66770 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 411, 412, 416, 419, 422, 

423, and 424 

[CMS–1613–FC] 

RIN 0938–AS15 

Medicare and Medicaid Programs: 

Hospital Outpatient Prospective 

Payment and Ambulatory Surgical 

Center Payment Systems and Quality 

Reporting Programs; Physician-Owned 

Hospitals: Data Sources for Expansion 

Exception; Physician Certification of 

Inpatient Hospital Services; Medicare 

Advantage Organizations and Part D 

Sponsors: CMS-Identified 

Overpayments Associated with 

Submitted Payment Data 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule with comment period. 

SUMMARY: This final rule with comment 

period revises the Medicare hospital 

outpatient prospective payment system 

(OPPS) and the Medicare ambulatory 

surgical center (ASC) payment system 

for CY 2015 to implement applicable 

statutory requirements and changes 

arising from our continuing experience 

with these systems. In this final rule 

with comment period, we describe the 

changes to the amounts and factors used 

to determine the payment rates for 

Medicare services paid under the OPPS 

and those paid under the ASC payment 

system. In addition, this final rule with 

comment period updates and refines the 

requirements for the Hospital 

Outpatient Quality Reporting (OQR) 

Program and the ASC Quality Reporting 

(ASCQR) Program. 

In this document, we also are making 

changes to the data sources permitted 

for expansion requests for physicianowned hospitals under the physician 

self-referral regulations; changes to the 

underlying authority for the 

requirement of an admission order for 

all hospital inpatient admissions and 

changes to require physician 

certification for hospital inpatient 

admissions only for long-stay cases and 

outlier cases; and changes to establish a 

formal process, including a three-level 

appeals process, to recoup 

overpayments that result from the 

submission of erroneous payment data 

by Medicare Advantage (MA) 

organizations and Part D sponsors in the 

limited circumstances in which the 

organization or sponsor fails to correct 

these data. 

DATES: Effective Date: This final rule 

with comment period is effective on 

January 1, 2015. 

Comment Period: To be assured 

consideration, comments on the 

payment classifications assigned to 

HCPCS codes identified in Addenda B, 

AA, and BB to this final rule with 

comment period with the ‘‘NI’’ 

comment indicator, and on other areas 

specified throughout this final rule with 

comment period must be received at one 

of the addresses provided in the 

ADDRESSES section no later than 5 p.m. 

EST on December 30, 2014. 

Application Deadline—New Class of 

New Technology Intraocular Lenses: 

Requests for review of applications for 

a new class of new technology 

intraocular lenses must be received by 

5 p.m. EST on March 2, 2015, at the 

following address: ASC/NTIOL, 

Division of Outpatient Care, Mailstop 

C4–05–17, Centers for Medicare and 

Medicaid Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

ADDRESSES: In commenting, please refer 

to file code CMS–1613–FC. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (no duplicates, please): 

1. Electronically. You may (and we 

encourage you to) submit electronic 

comments on this regulation to http://

www.regulations.gov. Follow the 

instructions under the ‘‘submit a 

comment’’ tab. 

2. By regular mail. You may mail 

written comments to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–1613–FC, P.O. Box 8013, 

Baltimore, MD 21244–1850. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments via express 

or overnight mail to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–1613–FC, Mail Stop C4–26–05, 

7500 Security Boulevard, Baltimore, MD 

21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments before the close 

of the comment period to either of the 

following addresses: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal Government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your 

comments to the Baltimore address, 

please call the telephone number (410) 

786–7195 in advance to schedule your 

arrival with one of our staff members. 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

For information on viewing public 

comments, we refer readers to the 

beginning of the SUPPLEMENTARY

INFORMATION section. 

FOR FURTHER INFORMATION: 

Marjorie Baldo, (410) 786–4617, for 

issues related to new CPT and Level 

II HCPCS codes, revised process for 

soliciting comments related to new 

Category I and III CPT codes, and 

exceptions to the 2 times rule. 

Elizabeth Bainger, (410) 786–0529, for 

issues related to the Hospital 

Outpatient Quality Reporting— 

Program Administration, Validation, 

and Reconsideration Issues. 

Anita Bhatia, (410) 786–7236, for issues 

related to the Ambulatory Surgical 

Center Quality Reporting (ASCQR) 

Program—Program Administration 

and Reconsideration Issues. 

Chuck Braver, (410) 786–9379, for 

issues related to the CMS Web posting 

of the OPPS and ASC payment files. 

Anne Calinger, (410) 786–3396, for 

issues related to Medicare Advantage 

(MA) organizations and Medicare Part 

D sponsor overpayments. 

Elisabeth Daniel, (410) 786–0237, for 

issues related to OPPS drugs, 

radiopharmaceuticals, biologicals, 

blood clotting factors, packaged 

items/services, and brachytherapy 

sources payment. 

Dexter Dickey, (410) 786–6856, or 

Dorothy Myrick, (410) 786–9671, for 

issues related to partial 

hospitalization and community 

mental health center (CMHC) issues. 

Eva Fung, (410) 786–7539, or Vinitha 

Meyyur, (410) 786–8819, for issues 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66771 

related to Hospital OQR Program and 

ASCQR measures issues and 

publication of Hospital OQR Program 

data issues. 

Twi Jackson, (410) 786–1159, for issues 

related to device-dependent APCs, 

composite APCs (extended 

assessment and management, low 

dose brachytherapy, multiple 

imaging), hospital outpatient visits, 

inpatient procedures list, and no cost/ 

full credit and partial credit devices. 

Marina Kushnirova, (410) 786–2682, for 

issues related to OPPS status 

indicators and comment indicators. 

John McInnes, (410) 786–0791, for 

issues related to new technology 

intraocular lenses (NTIOLs). 

Esther Markowitz, (410) 786–4595, for 

issues related to comprehensive APCs 

and ambulatory surgical center (ASC) 

payments. 

David Rice, (410) 786–6004, for issues 

related to APC weights, blood and 

blood products, cancer hospital 

payments, conversion factor, 

copayments, cost-to-charge ratios 

(CCRs), data claims, geometric mean 

calculation, off-campus providerbased issues, rural hospital payments, 

outlier payments, and wage index. 

Daniel Schroder, (410) 786–4487, for 

issues related to physician 

certification of hospital inpatient 

services. 

Carol Schwartz, (410) 786–0576, for 

issues related to the Advisory Panel 

on Hospital Outpatient Payment (HOP 

Panel) and OPPS pass-through 

devices. 

Teresa Walden, (410) 786–3755, or 

Patricia Taft, (410) 786–4561, for 

issues related to the physician selfreferral law/physician-owned hospital 

expansion exception process. 

Marjorie Baldo, (410) 786–4617, for all 

other issues related to hospital 

outpatient and ambulatory surgical 

center payments not previously 

identified. 

SUPPLEMENTARY INFORMATION: 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http://

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection, 

generally beginning approximately 3 

weeks after publication of the rule, at 

the headquarters of the Centers for 

Medicare & Medicaid Services, 7500 

Security Boulevard, Baltimore, MD 

21244, on Monday through Friday of 

each week from 8:30 a.m. to 4:00 p.m. 

EST. To schedule an appointment to 

view public comments, phone 1–800– 

743–3951. 

Electronic Access 

This Federal Register document is 

also available from the Federal Register 

online database through Federal Digital 

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

Government Printing Office. This 

database can be accessed via the 

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

Addenda Available Only Through the 

Internet on the CMS Web Site 

In the past, a majority of the Addenda 

referred to in our OPPS/ASC proposed 

and final rules were published in the 

Federal Register as part of the annual 

rulemakings. However, beginning with 

the CY 2012 OPPS/ASC proposed rule, 

all of the Addenda no longer appear in 

the Federal Register as part of the 

annual OPPS/ASC proposed and final 

rules to decrease administrative burden 

and reduce costs associated with 

publishing lengthy tables. Instead, these 

Addenda are published and available 

only on the CMS Web site. The 

Addenda relating to the OPPS are 

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

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

index.html. The Addenda relating to the 

ASC payment system are available at: 

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

Medicare-Fee-for-Service-Payment/

ASCPayment/index.html. 

Alphabetical List of Acronyms 

Appearing in This Federal Register 

Document 

AHA American Hospital Association 

AMA American Medical Association 

AMI Acute myocardial infarction 

APC Ambulatory Payment Classification 

ASC Ambulatory surgical center 

ASCQR Ambulatory Surgical Center 

Quality Reporting 

ASP Average sales price 

AWP Average wholesale price 

BBA Balanced Budget Act of 1997, Public 

Law 105–33 

BBRA Medicare, Medicaid, and SCHIP 

[State Children’s Health Insurance 

Program] Balanced Budget Refinement Act 

of 1999, Public Law 106–113 

BIPA Medicare, Medicaid, and SCHIP 

Benefits Improvement and Protection Act 

of 2000, Public Law 106–554 

BLS Bureau of Labor Statistics 

CAH Critical access hospital 

CAHPS Consumer Assessment of 

Healthcare Providers and Systems 

CAP Competitive Acquisition Program 

C–APC Comprehensive Ambulatory 

Payment Classification 

CASPER Certification and Survey Provider 

Enhanced Reporting 

CAUTI Catheter-associated urinary tract 

infection 

CBSA Core-Based Statistical Area 

CCN CMS Certification Number 

CCR Cost-to-charge ratio 

CDC Centers for Disease Control and 

Prevention 

CED Coverage with Evidence Development 

CERT Comprehensive Error Rate Testing 

CFR Code of Federal Regulations 

CI Comment indicator 

CLABSI Central Line [Catheter] Associated 

Blood Stream Infection 

CLFS Clinical Laboratory Fee Schedule 

CMHC Community mental health center 

CMS Centers for Medicare & Medicaid 

Services 

CoP Condition of participation 

CPI–U Consumer Price Index for All Urban 

Consumers 

CPT Current Procedural Terminology 

(copyrighted by the American Medical 

Association) 

CR Change request 

CRC Colorectal cancer 

CSAC Consensus Standards Approval 

Committee 

CT Computed tomography 

CV Coefficient of variation 

CY Calendar year 

DFO Designated Federal Official 

DIR Direct or indirect remuneration 

DME Durable medical equipment 

DMEPOS Durable Medical Equipment, 

Prosthetic, Orthotics, and Supplies 

DRA Deficit Reduction Act of 2005, Public 

Law 109–171 

DSH Disproportionate share hospital 

EACH Essential access community hospital 

EAM Extended assessment and 

management 

ECG Electrocardiogram 

ED Emergency department 

E/M Evaluation and management 

EHR Electronic health record 

ESRD End-stage renal disease 

ESRD QIP End-Stage Renal Disease Quality 

Improvement Program 

FACA Federal Advisory Committee Act, 

Public Law 92–463 

FDA Food and Drug Administration 

FFS [Medicare] Fee-for-service 

FY Fiscal year 

GAO Government Accountability Office 

GI Gastrointestinal 

HAI Healthcare-associated infection 

HCAHPS Hospital Consumer Assessment of 

Healthcare Providers and Systems 

HCERA Health Care and Education 

Reconciliation Act of 2010, Public Law 

111–152 

HCP Health care personnel 

HCPCS Healthcare Common Procedure 

Coding System 

HCRIS Healthcare Cost Report Information 

System 

HCUP Healthcare Cost and Utilization 

Project 

HH QRP Home Health Quality Reporting 

Program 

HHS Department of Health and Human 

Services 


tkelley on DSK3SPTVN1PROD with RULES2
66772 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

HIE Health information exchange 

HEU Highly enriched uranium 

HIPAA Health Insurance Portability and 

Accountability Act of 1996, Public Law 

104–191 

HOP Hospital Outpatient Payment [Panel] 

HOPD Hospital outpatient department 

HOP QDRP Hospital Outpatient Quality 

Data Reporting Program 

HPMS Health Plan Management System 

IBD Inflammatory bowel disease 

ICC Interclass correlation coefficient 

ICD Implantable cardioverter defibrillator 

ICD–9–CM International Classification of 

Diseases, Ninth Revision, Clinical 

Modification 

ICH In-center hemodialysis 

IDTF Independent diagnostic testing facility 

IGI IHS Global Insight, Inc. 

