adjustment, a change in the pass-through estimate, and adding estimated outlier payments. 

* These 3,878 providers include children and cancer hospitals, which are held harmless to pre-BBA amounts, and CMHCs. 

** Complete DSH numbers are not available for providers that are not paid under IPPS, including rehabilitation, psychiatric, and long-term care 

hospitals. 

(4) Estimated Effects of OPPS Changes 

on CMHCs 

The last line of Table 88 demonstrates 

the isolated impact on CMHCs, which 

furnish only partial hospitalization 

services under the OPPS. In CY 2017, 

CMHCs are paid under APC 5853 

(Partial Hospitalization (3 or more 

services) for CMHCs). We modeled the 

impact of this APC policy assuming that 

CMHCs will continue to provide the 

same number of days of PHP care as 

seen in the CY 2016 claims data used for 

this final rule with comment period. We 

excluded days with 1 or 2 services 

because our policy only pays a per diem 

rate for partial hospitalization when 3 or 

more qualifying services are provided to 

the beneficiary. We estimate that 

CMHCs will experience an overall 17.2 

percent increase in payments from CY 

2017 (shown in Column 6). We note that 

this includes the trimming methodology 

described in section VIII.B. of this final 

rule with comment period. 

Column 3 shows that the estimated 

impact of adopting the FY 2018 wage 

index values will result in a small 

increase of 0.2 percent to CMHCs. 

Column 5 shows that combining this 

OPD fee schedule increase factor, along 

with changes in APC policy for CY 2018 

and the FY 2018 wage index updates, 

will result in an estimated increase of 

17.8 percent. Column 6 shows that 

adding the changes in outlier and passthough payments will result in a total 

17.2 percent increase in payment for 

CMHCs. This reflects all changes to 

CMHCs for CY 2018. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59489 

(5) Estimated Effect of OPPS Changes on 

Beneficiaries 

For services for which the beneficiary 

pays a copayment of 20 percent of the 

payment rate, the beneficiary’s payment 

will increase for services for which the 

OPPS payments will rise and will 

decrease for services for which the 

OPPS payments will fall. For further 

discussion on the calculation of the 

national unadjusted copayments and 

minimum unadjusted copayments, we 

refer readers to section II.I. of this final 

rule with comment period. In all cases, 

section 1833(t)(8)(C)(i) of the Act limits 

beneficiary liability for copayment for a 

procedure performed in a year to the 

hospital inpatient deductible for the 

applicable year. 

We estimate that the aggregate 

beneficiary coinsurance percentage will 

be 18.5 percent for all services paid 

under the OPPS in CY 2018. The 

estimated aggregate beneficiary 

coinsurance reflects general system 

adjustments, including the CY 2018 

comprehensive APC payment policy 

discussed in section II.A.2.e. of this 

final rule with comment period. 

(6) Estimated Effects of OPPS Changes 

on Other Providers 

The relative payment weights and 

payment amounts established under the 

OPPS affect the payments made to ASCs 

as discussed in section XII. of this final 

rule with comment period. No types of 

providers or suppliers other than 

hospitals, CMHCs, and ASCs will be 

affected by the changes in this final rule 

with comment period. 

(7) Estimated Effects of OPPS Changes 

on the Medicare and Medicaid Programs 

The effect on the Medicare program is 

expected to be an increase of $690 

million in program payments for OPPS 

services furnished in CY 2018. The 

effect on the Medicaid program is 

expected to be limited to copayments 

that Medicaid may make on behalf of 

Medicaid recipients who are also 

Medicare beneficiaries. We refer readers 

to our discussion of the impact on 

beneficiaries in section XVIII.A.4.a.(4) of 

this final rule with comment period. 

(8) Alternative OPPS Policies 

Considered 

Alternatives to the OPPS changes we 

are making and the reasons for our 

selected alternatives are discussed 

throughout this final rule with comment 

period. 

• Alternatives considered for the 

enforcement instruction for the 

supervision of outpatient therapeutic 

services in critical access hospitals 

(CAHs) and certain small rural hospitals 

We considered whether to address 

enforcement of the direct supervision 

requirement for outpatient therapeutic 

services in CAHs and small, rural 

hospitals with fewer than 100 beds by 

extending the notice of nonenforcement 

while we further develop our policies. 

There are grounds for applying the same 

supervision requirements to CAHs as to 

all other hospitals. One of these grounds 

is that hospital outpatient services are 

furnished ‘‘incident to’’ physicians’ 

services, and we believe that the 

incident to rules apply equally to 

critical access and other types of 

hospitals. We also believe that Medicare 

should purchase the same basic level of 

quality and safe outpatient care for all 

beneficiaries, whether from a CAH, a 

small rural hospital, or other hospitals. 

At the same time, we acknowledge that 

in order to ensure the same level of 

outpatient care is furnished in CAHs 

and small rural hospitals as other 

hospitals, we need to continue the 

national discussion about what 

constitutes the appropriate supervision 

for a given service. We also need to 

acknowledge the challenges CAHs and 

small, rural hospitals have in recruiting 

and retaining physicians and qualified 

non-physician practitioners. 

Therefore, we are extending the notice 

of nonenforcement for CAHs and small 

rural hospitals with fewer than 100 beds 

for CY 2018 and CY 2019, to give all 

parties time to submit specific services 

to be considered for a reduced 

minimum supervision standard. We 

believe that the policies in this final rule 

with comment period will address 

industry concerns while maintaining an 

adequate level of safety and quality of 

care in the hospital outpatient services 

that Medicare purchases. 

• Alternatives Considered for the 

Methodology for Assigning Skin 

Substitutes to High or Low Cost Groups 

We refer readers to section V.B.1.d. of 

this final rule with comment period for 

a discussion of our proposal to assign 

any skin substitute product that was 

assigned to the high cost group in CY 

2017 to the high cost group in CY 2018, 

regardless of whether the product’s 

mean unit cost (MUC) or the product’s 

per day cost (PDC) exceeds or falls 

below the overall CY 2018 MUC or PDC 

threshold. We will continue to assign 

products that exceed either the overall 

CY 2018 MUC or PDC threshold to the 

high cost group. We also considered, but 

did not propose or finalize, retaining 

our methodology from CY 2017 and 

assigning skin substitutes to the high 

cost group based on whether an 

individual product’s MUC or PDC 

exceeded the overall CY 2018 MUC or 

PDC threshold based on calculations 

done for either the proposed rule or this 

final rule with comment period. 

b. Estimated Effects of CY 2018 ASC 

Payment System Policies 

Most ASC payment rates are 

calculated by multiplying the ASC 

conversion factor by the ASC relative 

payment weight. As discussed fully in 

section XII. of this final rule with 

comment period, we are setting the CY 

2018 ASC relative payment weights by 

scaling the CY 2018 OPPS relative 

payment weights by the ASC scalar of 

0.8990. The estimated effects of the 

updated relative payment weights on 

payment rates are varied and are 

reflected in the estimated payments 

displayed in Tables 89 and 90 below. 