IHS Indian Health Service 

I/OCE Integrated Outpatient Code Editor 

IOL Intraocular lens 

IORT Intraoperative radiation treatment 

IPFQR Inpatient Psychiatric Facility 

Quality Reporting 

IPPS [Hospital] Inpatient Prospective 

Payment System 

IQR [Hospital] Inpatient Quality Reporting 

IRF Inpatient rehabilitation facility 

IRF QRP Inpatient Rehabilitation Facility 

Quality Reporting 

IT Information technology 

LCD Local coverage determination 

LDR Low dose rate 

LTCH Long-term care hospital 

LTCHQR Long-Term Care Hospital Quality 

Reporting 

MAC Medicare Administrative Contractor 

MAP Measure Application Partnership 

MedPAC Medicare Payment Advisory 

Commission 

MEG Magnetoencephalography 

MFP Multifactor productivity 

MGCRB Medicare Geographic Classification 

Review Board 

MIEA–TRHCA Medicare Improvements and 

Extension Act under Division B, Title I of 

the Tax Relief Health Care Act of 2006, 

Public Law 109–432 

MIPPA Medicare Improvements for Patients 

and Providers Act of 2008, Public Law 

110–275 

MLR Medical loss ratio 

MMA Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003, Public Law 108–173 

MMEA Medicare and Medicaid Extenders 

Act of 2010, Public Law 111–309 

MMSEA Medicare, Medicaid, and SCHIP 

Extension Act of 2007, Public Law 110–173 

MPFS Medicare Physician Fee Schedule 

MR Medical review 

MRA Magnetic resonance angiography 

MRgFUS Magnetic Resonance Image 

Guided Focused Ultrasound 

MRI Magnetic resonance imaging 

MRSA Methicillin-Resistant 

Staphylococcus Aures 

MS–DRG Medicare severity diagnosisrelated group 

MSIS Medicaid Statistical Information 

System 

MUC Measure under consideration 

NCCI National Correct Coding Initiative 

NDC National Drug Code 

NHSN National Healthcare Safety Network 

NOS Not otherwise specified 

NPWT Negative Pressure Wound Therapy 

NPI National provider identification 

NQF National Quality Forum 

NQS National Quality Strategy 

NTIOL New technology intraocular lens 

NUBC National Uniform Billing Committee 

OACT [CMS] Office of the Actuary 

OBRA Omnibus Budget Reconciliation Act 

of 1996, Public Law 99–509 

OIG [HHS] Office of the Inspector General 

OMB Office of Management and Budget 

ONC Office of the National Coordinator for 

Health Information Technology 

OPD [Hospital] Outpatient Department 

OPO Organ Procurement Organization 

OPPS [Hospital] Outpatient Prospective 

Payment System 

OPSF Outpatient Provider-Specific File 

OQR [Hospital] Outpatient Quality 

Reporting 

OT Occupational therapy 

PBD Provider-Based Department 

PCHQR PPS-Exempt Cancer Hospital 

Quality Reporting 

PCR Payment-to-cost ratio 

PDE Prescription Drug Event 

PE Practice expense 

PEPPER Program Evaluation Payment 

Patterns Electronic Report 

PHP Partial hospitalization program 

PHSA Public Health Service Act, Public 

Law 96–88 

PMA Premarket approval 

PN Pneumonia 

POS Place of service 

PPI Producer Price Index 

PPS Prospective payment system 

PQRI Physician Quality Reporting Initiative 

PQRS Physician Quality Reporting System 

QDC Quality data code 

QIO Quality Improvement Organization 

RAC Recovery Audit Contractor 

RADV Risk Adjustment Data Validation 

RFA Regulatory Flexibility Act 

RHQDAPU Reporting Hospital Quality Data 

for Annual Payment Update 

RTI Research Triangle Institute, 

International 

RVU Relative value unit 

SAMS Secure Access Management Services 

SCH Sole community hospital 

SCOD Specified covered outpatient drugs 

SES Socioeconomic status 

SI Status indicator 

SIR Standardized infection ratio 

SNF Skilled nursing facility 

SRS Stereotactic radiosurgery 

SSA Social Security Administration 

SSI Surgical site infection 

TEP Technical Expert Panel 

TIP Transprostatic implant procedure 

TMS Transcranial Magnetic Stimulation 

[Therapy] 

TOPs Transitional Outpatient Payments 

USPSTF United States Preventive Services 

Task Force 

VBP Value-based purchasing 

WAC Wholesale acquisition cost 

Table of Contents 

I. Summary and Background 

A. Executive Summary of This Document 

1. Purpose 

2. Summary of the Major Provisions 

3. Summary of Costs and Benefits 

B. Legislative and Regulatory Authority for 

the Hospital OPPS 

C. Excluded OPPS Services and Hospitals 

D. Prior Rulemaking 

E. Advisory Panel on Hospital Outpatient 

Payment (the HOP Panel or the Panel) 

1. Authority of the Panel 

2. Establishment of the Panel 

3. Panel Meetings and Organizational 

Structure 

F. Public Comments Received on the CY 

2015 OPPS/ASC Proposed Rule 

G. Public Comments Received on the CY 

2014 OPPS/ASC Final Rule with 

Comment Period 

II. Updates Affecting OPPS Payments 

A. Recalibration of APC Relative Payment 

Weights 

1. Database Construction 

a. Database Source and Methodology 

b. Use of Single and Multiple Procedure 

Claims 

c. Calculation and Use of Cost-to-Charge 

Ratios (CCRs) 

2. Data Development Process and 

Calculation of Costs Used for Ratesetting 

a. Claims Preparation 

b. Splitting Claims and Creation of 

‘‘Pseudo’’ Single Procedure Claims 

(1) Splitting Claims 

(2) Creation of ‘‘Pseudo’’ Single Procedure 

Claims 

c. Completion of Claim Records and 

Geometric Mean Cost Calculations 

(1) General Process 

(2) Recommendations of the Panel 

Regarding Data Development 

d. Calculation of Single Procedure APC 

Criteria-Based Costs 

(1) Device-Dependent APCs 

(2) Blood and Blood Products 

(3) Brachytherapy Source Payment 

e. Establishment of Comprehensive APCs 

(1) Background 

(2) CY 2015 Policy for C–APCs 

(3) Public Comments 

(4) Statement of Final Policy and List of CY 

2015 C–APCs 

f. Calculation of Composite APC CriteriaBased Costs 

(1) Extended Assessment and Management 

Composite APCs (APC 8009) 

(2) Low Dose Rate (LDR) Prostate 

Brachytherapy Composite APC (APC 

8001) 

(3) Mental Health Services Composite APC 

(APC 0034) 

(4) Multiple Imaging Composite APCs 

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

3. Changes to Packaged Items and Services 

a. Background and Rationale for Packaging 

in the OPPS 

b. Revision of a Packaging Policy 

Established in CY 2014—Procedures 

Described by Add-On Codes 

c. Packaging Policies for CY 2015 

(1) Ancillary Services 

(2) Prosthetic Supplies 

4. Calculation of OPPS Scaled Payment 

Weights 

B. Conversion Factor Update 

C. Wage Index Changes 

D. Statewide Average Default CCRs 

E. Adjustment for Rural SCHs and EACHs 

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


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66773 

F. OPPS Payment to Certain Cancer 

Hospitals Described by Section 

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

1. Background 

2. Payment Adjustment for Certain Cancer 

Hospitals for CY 2015 

G. Hospital Outpatient Outlier Payments 

1. Background 

2. Outlier Calculation 

3. Final Outlier Calculation 

H. Calculation of an Adjusted Medicare 

Payment from the National Unadjusted 

Medicare Payment 

I. Beneficiary Copayments 

1. Background 

2. OPPS Copayment Policy 

3. Calculation of an Adjusted Copayment 

Amount for an APC Group 

III. OPPS Ambulatory Payment Classification 

(APC) Group Policies 

A. OPPS Treatment of New CPT and Level 

II HCPCS Codes 

1. Treatment of New CY 2014 Level II 

HCPCS and CPT Codes Effective April 1, 

2014 and July 1, 2014 for Which We 

Solicited Public Comments in the CY 

2015 OPPS/ASC Proposed Rule 

2. Process for New Level II HCPCS Codes 

That Will Be Effective October 1, 2014 

and New CPT and Level II HCPCS Codes 

That Will Be Effective January 1, 2015 

for Which We Are Soliciting Public 

Comments in this CY 2015 OPPS/ASC 

Final Rule with Comment Period 

3. Process for Soliciting Public Comments 

for New and Revised CPT Codes 

Released by the AMA 

a. Current Process for Accepting Comments 

on New and Revised CPT Codes for a 

Year 

b. Modification of Process for New and 

Revised CPT Codes That Are Effective 

January 1 

B. OPPS Changes—Variations within APCs 

1. Background 

2. Application of the 2 Times Rule 

3. Exceptions to the 2 Times Rule 

C. OPPS APC-Specific Policies 

1. Cardiovascular and Vascular Services: 

Cardiac Telemetry (APC 0213) 

2. Gastrointestinal (GI) Services: Upper GI 

Procedures (APCs 0142, 0361, 0419, and 

0422) 

3. Genitourinary Services 

a. Gynecologic Procedures (APCs 0188, 

0189, 0192, 0193, and 0202) 

b. Cystourethroscopy, Transprostatic 

Implant Procedures, and Other 

Genitourinary Procedures (APCs 0160, 

0161, 0162, 0163, and 1564 

c. Level IV Anal/Rectal Procedures (APC 

0150) 

d. Percutaneous Renal Cryoablation (APC 

0423) 

4. Nervous System Services 

a. Chemodenervation (APC 0206) 

b. Epidural Lysis (APCs 0203 and 0207) 

c. Transcranial Magnetic Stimulation 

Therapy (TMS) (APC 0218) 

5. Ocular Services: Ophthalmic Procedures 

and Services 

6. Imaging 

a. Echocardiography (APCs 0269, 0270, 

and 0697) 

b. Optical Coherence Tomography 

Procedures of the Breast 

c. Parathyroid Planar Imaging (APCs 0263, 

0317, 0406, 0414) 

7. Radiology Oncology 

a. Proton Beam Therapy and 

Magnetoencephalography (MEG) 

Services (APCs 0065, 0412, 0446, 0664, 

and 0667) 

b. Stereotactic Radiosurgery Services (SRS) 

and Magnetic Resonance Image Guided 

Focused Ultrasound (MRgFUS) (APC 

0066) 

8. Respiratory Services: Level II Endoscopy 

Lower Airway (APC 0415) 

9. Other Services 

a. Epidermal Autograft (APC 0327) 

b. Image-Guided Breast Biopsy Procedures 

and Image-Guided Abscess Drainage 

Procedures (APCs 0005 and 0007) 

c. Negative Pressure Wound Therapy 

(NPWT) (APCs 0012 and 0015) 

d. Platelet Rich Plasma (PRP) (APC 0327) 

IV. OPPS Payment for Devices 

A. Pass-Through Payments for Devices 

1. Expiration of Transitional Pass-Through 

Payments for Certain Devices 

a. Background 

b. CY 2015 Policy 

2. Provisions for Reducing Transitional 

Pass-Through Payments to Offset Costs 

Packaged into APC Groups 

a. Background 

b. CY 2015 Policy 

B. Adjustment to OPPS Payment for No 

Cost/Full Credit and Partial Credit 

Devices 

1. Background 

2. Policy for CY 2015 

V. OPPS Payment Changes for Drugs, 

Biologicals, and Radiopharmaceuticals 

A. OPPS Transitional Pass-Through 

Payment for Additional Costs of Drugs, 

Biologicals, and Radiopharmaceuticals 

1. Background 

2. Drugs and Biologicals with Expiring 

Pass-Through Status in CY 2014 

3. Drugs, Biologicals, and 

Radiopharmaceuticals with New or 

Continuing Pass-Through Status in CY 

2015 

4. Provisions for Reducing Transitional 

Pass-Through Payments for PolicyPackaged Drugs and Biologicals to Offset 

Costs Packaged into APC Groups 

a. Background 

b. Payment Offset Policy for Diagnostic 

Radiopharmaceuticals 

c. Payment Offset Policy for Contrast 

Agents 

d. Payment Offset Policy for Drugs, 

Biologicals, and Radiopharmaceuticals 

That Function as Supplies When Used in 

a Diagnostic Test or Procedure and Drugs 

and Biologicals That Function as 

Supplies When Used in a Surgical 

Procedure 

B. OPPS Payment for Drugs, Biologicals, 

and Radiopharmaceuticals without PassThrough Status 

1. Background 

2. Criteria for Packaging Payment for 

Drugs, Biologicals, and 

Radiopharmaceuticals 

a. Background 

b. Cost Threshold for Packaging of Payment 

for HCPCS Codes That Describe Certain 

Drugs, Certain Biologicals, and 

Therapeutic Radiopharmaceuticals 

(‘‘Threshold-Packaged Drugs’’) 

c. High Cost/Low Cost Threshold for 

Packaged Skin Substitutes 

d. Pass-Through Evaluation Process for 

Skin Substitutes 

e. Packaging Determination for HCPCS 

Codes That Describe the Same Drug or 

Biological But Different Dosages 

3. Payment for Drugs and Biologicals 

without Pass-Through Status That Are 

Not Packaged 

a. Payment for Specified Covered 

Outpatient Drugs (SCODs) and Other 

Separately Payable and Packaged Drugs 

and Biologicals 

b. CY 2015 Payment Policy 

4. Payment Policy for Therapeutic 

Radiopharmaceuticals 

5. Payment Adjustment Policy for 

Radioisotopes Derived From Non-Highly 

Enriched Uranium Sources 

6. Payment for Blood Clotting Factors 

7. Payment for Nonpass-Through Drugs, 

Biologicals, and Radiopharmaceuticals 

with HCPCS Codes but without OPPS 

Hospital Claims Data 

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

Radiopharmaceuticals, and Devices 

A. Background 

B. Estimate of Pass-Through Spending 

VII. OPPS Payment for Hospital Outpatient 

Visits 

A. Payment for Hospital Outpatient Clinic 

and Emergency Department Visits 

B. Payment for Critical Care Services 

VIII. Payment for Partial Hospitalization 

Services 

A. Background 

B. PHP APC Update for CY 2015 

C. Separate Threshold for Outlier Payments 

to CMHCs 

IX. Procedures That Will Be Paid Only as 

Inpatient Procedures 

A. Background 

B. Changes to the Inpatient List 

X. Nonrecurring Policy Changes: Collecting 

Data on Services Furnished in OffCampus Provider-Based Departments of 

Hospitals 

XI. CY 2015 OPPS Payment Status and 

Comment Indicators 

A. CY 2015 OPPS Payment Status Indicator 

Definitions 

B. CY 2015 Comment Indicator Definitions 

XII. Updates to the Ambulatory Surgical 

Center (ASC) Payment System 

A. Background 

1. Legislative History, Statutory Authority, 

and Prior Rulemaking for the ASC 

Payment System 

2. Policies Governing Changes to the Lists 

of Codes and Payment Rates for ASC 

Covered Surgical Procedures and 

Covered Ancillary Services 

B. Treatment of New Codes 

1. Process for Recognizing New Category I 

and Category III CPT Codes and Level II 

HCPCS Codes 

2. Treatment of New Level II HCPCS Codes 

and Category III CPT Codes Implemented 

in April 2014 and July 2014 for Which 

We Solicited Public Comments in the CY 

2015 OPPS/ASC Proposed Rule 

3. Process for New Level II HCPCS Codes 

and Category I and Category III CPT 


tkelley on DSK3SPTVN1PROD with RULES2
66774 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

Codes for Which We Are Soliciting 

Public Comments in this CY 2015 OPPS/ 

ASC Final Rule with Comment Period 

C. Update to the Lists of ASC Covered 

Surgical Procedures and Covered 

Ancillary Services 

1. Covered Surgical Procedures 

a. Additions to the List of ASC Covered 

Surgical Procedures 

b. Covered Surgical Procedures Designated 

as Office-Based 

(1) Background 

(2) Changes for CY 2015 to Covered 

Surgical Procedures Designated as 

Office-Based 

c. ASC Covered Surgical Procedures 

Designated as Device-Intensive 

(1) Background 

(2) Changes to List of Covered ASC 

Surgical Procedures Designated as 

Device-Intensive for CY 2015 

d. Adjustment to ASC Payments for No 

Cost/Full Credit and Partial Credit 

Devices 

e. ASC Treatment of Surgical Procedures 

Removed from the OPPS Inpatient List 

for CY 2015 

2. Covered Ancillary Services 

D. ASC Payment for Covered Surgical 

Procedures and Covered Ancillary 

Services 

1. ASC Payment for Covered Surgical 

Procedures 

a. Background 

b. Update to ASC Covered Surgical 

Procedure Payment Rates for CY 2015 

c. Waiver of Coinsurance and Deductible 

for Certain Preventive Services 

d. Payment for Cardiac Resynchronization 

Therapy Services 

e. Payment for Low Dose Rate (LDR) 

Prostate Brachytherapy Composite 

2. Payment for Covered Ancillary Services 

a. Background 

b. Payment for Covered Ancillary Services 

for CY 2015 

E. New Technology Intraocular Lenses 

(NTIOLs) 

1. NTIOL Application Cycle 

2. Requests to Establish New NTIOL 

Classes for CY 2015 

3. Payment Adjustment 

4. Announcement of CY 2015 Deadline for 

Submitting Requests for CMS Review of 

Applications for a New Class of NTIOLs 

F. ASC Payment and Comment Indicators 

1. Background 

2. ASC Payment and Comment Indicators 

G. Calculation of the ASC Conversion 

Factor and the ASC Payment Rates 

1. Background 

2. Calculation of the ASC Payment Rates 

a. Updating the ASC Relative Payment 

Weights for CY 2015 and Future Years 

b. Transition Period to New OMB 

Delineations for ASC Wage Index 

c. Updating the ASC Conversion Factor 

3. Display of CY 2015 ASC Payment Rates 

XIII. Hospital Outpatient Quality Reporting 

Program Updates 

A. Background 

1. Overview 

2. Statutory History of the Hospital OQR 

Program 

3. Measure Updates and Data Publication 

a. Maintenance of Technical Specifications 

for Quality Measures 

b. Public Display of Quality Measures 

B. Process for Retention of Hospital OQR 

Program Measures Adopted in Previous 

Payment Determinations 

C. Removal of Quality Measures from the 

Hospital OQR Program Measure Set 

1. Considerations in Removing Quality 

Measures from the Hospital OQR 

Program 

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

Measures 

3. Removal of Measures from the Hospital 

OQR Program for the CY 2017 Payment 

Determination and Subsequent Years 

D. Quality Measures Previously Adopted 

for the CY 2016 Payment Determination 

and Subsequent Years 

1. Data Submission Requirements for OP– 

27: Influenza Vaccination Coverage 

Among Healthcare Personnel (NQF 

#0431) Reported via NHSN for the CY 

2017 Payment Determination and 

Subsequent Years 

a. Clarification of Submission Deadline and 

Data Submitted 

b. Clarification on Reporting by CMS 

Certification Number (CCN) 

2. Delayed Data Collection for OP–29 and 

OP–30 

3. OP–31: Cataracts—Improvement in 

Patient’s Visual Function within 90 Days 

Following Cataract Surgery 

a. Correction of Response to Public 

Comments 

b. Delayed Data Collection for OP–31 and 

Exclusion from the CY 2016 Payment 

Determination Measure Set 

c. Voluntary Collection of Data for OP–31 

for the CY 2017 Payment Determination 

and Subsequent Years 

E. New Quality Measure for the CY 2018 

Payment Determination and Subsequent 

Years 

F. Possible Hospital OQR Program 

Measures and Topics for Future 

Consideration 

1. Electronic Clinical Quality Measures 

2. Partial Hospitalization Program 

Measures 

3. Behavioral Health Measures 

4. National Quality Strategy and CMS 

Quality Strategy Measure Domains 

G. Payment Reduction for Hospitals That 

Fail to Meet the Hospital Outpatient 

Quality Reporting (OQR) Program 

Requirements for the CY 2015 Payment 

Update 

1. Background 

2. Reporting Ratio Application and 

Associated Adjustment Policy for CY 

2015 

H. Requirements for Reporting Hospital 

OQR Program Data for the CY 2017 

Payment Determination and Subsequent 

Years 

1. Administrative Requirements for the CY 

2017 Payment Determination and 

Subsequent Years 

2. Form, Manner, and Timing of Data 

Submitted for the Hospital OQR Program 

a. General Procedural Requirements 

b. Requirements for Chart-Abstracted 

Measures Where Data Are Submitted 

Directly to CMS for the CY 2017 

Payment Determination and Subsequent 

Years 

c. Claims-Based Measure Data 

Requirements for the CY 2017 and CY 

2018 Payment Determination and 

Subsequent Years 

d. Data Submission Requirements for 

Measure Data Submitted via the CMS 

Web-Based Tool for the CY 2017 

Payment Determination and Subsequent 

Years 

e. Population and Sampling Data 

Requirements for the CY 2017 Payment 

Determination and Subsequent Years 

f. Review and Corrections Period for ChartAbstracted Measures 

3. Hospital OQR Program Validation 

Requirements for Chart-Abstracted 

Measure Data Submitted Directly to CMS 

for the CY 2017 Payment Determination 

and Subsequent Years 

a. Background 

b. Selection of Hospitals for Data 

Validation of Chart-Abstracted Measures 

for the CY 2017 Payment Determination 

and Subsequent Years 

c. Targeting Criteria for Data Validation 

Selection for the CY 2017 Payment 

Determination and Subsequent Years 

d. Methodology for Encounter Selection for 

the CY 2017 Payment Determination and 

Subsequent Years 

e. Medical Record Documentation Requests 

for Validation and Validation Score 

Calculation for the CY 2017 Payment 

Determination and Subsequent Years 

I. Hospital OQR Program Reconsideration 

and Appeals Procedures for the CY 2017 

Payment Determination and Subsequent 

Years 

J. Extension or Exception Process for the 

CY 2017 Payment Determination and 

Subsequent Years 

XIV. Requirements for the Ambulatory 

Surgical Center Quality Reporting 

(ASCQR) Program 

A. Background 

1. Overview 

2. Statutory History of the Ambulatory 

Surgical Center Quality Reporting 

(ASCQR) Program 

3. Regulatory History of the ASCQR 

Program 

B. ASCQR Program Quality Measures 

1. Considerations in the Selection of 

ASCQR Program Quality Measures 

2. Policy for Removal of Quality Measures 

from the ASCQR Program 

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

Measures 

4. ASCQR Program Quality Measures 

Adopted in Previous Rulemaking 

5. New ASCQR Program Quality Measure 

for the CY 2018 Payment Determination 

and Subsequent Years 

6. ASCQR Program Measures for Future 

Consideration 

7. Maintenance of Technical Specifications 

for Quality Measures 

8. Public Reporting of ASCQR Program 

Data 

C. Payment Reduction for ASCs That Fail 

to Meet the ASCQR Program 

Requirements 

1. Statutory Background 

2. Reduction to the ASC Payment Rates for 

ASCs That Fail to Meet the ASCQR 

Program Requirements for a Payment 

Determination Year 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66775 

D. Administrative Requirements 

1. Requirements Regarding QualityNet 

Account and Security Administrator 

2. Requirements Regarding Participation 

Status 

E. Form, Manner, and Timing of Data 

Submitted for the ASCQR Program 

1. Requirements Regarding Data Processing 

and Collection Periods for Claims-Based 

Measures Using Quality Data Codes 

(QDCs) 

2. Minimum Threshold, Minimum Case 

Volume, and Data Completeness for 

Claims-Based Measures Using QDCs 

3. Requirements for Data Submitted Via a 

CMS Online Data Submission Tool 

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

b. Delayed Data Collection for ASC–9 and 

ASC–10 

c. Delayed Data Collection and Exclusion 

for ASC–11 for the CY 2016 Payment 

Determination and Voluntary Data 

Collection for ASC–11 for the CY 2017 

Payment Determination and Subsequent 

Years 

4. Claims-Based Measure Data 

Requirements for the New Measure for 

the CY 2018 Payment Determination and 

Subsequent Years 

5. Data Submission Requirements for ASC– 

8 (Influenza Vaccination Coverage 

Among Healthcare Personnel) Reported 

via the National Healthcare Safety 

Network (NHSN) for the CY 2016 

Payment Determination and Subsequent 

Years 

a. Previously Adopted Requirements for 

the CY 2016 Payment Determination 

b. Data Collection Timeframes for the CY 

2017 Payment Determination and 

Subsequent Years and Submission 

Deadlines for the CY 2016 Payment 

Determination and Subsequent Years 

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

7. Extraordinary Circumstances Extensions 

or Exemptions for the CY 2017 Payment 

Determination and Subsequent Years 

8. ASCQR Program Reconsideration 

Procedures for the CY 2017 Payment 

Determination and Subsequent Years 

XV. Changes to the Rural Provider and 

Hospital Ownership Exceptions to the 

Physician Self-Referral Law: Expansion 

Exception Process 

A. Background 

1. Statutory Basis 

2. Affordable Care Act Amendments to the 

Rural Provider and Hospital Ownership 

Exceptions to the Physician Self-Referral 

Law 

B. Limitations Identified by Stakeholders 

Regarding the Required Use of HCRIS 

Data 

C. Changes to the Physician-Owned 

Hospital Expansion Exception Process 

1. Supplemental Data Sources 

a. Internal Data Sources 

b. External Data Sources 

c. Completeness of Supplemental Data 

Sources 

d. Other Issues Related to Supplemental 

Data Sources 

e. Summary of Final Provisions Regarding 

Supplemental Data Sources 

2. Fiscal Year Standard 

a. Summary of Public Comments and Our 

Response Regarding the Fiscal Year 

Standard 

b. Summary of Final Provisions Regarding 

the Fiscal Year Standard 

3. Community Input and Timing of a 

Complete Request 

a. Summary of Public Comments and Our 

Responses Regarding Community Input 

and Timing of a Complete Request 

b. Final Provisions Regarding Community 

Input and Timing of a Complete Request 

D. Additional Considerations 

E. Summary of the Final Provisions 

Regarding the Expansion Exception 

Process under the Rural Provider and 

Hospital Ownership Exceptions to the 

Physician Self-Referral Law 

XVI. Revision of the Requirements for 

Physician Certification of Hospital 

Inpatient Services Other Than 

Psychiatric Inpatient Services 

XVII. CMS-Identified Overpayments 

Associated with Payment Data 

Submitted by Medicare Advantage (MA) 