Beginning in CY 2011, section 3401 of 

the Affordable Care Act requires that the 

annual update to the ASC payment 

system (which currently is the CPI–U) 

after application of any quality reporting 

reduction be reduced by a productivity 

adjustment. The Affordable Care Act 

defines the productivity adjustment to 

be equal to the 10-year moving average 

of changes in annual economy-wide 

private nonfarm business multifactor 

productivity (MFP) (as projected by the 

Secretary for the 10-year period ending 

with the applicable fiscal year, year, 

cost reporting period, or other annual 

period). For ASCs that fail to meet their 

quality reporting requirements, the CY 

2018 payment determinations will be 

based on the application of a 2.0 

percentage points reduction to the 

annual update factor, which currently is 

the CPI–U. We calculated the CY 2018 

ASC conversion factor by adjusting the 

CY 2017 ASC conversion factor by 

1.0007 to account for changes in the prefloor and pre-reclassified hospital wage 

indexes between CY 2017 and CY 2018 

and by applying the CY 2018 MFPadjusted CPI–U update factor of 1.2 

percent (projected CPI–U update of 1.7 

percent minus a projected productivity 

adjustment of 0.5 percentage point). The 

CY 2018 ASC conversion factor is 

$45.575. 

(1) Limitations of Our Analysis 

Presented here are the projected 

effects of the changes for CY 2018 on 

Medicare payment to ASCs. A key 

limitation of our analysis is our inability 

to predict changes in ASC service-mix 

between CY 2016 and CY 2018 with 

precision. We believe that the net effect 


sradovich on DSK3GMQ082PROD with RULES2
59490 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

on Medicare expenditures resulting 

from the CY 2018 changes will be small 

in the aggregate for all ASCs. However, 

such changes may have differential 

effects across surgical specialty groups 

as ASCs continue to adjust to the 

payment rates based on the policies of 

the revised ASC payment system. We 

are unable to accurately project such 

changes at a disaggregated level. Clearly, 

individual ASCs will experience 

changes in payment that differ from the 

aggregated estimated impacts presented 

below. 

(2) Estimated Effects of ASC Payment 

System Policies on ASCs 

Some ASCs are multispecialty 

facilities that perform a wide range of 

surgical procedures from excision of 

lesions to hernia repair to cataract 

extraction; others focus on a single 

specialty and perform only a limited 

range of surgical procedures, such as 

eye, digestive system, or orthopedic 

procedures. The combined effect on an 

individual ASC of the update to the CY 

2018 payments will depend on a 

number of factors, including, but not 

limited to, the mix of services the ASC 

provides, the volume of specific services 

provided by the ASC, the percentage of 

its patients who are Medicare 

beneficiaries, and the extent to which an 

ASC provides different services in the 

coming year. The following discussion 

presents tables that display estimates of 

the impact of the CY 2018 updates to 

the ASC payment system on Medicare 

payments to ASCs, assuming the same 

mix of services as reflected in our CY 

2016 claims data. Table 89 depicts the 

estimated aggregate percent change in 

payment by surgical specialty or 

ancillary items and services group by 

comparing estimated CY 2017 payments 

to estimated CY 2018 payments, and 

Table 90 shows a comparison of 

estimated CY 2017 payments to 

estimated CY 2018 payments for 

procedures that we estimate will receive 

the most Medicare payment in CY 2017. 

Table 89 shows the estimated effects 

on aggregate Medicare payments under 

the ASC payment system by surgical 

specialty or ancillary items and services 

group. We have aggregated the surgical 

HCPCS codes by specialty group, 

grouped all HCPCS codes for covered 

ancillary items and services into a single 

group, and then estimated the effect on 

aggregated payment for surgical 

specialty and ancillary items and 

services groups. The groups are sorted 

for display in descending order by 

estimated Medicare program payment to 

ASCs. The following is an explanation 

of the information presented in Table 

89. 

• Column 1—Surgical Specialty or 

Ancillary Items and Services Group 

indicates the surgical specialty into 

which ASC procedures are grouped and 

the ancillary items and services group 

which includes all HCPCS codes for 

covered ancillary items and services. To 

group surgical procedures by surgical 

specialty, we used the CPT code range 

definitions and Level II HCPCS codes 

and Category III CPT codes as 

appropriate, to account for all surgical 

procedures to which the Medicare 

program payments are attributed. 

• Column 2—Estimated CY 2017 ASC 

Payments were calculated using CY 

2016 ASC utilization (the most recent 

full year of ASC utilization) and CY 

2017 ASC payment rates. The surgical 

specialty and ancillary items and 

services groups are displayed in 

descending order based on estimated CY 

2017 ASC payments. 

• Column 3—Estimated CY 2018 

Percent Change is the aggregate 

percentage increase or decrease in 

Medicare program payment to ASCs for 

each surgical specialty or ancillary 

items and services group that are 

attributable to updates to ASC payment 

rates for CY 2018 compared to CY 2017. 

As seen in Table 89, for the six 

specialty groups that account for the 

most ASC utilization and spending, we 

estimate that the update to ASC 

payment rates for CY 2017 will result in 

a 1-percent increase in aggregate 

payment amounts for eye and ocular 

adnexa procedures, a 2-percent increase 

in aggregate payment amounts for 

digestive system procedures, 1-percent 

increase in aggregate payment amounts 

for nervous system procedures, a 3- 

percent increase in aggregate payment 

amounts for musculoskeletal system 

procedures, a 1-percent increase in 

aggregate payment amounts for 

genitourinary system procedures, and a 

5-percent increase in aggregate payment 

amounts for integumentary system 

procedures. 

Also displayed in Table 89 is a 

separate estimate of Medicare ASC 

payments for the group of separately 

payable covered ancillary items and 

services. The payment estimates for the 

covered surgical procedures include the 

costs of packaged ancillary items and 

services. We estimate that aggregate 

payments for these items and services 

will decrease by 44 percent for CY 2018. 

TABLE 89—ESTIMATED IMPACT OF THE CY 2018 UPDATE TO THE ASC PAYMENT SYSTEM ON AGGREGATE CY 2018 

MEDICARE PROGRAM PAYMENTS BY SURGICAL SPECIALTY OR ANCILLARY ITEMS AND SERVICES GROUP

Surgical specialty group 

Estimated 

CY 2017 

ASC payments 

(in millions) 

Estimated 

CY 2018 

percent 

change 

(1) (2) (3) 

Total ......................................................................................................................................................................... $4,460 1 

Eye and ocular adnexa ............................................................................................................................................ 1,688 1 

Digestive system ...................................................................................................................................................... 852 2 

Nervous system ....................................................................................................................................................... 849 1 

Musculoskeletal system ........................................................................................................................................... 530 3 

Genitourinary system ............................................................................................................................................... 186 1 

Integumentary system ............................................................................................................................................. 141 5 

Ancillary items and services .................................................................................................................................... 55 ¥44 

Table 90 below shows the estimated 

impact of the updates to the revised 

ASC payment system on aggregate ASC 

payments for selected surgical 

procedures during CY 2018. The table 

displays 30 of the procedures receiving 

the greatest estimated CY 2017 aggregate 

Medicare payments to ASCs. The 

HCPCS codes are sorted in descending 

order by estimated CY 2017 program 

payment. 

• Column 1—CPT/HCPCS code. 

• Column 2—Short Descriptor of the 

HCPCS code. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59491 

• Column 3—Estimated CY 2017 ASC 

Payments were calculated using CY 

2016 ASC utilization (the most recent 

full year of ASC utilization) and the CY 

2017 ASC payment rates. The estimated 

CY 2017 payments are expressed in 

millions of dollars. 

• Column 4—Estimated CY 2018 

Percent Change reflects the percent 

differences between the estimated ASC 

payment for CY 2017 and the estimated 

payment for CY 2018 based on the 

update. 

TABLE 90—ESTIMATED IMPACT OF THE CY 2018 UPDATE TO THE ASC PAYMENT SYSTEM ON AGGREGATE PAYMENTS

FOR SELECTED PROCEDURES

CPT/HCPCS 

code Short descriptor 

Estimated 

CY 2017 

ASC payment 

(in millions) 

Estimated 

CY 2018 

percent 

change 

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

66984 ............. Cataract surg w/iol 1 stage ......................................................................................................... $1,172 1 

45380 ............. Colonoscopy and biopsy ............................................................................................................. 216 3 

43239 ............. Egd biopsy single/multiple ........................................................................................................... 178 2 

63685 ............. Insrt/redo spine n generator ........................................................................................................ 151 ¥1 

45385 ............. Colonoscopy w/lesion removal .................................................................................................... 146 3 

63650 ............. Implant neuroelectrodes .............................................................................................................. 118 4 

64483 ............. Inj foramen epidural l/s ................................................................................................................ 99 1 

66982 ............. Cataract surgery complex ........................................................................................................... 94 1 

0191T ............. Insert ant segment drain int ........................................................................................................ 86 1 

66821 ............. After cataract laser surgery ......................................................................................................... 69 0 

64635 ............. Destroy lumb/sac facet jnt ........................................................................................................... 68 0 

29827 ............. Arthroscop rotator cuff repr ......................................................................................................... 61 3 

64493 ............. Inj paravert f jnt l/s 1 lev .............................................................................................................. 60 1 

64590 ............. Insrt/redo pn/gastr stimul ............................................................................................................. 50 2 

G0105 ............ Colorectal scrn; hi risk ind ........................................................................................................... 45 3 

62323 ............. Njx interlaminar lmbr/sac ............................................................................................................. 45 3 

45378 ............. Diagnostic colonoscopy ............................................................................................................... 44 3 

G0121 ............ Colon ca scrn not hi rsk ind ........................................................................................................ 42 3 

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

15823 ............. Revision of upper eyelid .............................................................................................................. 32 6 

29881 ............. Knee arthroscopy/surgery ........................................................................................................... 30 5 

29880 ............. Knee arthroscopy/surgery ........................................................................................................... 26 5 

67042 ............. Vit for macular hole ..................................................................................................................... 25 1 

28285 ............. Repair of hammertoe ................................................................................................................... 24 5 

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

26055 ............. Incise finger tendon sheath ......................................................................................................... 23 6 

43235 ............. Egd diagnostic brush wash ......................................................................................................... 23 2 

64561 ............. Implant neuroelectrodes .............................................................................................................. 22 6 

50590 ............. Fragmenting of kidney stone ....................................................................................................... 21 1 

67904 ............. Repair eyelid defect ..................................................................................................................... 20 2 

(3) Estimated Effects of ASC Payment 

System Policies on Beneficiaries 

We estimate that the CY 2018 update 

to the ASC payment system will be 

generally positive for beneficiaries with 

respect to the new procedures that we 

are adding to the ASC list of covered 

surgical procedures and for those that 

we are designating as office-based for 

CY 2018. First, other than certain 

preventive services where coinsurance 

and the Part B deductible is waived to 

comply with sections 1833(a)(1) and (b) 

of the Act, the ASC coinsurance rate for 

all procedures is 20 percent. This 

contrasts with procedures performed in 

HOPDs under the OPPS, where the 

beneficiary is responsible for 

copayments that range from 20 percent 

to 40 percent of the procedure payment 

(other than for certain preventive 

services). Second, in almost all cases, 

the ASC payment rates under the ASC 

payment system are lower than payment 

rates for the same procedures under the 

OPPS. Therefore, the beneficiary 

coinsurance amount under the ASC 

payment system will almost always be 

less than the OPPS copayment amount 

for the same services. (The only 

exceptions would be if the ASC 

coinsurance amount exceeds the 

inpatient deductible. The statute 

requires that copayment amounts under 

the OPPS not exceed the inpatient 

deductible.) Beneficiary coinsurance for 

services migrating from physicians’ 

offices to ASCs may decrease or increase 

under the revised ASC payment system, 

depending on the particular service and 

the relative payment amounts under the 

MPFS compared to the ASC. However, 

for those additional procedures that we 

are designating as office-based in CY 

2018, the beneficiary coinsurance 

amount under the ASC payment system 

generally will be no greater than the 

beneficiary coinsurance under the 

MPFS because the coinsurance under 

both payment systems generally is 20 

percent (except for certain preventive 

services where the coinsurance is 

waived under both payment systems). 

(4) Alternative ASC Payment Policies 

Considered 

Alternatives to the ASC changes we 

are making and the reasons for our 

selected alternatives are discussed 

throughout this final rule with comment 

period. 

c. Accounting Statements and Tables 

As required by OMB Circular A–4 

(available on the Office of Management 

and Budget Web site at: https://

www.whitehouse.gov/omb/circulars_

a004_a-4#a), we have prepared two 

accounting statements to illustrate the 

impacts of this final rule with comment 

period. The first accounting statement, 

Table 91 below, illustrates the 


sradovich on DSK3GMQ082PROD with RULES2
59492 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

classification of expenditures for the CY 

2018 estimated hospital OPPS incurred 

benefit impacts associated with the CY 

2018 OPD fee schedule increase. The 

second accounting statement, Table 92 

below, illustrates the classification of 

expenditures associated with the 1.2 

percent CY 2018 update to the ASC 

payment system, based on the 

provisions of this final rule with 

comment period and the baseline 

spending estimates for ASCs. Lastly, the 

tables classify most estimated impacts 

as transfers. 

TABLE 91—ACCOUNTING STATEMENT: CY 2018 ESTIMATED HOSPITAL OPPS TRANSFERS FROM CY 2017 TO CY 2018 

ASSOCIATED WITH THE CY 2018 HOSPITAL OUTPATIENT OPD FEE SCHEDULE INCREASE

Category Transfers 

Annualized Monetized Transfers .............................................................. $690 million. 

From Whom to Whom .............................................................................. Federal Government to outpatient hospitals and other providers who 

receive payment under the hospital OPPS. 

Total ................................................................................................... $690 million. 

TABLE 92—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED TRANSFERS FROM CY 2017 TO CY 2018 AS A

RESULT OF THE CY 2018 UPDATE TO THE ASC PAYMENT SYSTEM

Category Transfers 

Annualized Monetized Transfers .............................................................. $40 million. 

From Whom to Whom .............................................................................. Federal Government to Medicare Providers and Suppliers. 