Organizations and Medicare Part D 

Sponsors (§§ 422.330 and 423.352) 

A. Background 

1. Medicare Part C Payment Background 

1. Medicare Part D Payment Background 

B. Provisions of the Proposed Rule and 

Final Policies 

1. Definitions of ‘‘Payment Data’’ and 

‘‘Applicable Reconciliation Date’’ 

2. Request for Corrections of Payment Data 

3. Payment Offset 

a. Offset Amount 

b. Payment Offset Notification 

4. Appeals Process for MA Organizations 

and Part D Sponsors 

a. Reconsideration 

b. Informal Hearing 

c. Review by Administrator 

5. Matters Subject to Appeal and Burden of 

Proof 

6. Effective Date of Appeals Process 

Provisions 

XVIII. Files Available to the Public Via the 

Internet 

XIX. Collection of Information Requirements 

A. Legislative Requirements for 

Solicitation of Comments 

B. Requirements in Regulation Text: 

Changes to the Rural Provider and 

Hospital Ownership Exceptions to the 

Physician Self-Referral Law: Expansion 

Exception Process (§ 411.362) 

C. Associated Information Collections Not 

Specified in Regulatory Text 

1. Hospital OQR Program 

a. Revisions to the CY 2016 Payment 

Determination Estimates 

b. Hospital OQR Program Requirements for 

the CY 2017 Payment Determination and 

Subsequent Years 

c. Review and Corrections Period 

Requirements for the CY 2017 Payment 

Determination and Subsequent Years 

d. Hospital OQR Program Validation 

Requirements for the CY 2017 Payment 

Determination and Subsequent Years 

e. Extraordinary Circumstances Extensions 

or Exemptions Process 

f. Reconsideration and Appeals 

2. ASCQR Program Requirements 

a. Background 

b. Revisions to the CY 2016 Payment 

Determination Estimates 

c. Claims-Based Measures for the CY 2014 

Payment Determination and Subsequent 

Years 

d. Web-Based Measures for the CY 2017 

Payment Determination and Subsequent 

Years 

e. Extraordinary Circumstances Extension 

or Exemptions Process 

f. Reconsiderations and Appeals 

XX. Waiver of Proposed Rulemaking and 

Response to Comments 

A. Waiver of Proposed Rulemaking 

B. Response to Comments 

XXI. Economic Analyses 

A. Regulatory Impact Analysis 

1. Introduction 

2. Statement of Need 

3. Overall Impacts for the OPPS and ASC 

Payment Provisions 

4. Detailed Economic Analyses 

a. Estimated Effects of OPPS Changes in 

this Final Rule with Comment Period 

(1) Limitations of Our Analysis 

(2) Estimated Effects of OPPS Changes on 

Hospitals 

(3) Estimated Effects of OPPS Changes on 

CMHCs 

(4) Estimated Effect of OPPS Changes on 

Beneficiaries 

(5) Estimated Effects of OPPS Changes on 

Other Providers 

(6) Estimated Effects of OPPS Changes on 

the Medicare and Medicaid Programs 

(7) Alternative OPPS Policies Considered 

b. Estimated Effects of CY 2015 ASC 

Payment System Policies 

(1) Limitations of Our Analysis 

(2) Estimated Effects of CY 2015ASC 

Payment System Policies on ASCs 

(3) Estimated Effects of ASC Payment 

System Policies on Beneficiaries 

(4) Alternative ASC Payment Policies 

Considered 

c. Accounting Statements and Tables 

d. Effects of Requirements for the Hospital 

OQR Program 

e. Effects of CY 2014 Policies for the 

ASCQR Program 

f. Effects of Changes to the Rural Provider 

and Hospital Ownership Exceptions to 

the Physician Self-Referral Law 

g. Effects of Policies Related to CMSIdentified Overpayments Associated 

with Payment Data Submitted by 

Medicare Advantage (MA) Organizations 

and Medicare Part D Sponsors 

B. Regulatory Flexibility Act (RFA) 

Analysis 

C. Unfunded Mandates Reform Act 

Analysis 

D. Conclusion 

XXII. Federalism Analysis 

I. Summary and Background 

A. Executive Summary of This 

Document 

1. Purpose 

In this final rule with comment 

period, we are updating the payment 

policies and payment rates for services 

furnished to Medicare beneficiaries in 

hospital outpatient departments and 


tkelley on DSK3SPTVN1PROD with RULES2
66776 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

Ambulatory Surgical Centers (ASCs) 

beginning January 1, 2015. Section 

1833(t) of the Social Security Act (the 

Act) requires us to annually review and 

update the relative payment weights 

and the conversion factor for services 

payable under the Outpatient 

Prospective Payment System (OPPS). 

Under section 1833(i) of the Act, we 

annually review and update the ASC 

payment rates. We describe these and 

various other statutory authorities in the 

relevant sections of this final rule with 

comment period. In addition, this final 

rule with comment period updates and 

refines the requirements for the Hospital 

Outpatient Quality Reporting (OQR) 

Program and the ASC Quality Reporting 

(ASCQR) Program. 

In this document, we also are making 

changes to the data sources permitted 

for expansion requests for physicianowned hospitals under the physician 

self-referral regulations; changes to the 

underlying authority for the 

requirement of an admission order for 

all hospital inpatient admissions and 

changes to require physician 

certification for hospital inpatient 

admissions only for long-stay cases and 

outlier cases; and changes to establish a 

formal process, including a three-level 

appeals process, to recoup 

overpayments that result from the 

submission of erroneous payment data 

by Medicare Advantage (MA) 

organizations and Part D sponsors in the 

limited circumstances in which the 

organization or sponsor fails to correct 

these data. 

2. Summary of the Major Provisions 

• OPPS Update: For CY 2015, we are 

increasing the payment rates under the 

OPPS by an Outpatient Department 

(OPD) fee schedule increase factor of 2.2 

percent. This increase is based on the 

final hospital inpatient market basket 

percentage increase of 2.9 percent for 

inpatient services paid under the 

hospital inpatient prospective payment 

system (IPPS), minus the multifactor 

productivity (MFP) adjustment of 0.5 

percentage point, and minus a 0.2 

percentage point adjustment required by 

the Affordable Care Act. Under this final 

rule with comment period, we estimate 

that total payments for CY 2015, 

including beneficiary cost-sharing, to 

the approximate 4,000 facilities paid 

under the OPPS (including general 

acute care hospitals, children’s 

hospitals, cancer hospitals, and 

community mental health centers 

(CMHCs)), will be approximately $56.1 

billion, an increase of approximately 

$5.1 billion compared to CY 2014 

payments, or $900 million excluding 

our estimated changes in enrollment, 

utilization, and case-mix. 

We are continuing to implement the 

statutory 2.0 percentage point reduction 

in payments for hospitals failing to meet 

the hospital outpatient quality reporting 

requirements, by applying a reporting 

factor of 0.980 to the OPPS payments 

and copayments for all applicable 

services. 

• Rural Adjustment: We are 

continuing the adjustment of 7.1 percent 

to the OPPS payments to certain rural 

sole community hospitals (SCHs), 

including essential access community 

hospitals (EACHs). This adjustment will 

apply to all services paid under the 

OPPS, excluding separately payable 

drugs and biologicals, devices paid 

under the pass-through payment policy, 

and items paid at charges reduced to 

cost. 

• Cancer Hospital Payment 

Adjustment: For CY 2015, we are 

continuing to provide additional 

payments to cancer hospitals so that the 

cancer hospital’s payment-to-cost ratio 

(PCR) after the additional payments is 

equal to the weighted average PCR for 

the other OPPS hospitals using the most 

recently submitted or settled cost report 

data. Based on those data, a target PCR 

of 0.89 will be used to determine the CY 

2015 cancer hospital payment 

adjustment to be paid at cost report 

settlement. That is, the payment 

adjustments will be the additional 

payments needed to result in a PCR 

equal to 0.89 for each cancer hospital. 

• Payment of Drugs, Biologicals, and 

Radiopharmaceuticals: For CY 2015, 

payment for the acquisition and 

pharmacy overhead costs of separately 

payable drugs and biologicals that do 

not have pass-through status are set at 

the statutory default of average sales 

price (ASP) plus 6 percent. 

• Packaging Policies: We are 

conditionally packaging certain 

ancillary services when they are 

integral, ancillary, supportive, 

dependent, or adjunctive to a primary 

service. The initial set of services 

packaged under this ancillary service 

policy are the services assigned to APCs 

having an APC geometric mean cost 

(prior to application of status indicator 

Q1) of less than or equal to $100. This 

$100 geometric mean cost limit for the 

APC is part of the methodology of 

establishing an initial set of 

conditionally packaged ancillary service 

APCs, and is not meant to represent a 

threshold above which a given ancillary 

service will not be packaged, but as a 

basis for selecting an initial set of APCs 

that will likely be updated and 

expanded in future years. 

• Implementation of Comprehensive 

APCs: For CY 2015, we are 

implementing, with several 

modifications, the policy for 

comprehensive APCs (C–APCs) that was 

finalized in the CY 2014 OPPS/ASC 

final rule with comment period effective 

January 1, 2015. We are continuing to 

define the services assigned to C–APCs 

as primary services, and to define a C– 

APC as a classification for the provision 

of a primary service and all adjunctive 

services and supplies provided to 

support the delivery of the primary 

service. We continue to consider the 

entire hospital stay, defined as all 

services reported on the hospital claim 

reporting the primary service, to be one 

comprehensive service for the provision 

of a primary service into which all other 

services appearing on the claim would 

be packaged. This results in a single 

Medicare payment and a single 

beneficiary copayment under the OPPS 

for the comprehensive service based on 

all included charges on the claim. 

We are establishing a total of 25 C– 

APCs for CY 2015, including all of the 

formerly device-dependent APCs 

remaining after some restructuring and 

consolidation of these APCs (except for 

APCs 0427, 0622, and 0652) and two C– 

APCs for other procedures that are 

either largely device-dependent or 

represent single session services with 

multiple components (single-session 

cranial stereotactic radiosurgery and 

intraocular telescope implantation). We 

are modifying the complexity 

adjustment criteria finalized last year by 

lowering volume and cost threshold 

criteria for complexity adjustments. 

Finally, we are packaging all add-on 

codes furnished as part of a 

comprehensive service, which is 

consistent with our general add-on code 

packaging policy. However, the add-on 

codes assigned to the CY 2014 devicedependent APCs will be being evaluated 

with a primary service for a potential 

complexity adjustment. 

• Ambulatory Surgical Center 

Payment Update: For CY 2015, we are 

increasing payment rates under the ASC 

payment system by 1.4 percent. This 

increase is based on a projected CPI–U 

update of 1.9 percent minus a 

multifactor productivity adjustment 

required by the Affordable Care Act that 

is projected to be 0.5 percentage point. 

Based on this update, we estimate that 

total payments to ASCs (including 

beneficiary cost-sharing and estimated 

changes in enrollment, utilization, and 

case-mix), for CY 2015 will be 

approximately $4.147 billion, an 

increase of approximately $236 million 

compared to estimated CY 2014 

Medicare payments. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66777 

• Hospital Outpatient Quality 

Reporting (OQR) Program: For the 

Hospital OQR Program, we are adding 

one claims-based quality measure for 

the CY 2018 payment determination and 

subsequent years instead of the CY 2017 

payment determination and subsequent 

years as proposed. However, prior to 

publicly reporting this measure, we plan 

to conduct a dry run (a preliminary 

analysis) for hospitals to review their 

performance and provide feedback 

using the most recently available data. 

There will be no payment impact during 

this dry-run period, and the results of 

the dry run will not be publicly 

reported. We are refining the criteria for 

determining ‘‘topped-out’’ measures, 

and we are removing the OP–6 and OP– 

7 measures due to ‘‘topped-out’’ status. 