Total ................................................................................................... $40 million. 

d. Effects of Requirements for the 

Hospital OQR Program 

(1) Background 

We refer readers to the CY 2017 

OPPS/ASC final rule with comment 

period (81 FR 79874), for the previously 

estimated effects of changes to the 

Hospital OQR Program for the CY 2018, 

CY 2019, and CY 2020 payment 

determinations. Of the 3,228 hospitals 

that met eligibility requirements for the 

CY 2017 payment determination, we 

determined that 87 hospitals did not 

meet the requirements to receive the full 

OPD fee schedule increase factor. Most 

of these hospitals (66 of the 87), chose 

not to participate in the Hospital OQR 

Program for the CY 2017 payment 

determination. We estimate that 

approximately 100 hospitals will not 

receive the full OPD fee schedule 

increase factor for the CY 2018 payment 

determination and subsequent years. 

In section XIII.B.4.c. of this final rule 

with comment period, we are finalizing 

the removal of six measures. 

Specifically, beginning with the CY 

2020 payment determination, we are 

finalizing, as proposed, to remove: (1) 

OP–21: Median Time to Pain 

Management for Long Bone Fracture; 

and (2) OP–26: Hospital Outpatient 

Volume Data on Selected Outpatient 

Surgical Procedures. Also, while we 

proposed to remove: (1) OP–1: Median 

Time to Fibrinolysis, (2) OP–4: Aspirin 

at Arrival, (3) OP–20: Door to Diagnostic 

Evaluation by a Qualified Medical 

Professional, and (4) OP–25: Safe 

Surgery Checklist beginning with the 

CY 2021 payment determination, we are 

finalizing removal of these measures 

with modification so that removal 

begins with the CY 2020 payment 

determination, one year earlier than 

proposed. To summarize, the following 

measures will be removed for the CY 

2020 payment determination: (1) OP–1: 

Median Time to Fibrinolysis; (2) OP–4: 

Aspirin at Arrival; (3) OP–20: Door to 

Diagnostic Evaluation by a Qualified 

Medical Professional; (4) OP–21: 

Median Time to Pain Management for 

Long Bone Fracture; (5) OP–25: Safe 

Surgery Checklist; and (6) OP–26: 

Hospital Outpatient Volume Data on 

Selected Outpatient Surgical 

Procedures. We expect these finalized 

proposals will reduce the burden of 

reporting for the Hospital OQR Program, 

as discussed in more detail below. 

In section XIII.B.10.b. of this final rule 

with comment period, we are finalizing, 

with modifications, our proposal to 

publicly report OP–18c using data 

beginning with patient encounters 

during the third quarter of 2017. 

However, we do not expect our 

modifications to affect the burden 

estimates made in the CY 2018 OPPS/ 

ASC proposed rule (82 FR 33705 

through 33708), as discussed below. 

In section XIII.B.5. of this final rule 

with comment period, we are finalizing 

our proposal to delay the OP–37a–e: 

Outpatient and Ambulatory Surgery 

Consumer Assessment of Healthcare 

Providers and Systems (OAS CAHPS) 

Survey-based measures beginning with 

the CY 2020 payment determination (CY 

2018 data collection period) until 

further notice in future rulemaking. 

In addition, in this final rule with 

comment period, beginning with the CY 

2020 payment determination, we are 

finalizing our proposals: (1) To codify at 

§ 419.46(e) our previously finalized 

process for targeting hospitals for 

validation of chart-abstracted measures 

(section XIII.D.7.b. of this final rule with 

comment period); (2) to formalize the 

educational review process and use it to 

correct incorrect validation results for 

chart-abstracted measures (section 

XIII.D.7.c. of this final rule with 

comment period); (3) to align the first 

quarter for which hospitals must submit 

data for all hospitals that did not 

participate in the previous year’s 

Hospital OQR Program, and make 

corresponding revisions at 42 CFR 

419.46(c)(3) (section XIII.D.1. of this 

final rule with comment period); and (4) 

to align the naming of the Extraordinary 

Circumstances Exceptions (ECE) policy 

and make conforming changes to the 

CFR (section XIII.D.8.a. of this final rule 

with comment period). We are not 

finalizing our proposals to change the 

NOP submission deadlines such that 

hospitals are required to submit the 

NOP any time prior to registering on the 

QualityNet Web site and to make 

conforming revisions at 42 CFR 

419.46(a) (section XIII.C.2.b. of this final 

rule with comment period). We do not 

believe that these changes will affect our 

burden estimates, as further discussed 

below. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59493 

(2) Estimated Impact of Newly Finalized 

Proposal To Delay OP–37a–e: 

Outpatient and Ambulatory Surgery 

Consumer Assessment of Healthcare 

Providers and Systems (OAS CAHPS) 

Survey-Based Measures Beginning With 

the CY 2020 Payment Determination 

As described in section XIII.B.5. of 

this final rule with comment period, we 

are finalizing our proposal to delay OP– 

37a–e: Outpatient and Ambulatory 

Surgery Consumer Assessment of 

Healthcare Providers and Systems (OAS 

CAHPS) Survey-based measures 

beginning with the CY 2020 payment 

determination (CY 2018 data collection 

period). As stated in the CY 2017 OPPS/ 

ASC final rule with comment period (81 

FR 79863), the information collection 

requirements associated with the five 

OAS CAHPS Survey-based measures 

(OP–37a, OP–37b, OP–37c, OP–37d, and 

OP–37e) are currently approved under 

OMB Control Number 0938–1240. For 

this reason, in the CY 2017 OPPS/ASC 

final rule with comment period (81 FR 

79863), we did not provide an 

independent estimate of the burden 

associated with OAS CAHPS Survey 

based measures for the Hospital OQR 

Program. Similarly, our finalized 

proposal to delay implementation of 

these measures does not affect our 

current burden estimates. 

(3) Estimated Impact of Proposal to 

Publicly Report OP–18c: Median Time 

From Emergency Department Arrival to 

Emergency Department Departure for 

Discharged Emergency Department 

Patients—Psychiatric/Mental Health 

Patients 

In section XIII.B.10.b. of this final rule 

with comment period, we are finalizing, 

with modifications, our proposal to 

publicly report 18c: Median Time from 

Emergency Department Arrival to 

Emergency Department Departure for 

Discharged Emergency Department 

Patients—Psychiatric/Mental Health 

Patients beginning with patient 

encounters from the third quarter of 

2017. As noted in that section, the data 

required for public reporting of OP–18c 

is already collected as part of the 

existing Hospital OQR Program 

requirements. Accordingly, we did not 

estimate changes to burden due to this 

proposal and we do not expect the 

modifications we are finalizing to affect 

burden. 

(4) Estimated Impact of Newly Finalized 

Proposals for the CY 2020 Payment 

Determination and Subsequent Years 

(a) Impact of Measure Removals 

In section XIII.B.4.c. of this final rule 

with comment period, we are finalizing 

our proposals to remove six measures 

from the Hospital OQR Program. 

Specifically, beginning with the CY 

2020 payment determination, we are 

finalizing, as proposed, to remove: (1) 

OP–21: Median Time to Pain 

Management for Long Bone Fracture; 

and (2) OP–26: Hospital Outpatient 

Volume Data on Selected Outpatient 

Surgical Procedures. Also, while we 

proposed to remove: (1) OP 1: Median 

Time to Fibrinolysis, (2) OP–4: Aspirin 

at Arrival, (3) OP–20: Door to Diagnostic 

Evaluation by a Qualified Medical 

Professional, and (4) OP–25: Safe 

Surgery Checklist beginning with the 

CY 2021 payment determination, we are 

finalizing removal of these measures 

with modification so that removal 

begins with the CY 2020 payment 

determination, one year earlier than 

proposed. In summary, we are finalizing 

removal of six measures beginning with 

the CY 2020 payment determination. 

We note that we have modified our 

estimates from the proposed rule (82 FR 

33673) in order to streamline our 

discussion in light of the modification. 

Specifically, we are finalizing the 

removal of four chart-abstracted 

measures ((1) OP–1: Median Time to 

Fibrinolysis; (2) OP–4: Aspirin at 

Arrival; (3) OP–20: Door to Diagnostic 

Evaluation by a Qualified Medical 

Professional; and (4) OP–21: Median 

Time to Pain Management for Long 

Bone Fracture) and two web-based 

measures ((1) OP–25: Safe Surgery 

Checklist Use; and (2) OP–26: Hospital 

Outpatient Volume Data on Selected 

Outpatient Surgical Procedures). As 

described in section XVI.B. of this final 

rule with comment period, we expect 

these measure removals to reduce 

burden by 457,490 hours and $16.7 

million for the CY 2020 payment 

determination. 

(b) Impact of Updates to Previously 

Finalized Chart-Abstracted Measure 

Validation Procedures and the 

Educational Review Process 

In section XIII.D.7.a. of this final rule 

with comment period, we provide 

clarification on our procedures for 

validation of chart-abstracted measures 

to note that the 50 poorest performing 

outlier hospitals will be targeted for 

validation. We do not expect this 

clarification to affect burden because it 

does not alter the number of hospitals 

selected for validation or the 

requirements for those hospitals that are 

selected. 

In addition, in section XIII.D.7.c. of 

this final rule with comment period, we 

are finalizing our proposal to formalize 

the process of allowing hospitals to use 

an educational review process to correct 

incorrect validation results for the first 

three quarters of validation for chartabstracted measures. We are also 

finalizing our proposal to update the 

process to specify that if the results of 

an educational review indicate that we 

incorrectly scored a hospital’s medical 

records selected for validation, the 

corrected quarterly validation score will 

be used to compute the hospital’s final 

validation score at the end of the 

calendar year. Under this finalized 

policy, the educational review request 

process remains the same for the CY 

2020 payment determination and 

subsequent years, except that revised 

scores identified through an educational 

review will be used to correct a 

hospital’s validation score. As a result, 

we do not expect this policy to affect the 

burden experienced by hospitals, as our 

changes to this policy result in a change 

in the way we address educational 

review requests and not a change to the 

process hospitals must follow to request 

an education review. As we stated in the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75171), we 

believe there is a burden associated with 

successful participation in the Hospital 

OQR Program, where successful 

participation results in a full annual 

payment update (APU) for a particular 

payment determination. This burden 

includes, but is not limited to, 

maintaining familiarity with the 

Hospital OQR Program requirements, 

which includes checking feedback 

reports to indicate a facility’s current 

status or performance (78 FR 75171). 

The overall administrative burden was 

estimated at 42 hours per hospital (78 

FR 75171). As stated above, we do not 

believe this burden will change with the 

finalization of our policy to update the 

educational review process to include 

corrections. 

(c) Impact of Proposed Update to NOP 

Submission Deadline 

In section XIII.C.2. of this final rule 

with comment period, we are not 

finalizing our proposal to revise the 

NOP submission deadlines such that 

hospitals are required to submit the 

NOP any time prior to registering on the 

QualityNet Web site. We estimated that 

this proposal would have a negligible 

effect on the time and cost of 

completing the participation 

requirements. As a result, our decision 

not to finalize the proposal to revise the 

NOP submission deadline does not 

affect our burden estimates. 


sradovich on DSK3GMQ082PROD with RULES2
59494 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

218As discussed in section XVI.C.4. of this final 

rule with comment period, data for ASC–5 is 

submitted via CMS claims using Quality Data 

Codes, which impose only a nominal burden on 

providers because these claims are already 

submitted for the purposes of payment. We 

therefore estimate a nominal reduction in burden 

associated with our finalized proposal to remove 

the ASC–5 measure from the ASCQR Program 

measure set beginning with the CY 2019 payment 

determination. 

(d) Impact of Aligning the First Quarter 

for Which Hospitals Must Submit Data 

for All Hospitals That Did Not 

Participate in the Previous Year’s 

Hospital OQR Program 

In section XIII.D.1 of this final rule 

with comment period, we are finalizing 

our proposal to align the timeline 

specifying the initial quarter for which 

hospitals must submit data for all 

hospitals that did not participate in the 

previous year’s Hospital OQR Program, 

rather than specifying different 

timelines for hospitals with Medicare 

acceptance dates before versus after 

January 1 of the year prior to an affected 

annual payment update. Although this 

finalized proposal alters the timeline for 

hospitals to begin submitting data for 

the Hospital OQR Program, it does not 

alter program requirements. As a result, 

we do not anticipate that this policy 

will affect burden. 

(e) Impact of Updates to the Previously 

Finalized ECE Policy 

We previously estimated the burden 

associated with general and 

administrative Hospital OQR Program 

requirements in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

75171). In section XIII.D.8. of this final 

rule with comment period, we discuss 

our finalized alignment of the naming of 

this exception policy and finalized 

proposal to update 42 CFR 419.46(d) to 

reflect our current ECE policies. We are 

also clarifying the timing of our 

response to ECE requests. Because we 

do not seek any new or additional 

information in our finalized ECE 

proposals, we believe the updates will 

have no effect on burden for hospitals. 

We refer readers to section XVI.B. of 

this final rule with comment period 

(information collection requirements) 

for a detailed discussion of the burden 

of the requirements for submitting data 

to the Hospital OQR Program. 

e. Effects of Proposed Requirements for 

the ASCQR Program 

1. Background 

In section XIV. of this final rule with 

comment period, we discuss our 

proposals to adopt policies affecting the 

ASCQR Program. For the CY 2017 

payment determination, of the 3,937 

ASCs that met eligibility requirements 

for the ASCQR Program, 209 ASCs did 

not meet the requirements to receive the 

full annual payment update. We note 

that, in the CY 2017 OPPS/ASC final 

rule with comment period (81 FR 

79874), we used the CY 2016 payment 

determination numbers as a baseline, 

and estimated that approximately 200 

ASCs will not receive the full annual 

payment update in CY 2018 due to 

failure to meet the ASCQR Program 

requirements (CY 2017 and CY 2018 

payment determination information 

were not yet available). 