In addition, we are updating several 

previously adopted measures. We are 

clarifying data submission requirements 

for OP–27 and are noting a delayed data 

collection for OP–29 and OP–30. We are 

excluding one previously adopted 

measure (OP–31) from the measure set 

for the CY 2016 payment determination 

and changing this measure from 

required to voluntary for the CY 2017 

payment determination and subsequent 

years. We will not subject hospitals to 

payment reductions with respect to the 

OP–31 measure for the CY 2016 

payment determination or during the 

period of voluntary reporting. In 

addition, we are formalizing a review 

and corrections period for chartabstracted measures. We also are 

updating validation procedures and 

changes to regulation text to correct 

typographical errors. We are changing 

the eligibility criteria for validation; a 

hospital will only be eligible for random 

selection for validation if it submits at 

least 12 cases to the Hospital OQR 

Program Clinical Data Warehouse 

during the quarter with the most 

recently available data. Hospitals also 

will have the option to submit 

validation data using electronic 

methods and must identify the medical 

record staff responsible for submission 

of records to the designated CMS 

contractor. Finally, we are clarifying 

how we refer to the extraordinary 

circumstances extensions or exemptions 

process. 

• Ambulatory Surgical Center Quality 

Reporting (ASCQR) Program: For the 

ASCQR Program, we are adopting one 

new quality measure (ASC–12) for the 

CY 2018 payment determination and 

subsequent years. This measure will be 

computed using paid Medicare fee-forservice (FFS) claims data and will not 

impose any additional burden on ASCs. 

We also are excluding one measure 

(ASC–11) previously adopted for the CY 

2016 payment determination and 

providing that this measure may be 

voluntarily rather than mandatorily 

reported for the CY 2017 payment 

determination and subsequent years. We 

will not subject ASCs to payment 

reductions with respect to this measure 

for the CY 2016 payment determination 

or during the period of voluntary 

reporting. In addition, we are 

establishing a measure removal process 

and criteria, defining data collection 

timeframes and submission deadlines, 

and clarifying how we refer to the 

extraordinary circumstances extensions 

or exemptions process. 

3. Summary of Costs and Benefits 

In sections XXI. and XXII. of this final 

rule with comment period, we set forth 

a detailed analysis of the regulatory and 

federalism impacts that the changes will 

have on affected entities and 

beneficiaries. Key estimated impacts are 

described below. 

a. Impacts of the OPPS Update 

(1) Impacts of All OPPS Changes 

Table 49 in section XXI. of this final 

rule with comment period displays the 

distributional impact of all the OPPS 

changes on various groups of hospitals 

and CMHCs for CY 2015 compared to all 

estimated OPPS payments in CY 2014. 

We estimate that the policies in this 

final rule with comment period will 

result in a 2.3 percent overall increase 

in OPPS payments to providers. We 

estimate that total OPPS payments for 

CY 2015, including beneficiary costsharing, to the approximate 4,000 

facilities paid under the OPPS 

(including general acute care hospitals, 

children’s hospitals, cancer hospitals, 

and CMHCs) will be approximately 

$56.1 billion, an increase of 

approximately $5.1 billion compared to 

CY 2014 payments, or $900 million, 

excluding our estimated changes in 

enrollment, utilization, and case-mix. 

We estimated the isolated impact of 

our OPPS policies on CMHCs because 

CMHCs are only paid for partial 

hospitalization services under the 

OPPS. Continuing the provider-specific 

structure that we adopted beginning in 

CY 2011 and basing payment fully on 

the type of provider furnishing the 

service, we estimate a 1.3 percent 

increase in CY 2015 payments to 

CMHCs relative to their CY 2014 

payments. 

(2) Impacts of the Updated Wage 

Indexes 

We estimate that our update of the 

wage indexes and application of the 

frontier State wage index, including 

changes resulting from the adoption of 

the new OMB labor market area 

delineations and the transitional 1-year, 

50/50 blended wage index, will mitigate 

any negative changes due to the new 

CBSA delineations. 

(3) Impacts of the Rural Adjustment and 

the Cancer Hospital Payment 

Adjustment 

There are no significant impacts of 

our CY 2015 payment policies for 

hospitals that are eligible for the rural 

adjustment or for the cancer hospital 

payment adjustment. We are not making 

any change in policies for determining 

the rural and cancer hospital payment 

adjustments, and the adjustment 

amounts do not significantly impact the 

budget neutrality adjustments for these 

policies. 

(4) Impacts of the OPD Fee Schedule 

Increase Factor 

We estimate that, for most hospitals, 

the application of the OPD fee schedule 

increase factor of 2.2 percent to the 

conversion factor for CY 2015 will 

mitigate the small negative impacts of 

the budget neutrality adjustments. As a 

result of the OPD fee schedule increase 

factor and other budget neutrality 

adjustments, we estimate that urban and 

rural hospitals will experience increases 

of approximately 2.3 percent for urban 

hospitals and 1.9 percent for rural 

hospitals. Classifying hospitals by 

teaching status or type of ownership 

suggests that these hospitals will receive 

similar increases. 

b. Impacts of the ASC Payment Update 

For impact purposes, the surgical 

procedures on the ASC list of covered 

procedures are aggregated into surgical 

specialty groups using CPT and HCPCS 

code range definitions. The percentage 

change in estimated total payments by 

specialty groups under the CY 2015 

payment rates compared to estimated 

CY 2014 payment rates ranges between 

¥4.0 percent for ancillary items and 

services and 14 percent for hematologic 

and lymphatic system procedures. 

c. Impacts of the Hospital OQR Program 

We do not expect our CY 2015 

policies to significantly affect the 

number of hospitals that do not receive 

a full annual payment update. 

d. Impacts of the ASCQR Program 

We do not expect our CY 2015 

proposed policies to significantly affect 

the number of ASCs that do not receive 

a full annual payment update. 


tkelley on DSK3SPTVN1PROD with RULES2
66778 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

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 costbased payment methodology with a 

prospective payment system (PPS). The 

Balanced Budget Act of 1997 (BBA) 

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

to the Act authorizing implementation 

of a PPS for hospital outpatient services. 

The OPPS was first implemented for 

services furnished on or after August 1, 

2000. Implementing regulations for the 

OPPS are located at 42 CFR Parts 410 

and 419. 

The Medicare, Medicaid, and SCHIP 

Balanced Budget Refinement Act of 

1999 (BBRA) (Pub. L. 106–113) made 

major changes in the hospital OPPS. 

The following Acts made additional 

changes to the OPPS: The Medicare, 

Medicaid, and SCHIP Benefits 

Improvement and Protection Act of 

2000 (BIPA) (Pub. L. 106–554); the 

Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 (MMA) (Pub. L. 108–173); the 

Deficit Reduction Act of 2005 (DRA) 

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

8, 2006; the Medicare Improvements 

and Extension Act under Division B of 

Title I of the Tax Relief and Health Care 

Act of 2006 (MIEA–TRHCA) (Pub. L. 

109–432), enacted on December 20, 

2006; the Medicare, Medicaid, and 

SCHIP Extension Act of 2007 (MMSEA) 

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

29, 2007; the Medicare Improvements 

for Patients and Providers Act of 2008 

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

July 15, 2008; the Patient Protection and 

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

enacted on March 23, 2010, as amended 

by the Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111– 

152), enacted on March 30, 2010 (these 

two public laws are collectively known 

as the Affordable Care Act); the 

Medicare and Medicaid Extenders Act 

of 2010 (MMEA, Pub. L. 111–309); the 

Temporary Payroll Tax Cut 

Continuation Act of 2011 (TPTCCA, 

Pub. L. 112–78), enacted on December 

23, 2011; the Middle Class Tax Relief 

and Job Creation Act of 2012 

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

February 22, 2012; and the American 

Taxpayer Relief Act of 2012 (Pub. L. 

112–240), enacted January 2, 2013. 

Under the OPPS, we pay for hospital 

Part B services on a rate-per-service 

basis that varies according to the APC 

group to which the service is assigned. 

We use the Healthcare Common 

Procedure Coding System (HCPCS) 

(which includes certain Current 

Procedural Terminology (CPT) codes) to 

identify and group the services within 

each APC. The OPPS includes payment 

for most hospital outpatient services, 

except those identified in section I.C. of 

this final rule with comment period. 

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

for payment under the OPPS for 

hospital outpatient services designated 

by the Secretary (which includes partial 

hospitalization services furnished by 

CMHCs), and certain inpatient hospital 

services that are paid under Part B. 

The OPPS rate is an unadjusted 

national payment amount that includes 

the Medicare payment and the 

beneficiary copayment. This rate is 

divided into a labor-related amount and 

a nonlabor-related amount. The 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. 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); hospitals located outside of the 

50 States, the District of Columbia, and 

Puerto Rico; and Indian Health Service 

(IHS) hospitals. 

D. Prior Rulemaking 

On April 7, 2000, we published in the 

Federal Register a final rule with 

comment period (65 FR 18434) to 

implement a prospective payment 

system for hospital outpatient services. 

The hospital OPPS was first 

implemented for services furnished on 

or after August 1, 2000. Section 

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

Secretary to review certain components 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66779 

of the OPPS, not less often than 

annually, and to revise the groups, 

relative payment weights, and other 

adjustments that take into account 

changes in medical practices, changes in 

technologies, and the addition of new 

services, new cost data, and other 

relevant information and factors. 

Since initially implementing the 

OPPS, we have published final rules in 

the Federal Register annually to 

implement statutory requirements and 

changes arising from our continuing 

experience with this system. These rules 

can be viewed on the CMS Web site at: 

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

Medicare-Fee-for-Service-Payment/

HospitalOutpatientPPS/index.html. 

E. Advisory Panel on Hospital 

Outpatient Payment (the HOP Panel or 

the Panel) 

1. Authority of the Panel 

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

amended by section 201(h) of Public 

Law 106–113, and redesignated by 

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

requires that we consult with an 

external advisory panel of experts to 

annually review the clinical integrity of 

the payment groups and their weights 

under the OPPS. In CY 2000, based on 

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

section 222 of the Public Health Service 

(PHS) Act, the Secretary established the 

Advisory Panel on Ambulatory Payment 

Classification Groups (APC Panel) to 

fulfill this requirement. In CY 2011, 

based on section 222 of the PHS Act 

which gives discretionary authority to 

the Secretary to convene advisory 

councils and committees, the Secretary 

expanded the panel’s scope to include 

the supervision of hospital outpatient 

therapeutic services in addition to the 

APC groups and weights. To reflect this 

new role of the panel, the Secretary 

changed the panel’s name to the 

Advisory Panel on Hospital Outpatient 

Payment (the HOP Panel, or the Panel). 

The Panel is not restricted to using data 

compiled by CMS, and in conducting its 

review it may use data collected or 

developed by organizations outside the 

Department. 

2. Establishment of the Panel 

On November 21, 2000, the Secretary 

signed the initial charter establishing 

the HOP Panel, at that time named the 

APC Panel. This expert panel, which 

may be composed of up to 19 

appropriate representatives of providers 

(currently employed full-time, not as 

consultants, in their respective areas of 

expertise), reviews clinical data and 

advises CMS about the clinical integrity 

of the APC groups and their payment 

weights. Since CY 2012, the Panel also 

is charged with advising the Secretary 

on the appropriate level of supervision 

for individual hospital outpatient 

therapeutic services. The Panel is 

technical in nature, and it is governed 

by the provisions of the Federal 

Advisory Committee Act (FACA). The 

current charter specifies, among other 

requirements, that: The Panel continues 

to be technical in nature; is governed by 

the provisions of the FACA; may 

convene up to three meetings per year; 

has a Designated Federal Official (DFO); 

and is chaired by a Federal Official 

designated by the Secretary. The current 

charter was amended on November 15, 

2011, and the Panel was renamed to 

reflect expanding the Panel’s authority 

to include supervision of hospital 

outpatient therapeutic services and 

therefore to add CAHs to its 

membership. 

The current Panel membership and 

other information pertaining to the 

Panel, including its charter, Federal 

Register notices, membership, meeting 

dates, agenda topics, and meeting 

reports, can be viewed on the CMS Web 

site at: http://www.cms.gov/FACA/05_

AdvisoryPanelonAmbulatory

PaymentClassificationGroups.asp

#TopOfPage. 

3. Panel Meetings and Organizational 

Structure 

The Panel has held multiple meetings, 

with the last meeting taking place on 

August 25, 2014. Prior to each meeting, 

we publish a notice in the Federal 

Register to announce the meeting and, 

when necessary, to solicit nominations 

for Panel membership and to announce 

new members. 

The Panel has established an 

operational structure that, in part, 

currently includes the use of three 

subcommittees to facilitate its required 

review process. The three current 

subcommittees are the Data 

Subcommittee, the Visits and 

Observation Subcommittee, and the 

Subcommittee for APC Groups and 

Status Indicator (SI) Assignments. 