In section XIV.B.3.b. of this final rule 

with comment period, we are finalizing 

our proposals, beginning with the CY 

2019 payment determination, to remove 

three measures (ASC–5: Prophylactic 

Intravenous (IV) Antibiotic Timing, 

ASC–6: Safe Surgery Checklist Use, and 

ASC–7: Ambulatory Surgical Center 

Facility Volume Data on Selected 

Ambulatory Surgical Center Surgical 

Procedures) from the ASCQR Program 

measure set. In section XIV.B.6.a. of this 

final rule with comment period, we are 

not finalizing our proposal, beginning 

with the CY 2021 payment 

determination, to adopt one new 

measure, ASC–16: Toxic Anterior 

Segment Syndrome. In section 

XIV.B.6.b. and c. of this final rule with 

comment period, we are finalizing our 

proposals, beginning with the CY 2022 

payment determination, to adopt two 

new measures collected via claims 

(ASC–17: Hospital Visits after 

Orthopedic Ambulatory Surgical Center 

Procedures and ASC–18: Hospital Visits 

after Urology Ambulatory Surgical 

Center Procedures). We expect these 

finalized proposals will reduce the 

overall burden of reporting data for the 

ASCQR Program, as discussed below. 

In this final rule with comment 

period, we are also finalizing our 

proposals: (1) To delay ASC–15a–e: 

OAS CAHPS survey-based measures 

beginning with the CY 2020 payment 

determination (CY 2018 data collection) 

(section XIV.B.4. of this final rule with 

comment period); (2) to expand the 

CMS online tool to also allow for batch 

submission beginning with data 

submitted during CY 2018 and to make 

corresponding revisions to the CFR 

(section XIV.D.3.b. of this final rule with 

comment period); and, (3) to align the 

naming of the Extraordinary 

Circumstances Exceptions (ECE) policy 

beginning with CY 2018 and to make 

conforming changes to the CFR (section 

XIV.D.6.b. of this final rule with 

comment period). As discussed below, 

we do not expect these finalized 

proposals to affect our burden estimates. 

2. Estimated Burden of Newly Finalized 

ASCQR Program Proposals Beginning 

With CY 2018 

In section XIV.B.4. of this final rule 

with comment period, we are finalizing 

our proposal to delay ASC–15a–e: OAS 

CAHPS Survey-based measures 

beginning with the CY 2020 payment 

determination (CY 2018 data collection) 

until further notice in future 

rulemaking. As described in the CY 

2017 OPPS/ASC final rule with 

comment period (81 FR 79864), the 

information collection requirements 

associated with the five OAS CAHPS 

Survey based measures (ASC–15a, ASC– 

15b, ASC–15c, ASC–15d, and ASC–15e) 

are currently approved under OMB 

Control Number 0938–1240. For this 

reason, we did not provide an 

independent estimate of the burden 

associated with OAS CAHPS Survey 

administration for the ASCQR Program 

in the CY 2017 OPPS/ASC final rule 

with comment period (81 FR 79864). 

Similarly, our finalized proposal to 

delay reporting on these measures does 

not affect our current burden estimates. 

For CY 2018, we are finalizing two 

additional policies. First, in section 

XIV.D.3.b. of this final rule with 

comment period, we are finalizing our 

proposal to expand the CMS online tool 

to also allow for batch submission 

beginning with data submitted during 

CY 2018 and to make corresponding 

revisions to the CFR. Second, in section 

XIV.D.6. of this final rule with comment 

period, we discuss our intent to align 

the naming of this exception policy and 

update 42 CFR 416.310(d) to reflect our 

current ECE policies. We are also 

clarifying the timing of CMS’ response 

to ECE requests. Because none of these 

policies change the reporting 

requirements of the ASCQR Program or 

require ASCs to submit any new or 

additional information, we believe the 

updates will have no effect on burden 

for ASCs. 

3. Estimated Burden of Newly Finalized 

ASCQR Program Proposals for the CY 

2019 Payment Determination 

In section XIV.B.3.b. of this final rule 

with comment period, we are finalizing 

our proposals to remove one claimsbased measure (ASC–5: Prophylactic 

Intravenous (IV) Antibiotic Timing 218) 

and two measures collected via a CMS 

online data submission tool (ASC–6: 

Safe Surgery Checklist Use and ASC–7: 

ASC Facility Volume Data on Selected 

ASC Surgical Procedures) from the 

ASCQR Program measure set beginning 

with the CY 2019 payment 

determination. As discussed in section 

XVI.C.4. of this final rule with comment 

period, data for ASC–5 is submitted via 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59495 

CMS claims using Quality Data Codes, 

which impose only a nominal burden 

on providers because these claims are 

already submitted for the purposes of 

payment. Therefore, we estimate a 

nominal reduction in burden associated 

with our finalized proposal to remove 

the ASC–5 measure from the ASCQR 

Program measure set beginning with the 

CY 2019 payment determination. As 

also discussed in section XVI.C.4. of this 

final rule with comment period, we 

estimate the proposals to remove ASC– 

6 and ASC–7 from the ASCQR Program 

measure set will reduce ASCs’ data 

collection and submission burden by 

approximately 657 hours (3,937 ASCs × 

0.167 hours per ASC) and $24,033 (657 

hours × $36.58 per hour) per measure, 

or a total burden reduction of 1,314 (657 

hours × 2 measures) and $48,066 (1,314 

hours × $36.58 per hour) across all 

ASCs. 

We did not propose to add any quality 

measures to the ASCQR measure set for 

the CY 2020 payment determination, 

and we do not believe that the other 

measures we previously adopted will 

cause any additional ASCs to fail to 

meet the ASCQR Program requirements. 

(We refer readers to section XIV.B.5. of 

this final rule with comment period for 

a list of these measures.) Therefore, we 

do not believe that these policies will 

increase the number of ASCs that do not 

receive a full annual payment update for 

the CY 2020 payment determination. 

4. Estimated Burden of ASCQR Program 

for the CY 2021 Payment Determination 

In section XIV.B.6.a. of this final rule 

with comment period, we are not 

finalizing our proposal to adopt one 

new measure collected via a CMS online 

data submission tool, ASC–16: Toxic 

Anterior Segment Syndrome. Therefore, 

the initially estimated burden from the 

CY 2018 OPPS/ASC proposed rule (82 

FR 33721) does not apply. 

5. Estimated Burden of ASCQR Program 

Newly Finalized Proposals for the CY 

2022 Payment Determination 

In sections XIV.B.6.b. and c. of this 

final rule with comment period, we are 

finalizing our proposals, beginning with 

the CY 2022 payment determination, to 

adopt two measures collected via 

claims: (1) ASC–17: Hospital Visits after 

Orthopedic Ambulatory Surgical Center 

Procedures; and (2) ASC–18: Hospital 

Visits after Urology Ambulatory 

Surgical Center Procedures. Data used to 

calculate scores for these measures is 

collected via Part A and Part B Medicare 

administrative claims and Medicare 

enrollment data, and therefore does not 

require ASCs to report any additional 

data. Because these measures do not 

require ASCs to submit any additional 

data, we do not believe there will be any 

additional burden associated with these 

proposals. 

We refer readers to the information 

collection requirements in section 

XVI.C. of this final rule with comment 

period for a detailed discussion of the 

financial and hourly burden of the 

ASCQR Program’s current and proposed 

requirements. 

B. Regulatory Flexibility Act (RFA) 

Analysis 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities, if a rule has a significant impact 

on a substantial number of small 

entities. For purposes of the RFA, we 

estimate that most hospitals, ASCs and 

CMHCs are small entities as that term is 

used in the RFA. For purposes of the 

RFA, most hospitals are considered 

small businesses according to the Small 

Business Administration’s size 

standards with total revenues of $38.5 

million or less in any single year or by 

the hospital’s not-for-profit status. Most 

ASCs and most CMHCs are considered 

small businesses with total revenues of 

$15 million or less in any single year. 