The Data Subcommittee is responsible 

for studying the data issues confronting 

the Panel and for recommending 

options for resolving them. The Visits 

and Observation Subcommittee reviews 

and makes recommendations to the 

Panel on all technical issues pertaining 

to observation services and hospital 

outpatient visits paid under the OPPS 

(for example, APC configurations and 

APC relative payment weights). The 

Subcommittee for APC Groups and SI 

Assignments advises the Panel on the 

following issues: The appropriate SIs to 

be assigned to HCPCS codes, including 

but not limited to whether a HCPCS 

code or a category of codes should be 

packaged or separately paid; and the 

appropriate APC placement of HCPCS 

codes regarding services for which 

separate payment is made. 

Each of these subcommittees was 

established by a majority vote from the 

full Panel during a scheduled Panel 

meeting, and the Panel recommended at 

the August 2014 meeting that the 

subcommittees continue. We accepted 

this recommendation. 

Discussions of the other 

recommendations made by the Panel at 

the August 2014 Panel meeting are 

included in the sections of this final 

rule with comment period that are 

specific to each recommendation. For 

discussions of earlier Panel meetings 

and recommendations, we refer readers 

to previously published OPPS/ASC 

proposed and final rules, the CMS Web 

site mentioned earlier in this section, 

and the FACA database at: http://

fido.gov/facadatabase/public.asp. 

F. Public Comments Received on the CY 

2015 OPPS/ASC Proposed Rule 

We received approximately 719 

timely pieces of correspondence on the 

CY 2015 OPPS/ASC proposed rule that 

appeared in the Federal Register on July 

14, 2014 (79 FR 40915). We note that we 

received some public comments that are 

outside the scope of the CY 2015 OPPS/ 

ASC proposed rule. Out-of-scope public 

comments are not addressed in this CY 

2015 OPPS/ASC final rule with 

comment period. Summaries of those 

public comments that are within the 

scope of the proposed rule and our 

responses are set forth in the various 

sections of this final rule with comment 

period under the appropriate headings. 

G. Public Comments Received on the CY 

2014 OPPS/ASC Final Rule With 

Comment Period 

We received approximately 490 

timely pieces of correspondence on the 

CY 2014 OPPS/ASC final rule with 

comment period that appeared in the 

Federal Register on December 10, 2013 

(78 FR 74826), some of which contained 

comments on the interim APC 

assignments and/or status indicators of 

new or replacement HCPCS codes 

(identified with comment indicator 

‘‘NI’’ in Addenda B, AA, and BB to that 

final rule). Summaries of the public 

comments on new or replacement codes 

are set forth in this CY 2015 OPPS/ASC 

final rule with comment period under 

the appropriate subject-matter headings. 


tkelley on DSK3SPTVN1PROD with RULES2
66780 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

II. Updates Affecting OPPS Payments 

A. Recalibration of APC Relative 

Payment Weights 

1. Database Construction 

a. Database Source and Methodology 

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

requires that the Secretary review not 

less often than annually and revise the 

relative payment weights for APCs. In 

the April 7, 2000 OPPS final rule with 

comment period (65 FR 18482), we 

explained in detail how we calculated 

the relative payment weights that were 

implemented on August 1, 2000 for each 

APC group. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40925), for the CY 2015 

OPPS, we proposed to recalibrate the 

APC relative payment weights for 

services furnished on or after January 1, 

2015, and before January 1, 2016 (CY 

2015), using the same basic 

methodology that we described in the 

CY 2014 OPPS/ASC final rule with 

comment period. That is, we proposed 

to recalibrate the relative payment 

weights for each APC based on claims 

and cost report data for hospital 

outpatient department (HOPD) services, 

using the most recent available data to 

construct a database for calculating APC 

group weights. Therefore, for the 

purpose of recalibrating the proposed 

APC relative payment weights for CY 

2015, we used approximately 149 

million final action claims (claims for 

which all disputes and adjustments 

have been resolved and payment has 

been made) for hospital outpatient 

department services furnished on or 

after January 1, 2013, and before January 

1, 2014. For this final rule with 

comment period, for the purpose of 

recalibrating the final APC relative 

payment weights for CY 2015, we used 

approximately 161 million final action 

claims (claims for which all disputes 

and adjustments have been resolved and 

payment has been made) for HOPD 

services furnished on or after January 1, 

2013, and before January 1, 2014. For 

exact counts of claims used, we refer 

readers to the claims accounting 

narrative under supporting 

documentation for the CY 2015 OPPS/ 

ASC proposed rule and this final rule 

with comment period on the CMS Web 

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

Medicare-Fee-for-Service-Payment/

HospitalOutpatientPPS/index.html. 

Of the approximately 161 million 

final action claims for services provided 

in hospital outpatient settings used to 

calculate the CY 2015 OPPS payment 

rates for this final rule with comment 

period, approximately 123 million 

claims were the type of bill potentially 

appropriate for use in setting rates for 

OPPS services (but did not necessarily 

contain services payable under the 

OPPS). Of the approximately 123 

million claims, approximately 5 million 

claims were not for services paid under 

the OPPS or were excluded as not 

appropriate for use (for example, 

erroneous cost-to-charge ratios (CCRs) or 

no HCPCS codes reported on the claim). 

From the remaining approximately 118 

million claims, we created 

approximately 101 million single 

records, of which approximately 50 

million were ‘‘pseudo’’ single or ‘‘single 

session’’ claims (created from 

approximately 22 million multiple 

procedure claims using the process we 

discuss later in this section). 

Approximately 1 million claims were 

trimmed out on cost or units in excess 

of ± 3 standard deviations from the 

geometric mean, yielding approximately 

101 million single bills for ratesetting. 

As described in section II.A.2. of this 

final rule with comment period, our 

data development process is designed 

with the goal of using appropriate cost 

information in setting the APC relative 

payment weights. The bypass process is 

described in section II.A.1.b. of this 

final rule with comment period. This 

section discusses how we develop 

‘‘pseudo’’ single procedure claims (as 

defined below), with the intention of 

using more appropriate data from the 

available claims. In some cases, the 

bypass process allows us to use some 

portion of the submitted claim for cost 

estimation purposes, while the 

remaining information on the claim 

continues to be unusable. Consistent 

with the goal of using appropriate 

information in our data development 

process, we only use claims (or portions 

of each claim) that are appropriate for 

ratesetting purposes. 

The final APC relative weights and 

payments for CY 2015 in Addenda A 

and B to this final rule with comment 

period (which are available via the 

Internet on the CMS Web site) were 

calculated using claims from CY 2013 

that were processed through June 30, 

2014. While prior to CY 2013 we 

historically based the payments on 

median hospital costs for services in the 

APC groups, beginning with the CY 

2013 OPPS, we established the costbased relative payment weights for the 

OPPS using geometric mean costs, as 

discussed in the CY 2013 OPPS/ASC 

final rule with comment period (77 FR 

68259 through 68271). For the CY 2015 

OPPS, we proposed and are using this 

same methodology, basing payments on 

geometric mean costs. Under this 

methodology, we select claims for 

services paid under the OPPS and 

match these claims to the most recent 

cost report filed by the individual 

hospitals represented in our claims data. 

We continue to believe that it is 

appropriate to use the most current full 

calendar year claims data and the most 

recently submitted cost reports to 

calculate the relative costs 

underpinning the APC relative payment 

weights and the CY 2015 payment rates. 

b. Use of Single and Multiple Procedure 

Claims 

For CY 2015, in general, and as we 

proposed, we are continuing to use 

single procedure claims to set the costs 

on which the APC relative payment 

weights are based. We generally use 

single procedure claims to set the 

estimated costs for APCs because we 

believe that the OPPS relative weights 

on which payment rates are based 

should be derived from the costs of 

furnishing one unit of one procedure 

and because, in many circumstances, we 

are unable to ensure that packaged costs 

can be appropriately allocated across 

multiple procedures performed on the 

same date of service. 

It is generally desirable to use the data 

from as many claims as possible to 

recalibrate the APC relative payment 

weights, including those claims for 

multiple procedures. As we have for 

several years, we are continuing to use 

date of service stratification and a list of 

codes to be bypassed to convert 

multiple procedure claims to ‘‘pseudo’’ 

single procedure claims. Through 

bypassing specified codes that we 

believe do not have significant packaged 

costs, we are able to use more data from 

multiple procedure claims. In many 

cases, this enables us to create multiple 

‘‘pseudo’’ single procedure claims from 

claims that were submitted as multiple 

procedure claims spanning multiple 

dates of service, or claims that 

contained numerous separately paid 

procedures reported on the same date 

on one claim. We refer to these newly 

created single procedure claims as 

‘‘pseudo’’ single procedure claims. The 

history of our use of a bypass list to 

generate ‘‘pseudo’’ single procedure 

claims is well documented, most 

recently in the CY 2014 OPPS/ASC final 

rule with comment period (78 FR 74849 

through 74851). In addition, for CY 2008 

(72 FR 66614 through 66664), we 

increased packaging and created the 

first composite APCs, and continued 

those policies through CY 2014. 

Increased packaging and creation of 

composite APCs also increased the 

number of bills that we were able to use 

for ratesetting by enabling us to use 

claims that contained multiple major 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66781 

procedures that previously would not 

have been usable. Further, for CY 2009, 

we expanded the composite APC model 

to one additional clinical area, multiple 

imaging services (73 FR 68559 through 

68569), which also increased the 

number of bills we were able to use in 

developing the OPPS relative weights 

on which payments are based. We have 

continued the composite APCs for 

multiple imaging services through CY 

2014, and as we proposed, we are 

continuing this policy for CY 2015. We 

refer readers to section II.A.2.f. of the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 74910 through 

74925) for a discussion of the use of 

claims in modeling the costs for 

composite APCs and to section II.A.3. of 

the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 74925 through 

74948) for a discussion of our packaging 

policies for CY 2014. In addition, as we 

proposed, we are establishing additional 

packaging policies for the CY 2015 

OPPS, as discussed in section II.A.3. of 

this final rule with comment period. 

As we proposed, we are continuing to 

apply these processes to enable us to 

use as much claims data as possible for 

ratesetting for the CY 2015 OPPS. This 

methodology enabled us to create, for 

this final rule with comment period, 

approximately 50 million ‘‘pseudo’’ 

single procedure claims, including 

multiple imaging composite ‘‘single 

session’’ bills (we refer readers to 

section II.A.2.f.(4) of this final rule with 

comment period for further discussion), 

to add to the approximately 51 million 

‘‘natural’’ single procedure claims. 

For CY 2015, we proposed to bypass 

227 HCPCS codes that were identified 

in Addendum N to the CY 2015 OPPS/ 

ASC proposed rule (which is available 

via the Internet on the CMS Web site). 

Since the inception of the bypass list, 

which is the list of codes to be bypassed 

to convert multiple procedure claims to 

‘‘pseudo’’ single procedure claims, we 

have calculated the percent of ‘‘natural’’ 

single bills that contained packaging for 

each HCPCS code and the amount of 

packaging on each ‘‘natural’’ single bill 

for each code. Each year, we generally 

retain the codes on the previous year’s 

bypass list and use the updated year’s 

data (for CY 2015, data available for the 

March 10, 2014 meeting of the Advisory 

Panel on Hospital Outpatient Payment 

(the Panel) from CY 2013 claims 

processed through September 30, 2013, 

and CY 2012 claims data processed 

through June 30, 2013, used to model 

the payment rates for CY 2014) to 

determine whether it would be 

appropriate to add additional codes to 

the previous year’s bypass list. For CY 

2015, we proposed to continue to 

bypass all of the HCPCS codes on the 

CY 2014 OPPS bypass list, with the 

exception of HCPCS codes that we 

proposed to delete for CY 2015, which 

were listed in Table 1 of the proposed 

rule (79 FR 40927 through 40929). We 

also proposed to remove HCPCS codes 

that are not separately paid under the 

OPPS because the purpose of the bypass 

list is to obtain more data for those 

codes relevant to ratesetting. Some of 

the codes we proposed to remove from 

the CY 2015 bypass list are affected by 

the CY 2015 final packaging policy, 

discussed in section II.A.3. of this final 

rule with comment period. In addition, 

we proposed to add to the bypass list for 

CY 2015 HCPCS codes not on the CY 

2014 bypass list that, using either the 

CY 2014 final rule with comment period 

data (CY 2012 claims) or the March 10, 

2014 Panel data (first 9 months of CY 

2013 claims), met the empirical criteria 

for the bypass list that are summarized 

below. Finally, to remain consistent 

with the CY 2015 proposal to continue 

to develop OPPS relative payment 

weights based on geometric mean costs, 

we also proposed that the packaged cost 

criterion continue to be based on the 

geometric mean cost. The entire list 

proposed for CY 2015 (including the 

codes that remain on the bypass list 

from prior years) was open to public 

comment in the CY 2015 OPPS/ASC 

proposed rule. Because we must make 

some assumptions about packaging in 

the multiple procedure claims in order 

to assess a HCPCS code for addition to 

the bypass list, we assumed that the 

representation of packaging on 

‘‘natural’’ single procedure claims for 

any given code is comparable to 

packaging for that code in the multiple 

procedure claims. The criteria for the 

bypass list are: 

• There are 100 or more ‘‘natural’’ 

single procedure claims for the code. 

This number of single procedure claims 

ensures that observed outcomes are 

sufficiently representative of packaging 

that might occur in the multiple claims. 

• Five percent or fewer of the 

‘‘natural’’ single procedure claims for 

the code have packaged costs on that 

single procedure claim for the code. 

This criterion results in limiting the 

amount of packaging being redistributed 

to the separately payable procedures 

remaining on the claim after the bypass 

code is removed and ensures that the 

costs associated with the bypass code 

represent the cost of the bypassed 

service. 

• The geometric mean cost of 

packaging observed in the ‘‘natural’’ 

single procedure claims is equal to or 

less than $55. This criterion also limits 

the amount of error in redistributed 

costs. During the assessment of claims 

against the bypass criteria, we do not 

know the dollar value of the packaged 

cost that should be appropriately 

attributed to the other procedures on the 

claim. Therefore, ensuring that 

redistributed costs associated with a 

bypass code are small in amount and 

volume protects the validity of cost 

estimates for low cost services billed 

with the bypassed service. 

We note that, as we did for CY 2014, 

we proposed to continue to establish the 

CY 2015 OPPS relative payment weights 

based on geometric mean costs. To 

remain consistent in the metric used for 

identifying cost patterns, we proposed 

to use the geometric mean cost of 

packaging to identify potential codes to 

add to the bypass list. 

In response to public comments on 

the CY 2010 OPPS/ASC proposed rule 

requesting that the packaged cost 

threshold be updated, we considered 

whether it would be appropriate to 

update the $50 packaged cost threshold 

for inflation when examining potential 

bypass list additions. As discussed in 

the CY 2010 OPPS/ASC final rule with 

comment period (74 FR 60328), the real 

value of this packaged cost threshold 

criterion has declined due to inflation, 

making the packaged cost threshold 

more restrictive over time when 

considering additions to the bypass list. 

Therefore, adjusting the threshold by 

the market basket increase would 

prevent continuing decline in the 

threshold’s real value. Based on the 

same rationale described for the CY 

2014 OPPS/ASC final rule with 

comment period (78 FR 74838), we 

proposed for CY 2015 to continue to 

update the packaged cost threshold by 

the market basket increase. By applying 

the final CY 2014 market basket increase 

of 1.7 percent to the prior nonrounded 

dollar threshold of $54.73 (78 FR 

74838), we determined that the 

threshold remains for CY 2015 at $55 

($55.66 rounded to $55, the nearest $5 

increment). Therefore, we proposed to 

set the geometric mean packaged cost 

threshold on the CY 2013 claims at $55 

for a code to be considered for addition 

to the CY 2015 OPPS bypass list. 

• The code is not a code for an 

unlisted service. Unlisted codes do not 

describe a specific service, and thus 

their costs would not be appropriate for 

bypass list purposes. 

In addition, we proposed to continue 

to include on the bypass list HCPCS 

codes that CMS medical advisors 

believe have minimal associated 

packaging based on their clinical 

assessment of the complete CY 2015 

OPPS proposal. Some of these codes 

were identified by CMS medical 


tkelley on DSK3SPTVN1PROD with RULES2
66782 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

advisors and some were identified in 

prior years by commenters with 

specialized knowledge of the packaging 

associated with specific services. We 

also proposed to continue to include 

certain HCPCS codes on the bypass list 

in order to purposefully direct the 

assignment of packaged costs to a 

companion code where services always 

appear together and where there would 

otherwise be few single procedure 

claims available for ratesetting. For 

example, we have previously discussed 

our reasoning for adding HCPCS code 

G0390 (Trauma response team 

associated with hospital critical care 

service) to the bypass list (73 FR 68513). 

As a result of the multiple imaging 

composite APCs that we established in 

CY 2009, the program logic for creating 

‘‘pseudo’’ single procedure claims from 

bypassed codes that are also members of 

multiple imaging composite APCs 

changed. When creating the set of 

‘‘pseudo’’ single procedure claims, 

claims that contain ‘‘overlap bypass 

codes’’ (those HCPCS codes that are 

both on the bypass list and are members 

of the multiple imaging composite 

APCs) were identified first. These 

HCPCS codes were then processed to 

create multiple imaging composite 

‘‘single session’’ bills, that is, claims 

containing HCPCS codes from only one 

imaging family, thus suppressing the 

initial use of these codes as bypass 

codes. However, these ‘‘overlap bypass 

codes’’ were retained on the bypass list 

because, at the end of the ‘‘pseudo’’ 

single processing logic, we reassessed 

the claims without suppression of the 

‘‘overlap bypass codes’’ under our 

longstanding ‘‘pseudo’’ single process to 

determine whether we could convert 

additional claims to ‘‘pseudo’’ single 

procedure claims. (We refer readers to 

section II.A.2.b. of this final rule with 

comment period for further discussion 

of the treatment of ‘‘overlap bypass 

codes.’’) This process also created 

multiple imaging composite ‘‘single 

session’’ bills that could be used for 

calculating composite APC costs. 

‘‘Overlap bypass codes’’ that are 

members of the multiple imaging 

composite APCs are identified by 

asterisks (*) in Addendum N to this 

final rule with comment period (which 

is available via the Internet on the CMS 

Web site). 

Comment: One commenter supported 

the CY 2015 proposal to remove certain 

codes from the bypass list, in particular 

for the anatomic pathology procedures, 

and suggested that the bypass list 

undervalues codes and artificially 

lowers their estimated costs, as 

evidenced by the estimated increase in 

payment for some of those services in 

the CY 2015 OPPS/ASC proposed rule. 

Response: We appreciate the 

commenter’s support. The bypass list 

process is used to extract more data 

from claims that would otherwise be 

unusable. We use a variety of 

information in identifying codes that 

could be potentially added to the bypass 

list each year, including codes selected 

based on the empirical criteria, CMS 

medical advisor recommendations, and 

commenter requests. In doing so, we 

attempt to ensure that the amount of 

packaged cost being redistributed as a 

result of the process is limited. 

After consideration of the public 

comments we received, we are adopting 

as final the proposed ‘‘pseudo’’ single 

claims process. As discussed earlier in 

this section, there are interactions 

between the application of a bypass list 

and various other OPPS payment 

policies. As a result of modifications to 

the packaging policies described in 

section III. of this final rule with 

comment period, we are adding codes 

that we had originally proposed to 

remove from the CY 2015 bypass list 

back on the CY 2015 final OPPS bypass 

list. 

Addendum N to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site) 

includes the list of bypass codes for CY 

2015. The list of bypass codes contains 

codes that were reported on claims for 

services in CY 2013 and, therefore, 

includes codes that were in effect in CY 

2013 and used for billing but were 

deleted for CY 2014. We retained these 

deleted bypass codes on the CY 2015 

bypass list because these codes existed 

in CY 2013 and were covered OPD 

services in that period, and CY 2013 

claims data are used to calculate CY 

2015 payment rates. Keeping these 

deleted bypass codes on the bypass list 

potentially allows us to create more 

‘‘pseudo’’ single procedure claims for 

ratesetting purposes. ‘‘Overlap bypass 

codes’’ that were members of the 

multiple imaging composite APCs are 

identified by asterisks (*) in the third 

column of Addendum N to this final 

rule with comment period. HCPCS 

codes that we are adding for CY 2015 

are identified by asterisks (*) in the 

fourth column of Addendum N. 

Table 1 of the proposed rule 

contained the list of codes that we 

proposed to remove from the CY 2015 

bypass list (79 FR 40927 through 

40929). Table 1 below contains the list 

of codes that we are removing from the 

final CY 2015 bypass list because these 

codes were either deleted from the 

HCPCS before CY 2013 (and therefore 

were not covered OPD services in CY 

2013) or were not separately payable 

codes under the CY 2015 OPPS because 

these codes are not used for ratesetting 

through the bypass process. The list of 

codes for removal from the bypass list 

includes those that will be affected by 

the CY 2015 OPPS packaging policy 

described in section II.A.3. of this final 

rule with comment period. 

TABLE 1—HCPCS CODES REMOVED

FROM THE CY 2015 BYPASS LIST

HCPCS 

Code HCPCS Short descriptor 

11056 ....... Trim skin lesions 2 to 4. 

11300 ....... Shave skin lesion 0.5 cm/<. 

11301 ....... Shave skin lesion 0.6–1.0 cm. 

11719 ....... Trim nail(s) any number. 

11720 ....... Debride nail 1–5. 

11721 ....... Debride nail 6 or more. 

17000 ....... Destruct premalg lesion. 

17110 ....... Destruct b9 lesion 1–14. 

29240 ....... Strapping of shoulder. 

29260 ....... Strapping of elbow or wrist. 

29280 ....... Strapping of hand or finger. 

29520 ....... Strapping of hip. 

29530 ....... Strapping of knee. 

51741 ....... Electro-uroflowmetry first. 

51798 ....... Us urine capacity measure. 

53601 ....... Dilate urethra stricture. 

53661 ....... Dilation of urethra. 

54240 ....... Penis study. 

67820 ....... Revise eyelashes. 

69210 ....... Remove impacted ear wax uni. 

69220 ....... Clean out mastoid cavity. 

70030 ....... X-ray eye for foreign body. 

70100 ....... X-ray exam of jaw <4 views. 

70110 ....... X-ray exam of jaw 4/>≤ views. 

70120 ....... X-ray exam of mastoids. 

70130 ....... X-ray exam of mastoids. 

70140 ....... X-ray exam of facial bones. 

70150 ....... X-ray exam of facial bones. 

70160 ....... X-ray exam of nasal bones. 

70200 ....... X-ray exam of eye sockets. 

70210 ....... X-ray exam of sinuses. 

70220 ....... X-ray exam of sinuses. 

70240 ....... X-ray exam pituitary saddle. 

70250 ....... X-ray exam of skull. 

70260 ....... X-ray exam of skull. 

70320 ....... Full mouth x-ray of teeth. 

70328 ....... X-ray exam of jaw joint. 

70330 ....... X-ray exam of jaw joints. 

70355 ....... Panoramic x-ray of jaws. 

70360 ....... X-ray exam of neck. 

71021 ....... Chest x-ray frnt lat lordotc. 

71022 ....... Chest x-ray frnt lat oblique. 

71023 ....... Chest x-ray and fluoroscopy. 

71030 ....... Chest x-ray 4/> views. 

71035 ....... Chest x-ray special views. 

71100 ....... X-ray exam ribs uni 2 views. 

71101 ....... X-ray exam unilat ribs/chest. 

71110 ....... X-ray exam ribs bil 3 views. 

71111 ....... X-ray exam ribs/chest4/> vws. 

71120 ....... X-ray exam breastbone 2/> vws. 

71130 ....... X-ray strenoclavic jt 3/>vws. 

72020 ....... X-ray exam of spine 1 view. 

72040 ....... X-ray exam neck spine 2–3 vw. 

72050 ....... X-ray exam neck spine 4/5vws. 

72052 ....... X-ray exam neck spine 6/>vws. 

72069 ....... X-ray exam trunk spine stand. 

72070 ....... X-ray exam thorac spine 2vws. 

72072 ....... X-ray exam thorac spine 3vws. 

72074 ....... X-ray exam thorac spine4/>vw. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66783 

TABLE 1—HCPCS CODES REMOVED

FROM THE CY 2015 BYPASS LIST— 

Continued 

HCPCS 

Code HCPCS Short descriptor 

72080 ....... X-ray exam trunk spine 2 vws. 

72090 ....... X-ray exam scloiosis erect. 

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

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

72114 ....... X-ray exam l-s spine bending. 

72120 ....... X-ray bend only l-s spine. 

72170 ....... X-ray exam of pelvis. 

72190 ....... X-ray exam of pelvis. 

72202 ....... X-ray exam si joints 3/> vws. 

72220 ....... X-ray exam sacrum tailbone. 

73000 ....... X-ray exam of collar bone. 

73010 ....... X-ray exam of shoulder blade. 

73020 ....... X-ray exam of shoulder. 

73030 ....... X-ray exam of shoulder. 

73050 ....... X-ray exam of shoulders. 

73060 ....... X-ray exam of humerus. 

73070 ....... X-ray exam of elbow. 

73080 ....... X-ray exam of elbow. 

73090 ....... X-ray exam of forearm. 

73100 ....... X-ray exam of wrist. 

73110 ....... X-ray exam of wrist. 

73120 ....... X-ray exam of hand. 

73130 ....... X-ray exam of hand. 

73140 ....... X-ray exam of finger(s). 

73510 ....... X-ray exam of hip. 

73520 ....... X-ray exam of hips. 

73540 ....... X-ray exam of pelvis & hips. 