For details, see the Small Business 

Administration’s ‘‘Table of Small 

Business Size Standards’’ at http://

www.sba.gov/content/table-smallbusiness-size-standards. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 604 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a metropolitan statistical area and has 

100 or fewer beds. We estimate that this 

final rule with comment period will 

increase payments to small rural 

hospitals by less than 3 percent; 

therefore, it should not have a 

significant impact on approximately 626 

small rural hospitals. 

The analysis above, together with the 

remainder of this preamble, provides a 

regulatory flexibility analysis and a 

regulatory impact analysis. 

C. Unfunded Mandates Reform Act 

Analysis 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require spending in any 1 year of $100 

million in 1995 dollars, updated 

annually for inflation. That threshold 

level is currently approximately $148 

million. This final rule with comment 

period does not mandate any 

requirements for State, local, or tribal 

governments, or for the private sector. 

D. Reducing Regulation and Controlling 

Regulatory Costs 

Executive Order 13771, titled 

Reducing Regulation and Controlling 

Regulatory Costs, was issued on January 

30, 2017. Section 2(a) of Executive 

Order 13771 requires an agency, unless 

prohibited by law, to identify at least 

two existing regulations to be repealed 

when the agency publicly proposes for 

notice and comment, or otherwise 

promulgates, a new regulation. In 

furtherance of this requirement, section 

2(c) of Executive Order 13771 requires 

that the new incremental costs 

associated with new regulations shall, to 

the extent permitted by law, be offset by 

the elimination of existing costs 

associated with at least two prior 

regulations. OMB’s guidance, issued on 

April 5, 2017, explains that ‘‘In general, 

Federal spending regulatory actions that 

cause only income transfers between 

taxpayers and program beneficiaries 

(e.g., regulations associated with . . . 

Medicare spending) are considered 

‘transfer rules’ and are not covered by 

EO 13771. However, in some cases, such 

regulatory actions may impose 

requirements apart from transfers, or 

transfers may distort markets causing 

inefficiencies. In those cases, the actions 

would need to be offset to the extent 

they impose more than de minimis 

costs.’’ As shown in the previous 

discussion of Regulatory Review Costs 

under section XVIII.A.4. of this final 

rule with comment period, we estimate 

that total regulatory review costs on the 

affected entities will be approximately 

$2.8 million. As discussed in section 

XVI. of this final rule with comment 

period, we estimate that this rule leads 

to paperwork cost savings of 

approximately $16.8 million per year on 

an ongoing basis. It has been determined 

that this final rule with comment period 

is a deregulatory action for the purposes 

of Executive Order 13771. 

E. Conclusion 

The changes we are making in this 

final rule with comment period will 

affect all classes of hospitals paid under 

the OPPS and will affect both CMHCs 

and ASCs. We estimate that most classes 

of hospitals paid under the OPPS will 

experience a modest increase or a 

minimal decrease in payment for 

services furnished under the OPPS in 

CY 2018. Table 88 demonstrates the 

estimated distributional impact of the 

OPPS budget neutrality requirements 


sradovich on DSK3GMQ082PROD with RULES2
59496 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 

that will result in a 1.4 percent increase 

in payments for all services paid under 

the OPPS in CY 2018, after considering 

all of the changes to APC 

reconfiguration and recalibration, as 

well as the OPD fee schedule increase 

factor, wage index changes, including 

the frontier State wage index 

adjustment, estimated payment for 

outliers, and changes to the passthrough payment estimate. However, 

some classes of providers that are paid 

under the OPPS will experience more 

significant gains or losses in OPPS 

payments in CY 2018. 

The updates to the ASC payment 

system for CY 2018 will affect each of 

the approximately 5,500 ASCs currently 

approved for participation in the 

Medicare program. The effect on an 

individual ASC will depend on its mix 

of patients, the proportion of the ASC’s 

patients who are Medicare beneficiaries, 

the degree to which the payments for 

the procedures offered by the ASC are 

changed under the ASC payment 

system, and the extent to which the ASC 

provides a different set of procedures in 

the coming year. Table 89 demonstrates 

the estimated distributional impact 

among ASC surgical specialties of the 

MFP-adjusted CPI–U update factor of 

1.2 percent for CY 2018. 

XIX. Federalism Analysis 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

costs on State and local governments, 

preempts State law, or otherwise has 

Federalism implications. We have 

examined the OPPS and ASC provisions 

included in this final rule with 

comment period in accordance with 

Executive Order 13132, Federalism, and 

have determined that they will not have 

a substantial direct effect on State, local 

or tribal governments, preempt State 

law, or otherwise have a Federalism 

implication. As reflected in Table 88 of 

this final rule with comment period, we 

estimate that OPPS payments to 

governmental hospitals (including State 

and local governmental hospitals) will 

experience no change under this final 

rule with comment period. While we do 

not know the number of ASCs or 

CMHCs with government ownership, we 

anticipate that it is small. The analyses 

we have provided in this section of this 

final rule with comment period, in 

conjunction with the remainder of this 

document, demonstrate that this final 

rule with comment period is consistent 

with the regulatory philosophy and 

principles identified in Executive Order 

12866, the RFA, and section 1102(b) of 

the Act. 

This final rule with comment period 

will affect payments to a substantial 

number of small rural hospitals and a 

small number of rural ASCs, as well as 

other classes of hospitals, CMHCs, and 

ASCs, and some effects may be 

significant. 

List of Subjects 

42 CFR Part 414 

Administrative practice and 

procedure, Health facilities, Health 

professions, Kidney disease, Medicare, 

Reporting and recordkeeping 

requirements. 

42 CFR Part 416 

Health facilities, Health professions, 

Medicare, Reporting and recordkeeping 

requirements. 

42 CFR Part 419 

Hospitals, Medicare, Reporting and 

recordkeeping requirements. 

For reasons stated in the preamble of 

this document, the Centers for Medicare 

& Medicaid Services is amending 42 

CFR chapter IV as set forth below: 

PART 414—PAYMENT FOR PART B 

MEDICAL AND OTHER HEALTH 

SERVICES 

■ 1. The authority citation for part 414 

continues to read as follows: 

Authority: Secs. 1102, 1871, and 

1881(b)(1) of the Social Security Act (42 

U.S.C. 1302, 1395hh, and 1395rr(b)(1). 

■ 2. Section 414.510 is amended by 

adding paragraph (b)(5) to read as 

follows: 

§ 414.510 Laboratory date of service for 

clinical laboratory and pathology 

specimens. 

* * * * * 

(b) * * * 

(5) In the case of a molecular 

pathology test or a test designated by 

CMS as an ADLT under paragraph (1) of 

the definition of an advanced diagnostic 

laboratory test in § 414.502, the date of 

service of the test must be the date the 

test was performed only if— 

(i) The test was performed following 

a hospital outpatient’s discharge from 

the hospital outpatient department; 

(ii) The specimen was collected from 

a hospital outpatient during an 

encounter (as both are defined in § 410.2 

of this chapter); 

(iii) It was medically appropriate to 

have collected the sample from the 

hospital outpatient during the hospital 

outpatient encounter; 

(iv) The results of the test do not 

guide treatment provided during the 

hospital outpatient encounter; and 

(v) The test was reasonable and 

medically necessary for the treatment of 

an illness. 

PART 416—AMBULATORY SURGICAL 

SERVICES 

■ 3. The authority citation for part 416 

continues to read as follows: 

Authority: Secs. 1102, 1138, and 1871 of 

the Social Security Act (42 U.S.C. 1302, 

1320b–8, and 1395hh) and section 371 of the 

Public Health Service Act (42 U.S.C. 273). 

■ 4. Section 416.310 is amended by 

revising paragraphs (c)(1)(i) and (d) to 

read as follows: 

§ 416.310. Data collection and submission 

requirements under the ASCQR Program. 

* * * * * 

(c) * * * 

(1) * * * 

(i) QualityNet account for web-based 

measures. ASCs, and any agents 

submitting data on an ASC’s behalf, 

must maintain a QualityNet account in 

order to submit quality measure data to 

the QualityNet Web site for all webbased measures submitted via a CMS 

online data submission tool. A 

QualityNet security administrator is 

necessary to set up such an account for 

the purpose of submitting this 

information. 

* * * * * 

(d) Extraordinary circumstances 

exceptions. CMS may grant an 

exception with respect to quality data 

reporting requirements in the event of 

extraordinary circumstances beyond the 

control of the hospital, such as when an 

act of nature affects an entire region or 

if CMS determines that a systemic 

problem with one of its data collection 

systems directly affected the ability of 

the hospitals to submit data. CMS may 

grant an exception as follows: 

(1) Upon request of the ASC. Specific 

requirements for submission of a request 

for an exception are available on the 

QualityNet Web site; or 

(2) At the discretion of CMS. CMS 

may grant exceptions to ASCs that have 

not requested them when CMS 

determines that an extraordinary 

circumstance has occurred. 

* * * * * 

PART 419—PROSPECTIVE PAYMENT 

SYSTEM FOR HOSPITAL OUTPATIENT 

DEPARTMENT SERVICES 

■ 5. The authority citation for part 419 

continues to read as follows: 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Rules and Regulations 59497 

Authority: Secs. 1102, 1833(t), and 1871 

of the Social Security Act (42 U.S.C. 1302, 

1395l(t), and 1395hh). 

■ 6. Section 419.32 is amended by 

adding paragraph (b)(1)(iv)(B)(9) to read 

as follows: 

§ 419.32 Calculation of prospective 

payment rates for hospital outpatient 

services. 

* * * * * 

(b) * * * 

(1) * * * 

(iv) * * * 

(B) * * * 

(9) For calendar year 2018, a 

multiproductivity adjustment (as 

determined by CMS) and 0.75 

percentage point. 

* * * * * 

■ 7. Section 419.46 is amended— 

■ a. In paragraph (a)(1) by removing the 

phrase ‘‘Web site’’ and adding in its 

place the term ‘‘website’’. 

■ b. In paragraphs (b) and (c)(2) by 

removing the phrase ‘‘Web site’’ and 

adding in its place the term ‘‘website’’. 

■ c. By revising paragraphs (c)(3)(i) and 

(ii) and (d). 

■ d. By adding paragraph (e)(3). 

■ e. In paragraphs (f)(1) and (g)(2) by 

removing the phrase ‘‘Web site’’ and 

adding in its place the term ‘‘website’’ 

wherever it appears. 

The revisions and additions read as 

follow: 

§ 419.46 Participation, data submission, 

and validation requirements under the 

Hospital Outpatient Quality Reporting 

(OQR) Program. 

* * * * * 

(c) * * * 

(3) * * * 

(i) Hospitals that did not participate 

in the previous year’s Hospital OQR 

Program must initially submit data 

beginning with encounters occurring 

during the first calendar quarter of the 

year prior to the affected annual 

payment update. 

(ii) Hospitals that did not participate 

in the previous year’s Hospital OQR 

Program must follow data submission 

deadlines as specified in paragraph 

(c)(2) of this section. 

* * * * * 

(d) Exception. CMS may grant an 

exception to one or more data 

submission deadlines and requirements 

in the event of extraordinary 

circumstances beyond the control of the 

hospital, such as when an act of nature 

affects an entire region or locale or a 

systemic problem with one of CMS’ data 

collection systems directly or indirectly 

affects data submission. CMS may grant 

an exception as follows: 

(1) Upon request by the hospital. 

Specific requirements for submission of 

a request for an exception are available 

on the QualityNet Web site. 

(2) At the discretion of CMS. CMS 

may grant exceptions to hospitals that 

have not requested them when CMS 

determines that an extraordinary 

circumstance has occurred. 

(e) * * * 

(3) CMS will select a random sample 

of 450 hospitals for validation purposes, 

and will select an additional 50 

hospitals for validation purposes based 

on the following criteria: 

(i) The hospital fails the validation 

requirement that applies to the previous 

year’s payment determination; or 

(ii) The hospital has an outlier value 

for a measure based on the data it 

submits. An ‘‘outlier value’’ is a 

measure value that is greater than 5 

standard deviations from the mean of 

the measure values for other hospitals, 

and indicates a poor score. 

* * * * * 

■ 8. Section 419.71 is added to read as 

follows: 

§ 419.71 Payment reduction for certain Xray imaging services. 

(a) Definition. For purposes of this 

section, the term ‘‘computed 

radiography technology’’ means 

cassette-based imaging which utilizes an 

imaging plate to create the image 

involved. 

(b) Payment reduction for film X-ray 

imaging services. For an imaging service 

that is an X-ray taken using film and 

that is furnished during 2017 or a 

subsequent year, the payment amount 

for such service (including the X-ray 

component of a packaged service) is 

reduced by 20 percent. 

(c) Payment reduction for computed 

radiography imaging services. The 

payment amount for an imaging service 

that is an X-ray taken using computed 

radiography technology (including the 

X-ray component of a packaged service) 

is reduced by— 

(1) 7 percent, for such services 

furnished in CY 2018, 2019, 2020, 2021, 

or 2022. 

(2) 10 percent, for such services 

furnished in CY 2023 or a subsequent 

calendar year. 

(d) Application without regard to 

budget neutrality. The reductions taken 

under this section are not considered 

adjustments under section 1833(t)(2)(E) 

of the Act and are not implemented in 

a budget neutral manner. 

Dated: October 26, 2017. 

Seema Verma, 

Administrator, Centers for Medicare and 

Medicaid Services. 

Dated: October 30, 2017. 

Eric D. Hargan, 

Acting Secretary, Department of Health and 

Human Services. 

Editorial Note: Rule document 2017– 

23932 was originally published on pages 

52356 through 52637 in the issue of Monday, 

November 13, 2017. In that publication, a 

section of the document was omitted due to 

a printing error. The corrected document is 

published here in its entirety. 

[FR Doc. R1–2017–23932 Filed 11–1–17; 4:15 pm] 

BILLING CODE 1301–00–D 


sradovich on DSK3GMQ082PROD with RULES2