73550 ....... X-ray exam of thigh. 

73560 ....... X-ray exam of knee 1 or 2. 

73562 ....... X-ray exam of knee 3. 

73564 ....... X-ray exam knee 4 or more. 

73565 ....... X-ray exam of knees. 

73590 ....... X-ray exam of lower leg. 

73600 ....... X-ray exam of ankle. 

73610 ....... X-ray exam of ankle. 

73620 ....... X-ray exam of foot. 

73630 ....... X-ray exam of foot. 

73650 ....... X-ray exam of heel. 

73660 ....... X-ray exam of toe(s). 

74000 ....... X-ray exam of abdomen. 

74010 ....... X-ray exam of abdomen. 

74020 ....... X-ray exam of abdomen. 

74022 ....... X-ray exam series abdomen. 

76100 ....... X-ray exam of body section. 

76510 ....... Ophth us b & quant a. 

76514 ....... Echo exam of eye thickness. 

76516 ....... Echo exam of eye. 

76519 ....... Echo exam of eye. 

76645 ....... Us exam breast(s). 

76816 ....... Ob us follow-up per fetus. 

76882 ....... Us xtr non-vasc lmtd. 

76970 ....... Ultrasound exam follow-up. 

76977 ....... Us bone density measure. 

77072 ....... X-rays for bone age. 

77073 ....... X-rays bone length studies. 

77074 ....... X-rays bone survey limited. 

77076 ....... X-rays bone survey infant. 

77077 ....... Joint survey single view. 

77078 ....... Ct bone density axial. 

77079 ....... Ct bone density peripheral. 

77080 ....... Dxa bone density axial. 

77081 ....... Dxa bone density/peripheral. 

77082 ....... Dxa bone density vert fx. 

77083 ....... Radiographic absorptiometry. 

80500 ....... Lab pathology consultation. 

80502 ....... Lab pathology consultation. 

85097 ....... Bone marrow interpretation. 

86510 ....... Histoplasmosis skin test. 

86850 ....... Rbc antibody screen. 

TABLE 1—HCPCS CODES REMOVED

FROM THE CY 2015 BYPASS LIST— 

Continued 

HCPCS 

Code HCPCS Short descriptor 

86870 ....... Rbc antibody identification. 

86880 ....... Coombs test direct. 

86885 ....... Coombs test indirect qual. 

86886 ....... Coombs test indirect titer. 

86900 ....... Blood typing abo. 

86901 ....... Blood typing rh (d). 

86904 ....... Blood typing patient serum. 

86905 ....... Blood typing rbc antigens. 

86906 ....... Blood typing rh phenotype. 

86930 ....... Frozen blood prep. 

86970 ....... Rbc pretx incubatj w/chemicl. 

86977 ....... Rbc serum pretx incubj/inhib. 

88104 ....... Cytopath fl nongyn smears. 

88106 ....... Cytopath fl nongyn filter. 

88107 ....... Cytopath fl nongyn sm/fltr. 

88108 ....... Cytopath concentrate tech. 

88112 ....... Cytopath cell enhance tech. 

88120 ....... Cytp urne 3–5 probes ea spec. 

88160 ....... Cytopath smear other source. 

88161 ....... Cytopath smear other source. 

88162 ....... Cytopath smear other source. 

88172 ....... Cytp dx eval fna 1st ea site. 

88173 ....... Cytopath eval fna report. 

88182 ....... Cell marker study. 

88184 ....... Flowcytometry/tc 1 marker. 

88189 ....... Flowcytometry/read 16 & >. 

88300 ....... Surgical path gross. 

88302 ....... Tissue exam by pathologist. 

88304 ....... Tissue exam by pathologist. 

88305 ....... Tissue exam by pathologist. 

88307 ....... Tissue exam by pathologist. 

88312 ....... Special stains group 1. 

88313 ....... Special stains group 2. 

88321 ....... Microslide consultation. 

88323 ....... Microslide consultation. 

88325 ....... Comprehensive review of data. 

88329 ....... Path consult introp. 

88331 ....... Path consult intraop 1 bloc. 

88342 ....... Immunohisto antibody slide. 

88346 ....... Immunofluorescent study. 

88347 ....... Immunofluorescent study. 

88348 ....... Electron microscopy. 

88358 ....... Analysis tumor. 

88360 ....... Tumor immunohistochem/manual. 

88361 ....... Tumor immunohistochem/

comput. 

88365 ....... Insitu hybridization (fish). 

88368 ....... Insitu hybridization manual. 

88385 ....... Eval molecul probes 51–250. 

88386 ....... Eval molecul probes 251–500. 

89049 ....... Chct for mal hyperthermia. 

89220 ....... Sputum specimen collection. 

89230 ....... Collect sweat for test. 

89240 ....... Pathology lab procedure. 

92020 ....... Special eye evaluation. 

92025 ....... Corneal topography. 

92060 ....... Special eye evaluation. 

92081 ....... Visual field examination(s). 

92082 ....... Visual field examination(s). 

92083 ....... Visual field examination(s). 

92133 ....... Cmptr ophth img optic nerve. 

92134 ....... Cptr ophth dx img post segmt. 

92136 ....... Ophthalmic biometry. 

92225 ....... Special eye exam initial. 

92226 ....... Special eye exam subsequent. 

92230 ....... Eye exam with photos. 

92250 ....... Eye exam with photos. 

92285 ....... Eye photography. 

TABLE 1—HCPCS CODES REMOVED

FROM THE CY 2015 BYPASS LIST— 

Continued 

HCPCS 

Code HCPCS Short descriptor 

92286 ....... Internal eye photography. 

92520 ....... Laryngeal function studies. 

92541 ....... Spontaneous nystagmus test. 

92542 ....... Positional nystagmus test. 

92550 ....... Tympanometry & reflex thresh. 

92552 ....... Pure tone audiometry air. 

92553 ....... Audiometry air & bone. 

92555 ....... Speech threshold audiometry. 

92556 ....... Speech audiometry complete. 

92557 ....... Comprehensive hearing test. 

92567 ....... Tympanometry. 

92570 ....... Acoustic immitance testing. 

92582 ....... Conditioning play audiometry. 

92603 ....... Cochlear implt f/up exam 7/>. 

92604 ....... Reprogram cochlear implt 7/>. 

92626 ....... Eval aud rehab status. 

93005 ....... Electrocardiogram tracing. 

93017 ....... Cardiovascular stress test. 

93225 ....... Ecg monit/reprt up to 48 hrs. 

93226 ....... Ecg monit/reprt up to 48 hrs. 

93270 ....... Remote 30 day ecg rev/report. 

93278 ....... Ecg/signal-averaged. 

93279 ....... Pm device progr eval sngl. 

93280 ....... Pm device progr eval dual. 

93281 ....... Pm device progr eval multi. 

93282 ....... Icd device progr eval 1 sngl. 

93283 ....... Icd device progr eval dual. 

93284 ....... Icd device progr eval mult. 

93285 ....... Ilr device eval progr. 

93288 ....... Pm device eval in person. 

93289 ....... Icd device interrogate. 

93290 ....... Icm device eval. 

93291 ....... Ilr device interrogate. 

93292 ....... Wcd device interrogate. 

93293 ....... Pm phone r-strip device eval. 

93296 ....... Pm/icd remote tech serv. 

93299 ....... Icm/ilr remote tech serv. 

93701 ....... Bioimpedance cv analysis. 

93786 ....... Ambulatory bp recording. 

93788 ....... Ambulatory bp analysis. 

93875 ....... Extracranial study. 

94015 ....... Patient recorded spirometry. 

94690 ....... Exhaled air analysis. 

95803 ....... Actigraphy testing. 

95869 ....... Muscle test thor paraspinal. 

95900 ....... Motor nerve conduction test. 

95921 ....... Autonomic nrv parasym inervj. 

95970 ....... Analyze neurostim no prog. 

96900 ....... Ultraviolet light therapy. 

96910 ....... Photochemotherapy with uv-b. 

96912 ....... Photochemotherapy with uv-a. 

96920 ....... Laser tx skin < 250 sq cm. 

96921 ....... Laser tx skin 250–500 sq cm. 

98925 ....... Osteopath manj 1–2 regions. 

98926 ....... Osteopath manj 3–4 regions. 

98927 ....... Osteopath manj 5–6 regions. 

98928 ....... Osteopath manj 7–8 regions. 

98929 ....... Osteopath manj 9–10 regions. 

98940 ....... Chiropract manj 1–2 regions. 

98941 ....... Chiropract manj 3–4 regions. 

98942 ....... Chiropractic manj 5 regions. 

G0127 ...... Trim nail(s). 

G0130 ...... Single energy x-ray study. 

G0166 ...... Extrnl counterpulse, per tx. 

G0239 ...... Oth resp proc, group. 

G0389 ...... Ultrasound exam aaa screen. 

G0404 ...... Ekg tracing for initial prev. 

G0424 ...... Pulmonary rehab w exer. 

Q0091 ...... Obtaining screen pap smear. 


tkelley on DSK3SPTVN1PROD with RULES2
66784 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

c. Calculation and Use of Cost-to-Charge 

Ratios (CCRs) 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40929), we proposed to 

continue to use the hospital-specific 

overall ancillary and departmental costto-charge ratios (CCRs) to convert 

charges to estimated costs through 

application of a revenue code-to-cost 

center crosswalk. To calculate the APC 

costs on which the proposed CY 2015 

APC payment rates were based, we 

calculated hospital-specific overall 

ancillary CCRs and hospital-specific 

departmental CCRs for each hospital for 

which we had CY 2013 claims data by 

comparing these claims data to the most 

recently available hospital cost reports, 

which, in most cases, were from CY 

2012. For the CY 2015 OPPS proposed 

rates, we used the set of claims 

processed during CY 2013. We applied 

the hospital-specific CCR to the 

hospital’s charges at the most detailed 

level possible, based on a revenue 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 2013 (the year of 

claims data we used to calculate the 

proposed CY 2015 OPPS payment rates) 

and found that the National Uniform 

Billing Committee (NUBC) did not add 

any new revenue codes to the NUBC 

2013 Data Specifications Manual. 

In accordance with our longstanding 

policy, we calculated CCRs for the 

standard and nonstandard cost centers 

accepted by the electronic cost report 

database. In general, the most detailed 

level at which we calculated CCRs was 

the hospital-specific departmental level. 

For a discussion of the hospital-specific 

overall ancillary CCR calculation, we 

refer readers to the CY 2007 OPPS/ASC 

final rule with comment period (71 FR 

67983 through 67985). The calculation 

of blood costs is a longstanding 

exception (since the CY 2005 OPPS) to 

this general methodology for calculation 

of CCRs used for converting charges to 

costs on each claim. This exception is 

discussed in detail in the CY 2007 

OPPS/ASC final rule with comment 

period and discussed further in section 

II.A.2.d.(2) of this final rule with 

comment period. 

For the CCR calculation process, we 

used the same general approach that we 

used in developing the final APC rates 

for CY 2007 and thereafter, using the 

revised CCR calculation that excluded 

the costs of paramedical education 

programs and weighted the outpatient 

charges by the volume of outpatient 

services furnished by the hospital. We 

refer readers to the CY 2007 OPPS/ASC 

final rule with comment period for more 

information (71 FR 67983 through 

67985). We first limited the population 

of cost reports to only those hospitals 

that filed outpatient claims in CY 2013 

before determining whether the CCRs 

for such hospitals were valid. 

We then calculated the CCRs for each 

cost center and the overall ancillary 

CCR for each hospital for which we had 

claims data. We did this using hospitalspecific data from the Hospital Cost 

Report Information System (HCRIS). We 

used the most recent available cost 

report data, which, in most cases, were 

from cost reports with cost reporting 

periods beginning in CY 2012. For the 

proposed rule, we used the most 

recently submitted cost reports to 

calculate the CCRs to be used to 

calculate costs for the proposed CY 2015 

OPPS payment rates. If the most 

recently available cost report was 

submitted but not settled, we looked at 

the last settled cost report to determine 

the ratio of submitted to settled cost 

using the overall ancillary CCR, and we 

then adjusted the most recent available 

submitted, but not settled, cost report 

using that ratio. We then calculated both 

an overall ancillary CCR and cost 

center-specific CCRs for each hospital. 

We used the overall ancillary CCR 

referenced above for all purposes that 

require use of an overall ancillary CCR. 

We proposed to continue this 

longstanding methodology for the 

calculation of costs for CY 2015. 

Since the implementation of the 

OPPS, some commenters have raised 

concerns about potential bias in the 

OPPS cost-based weights due to ‘‘charge 

compression,’’ which is the practice of 

applying a lower charge markup to 

higher cost services and a higher charge 

markup to lower cost services. As a 

result, the cost-based weights may 

reflect some aggregation bias, 

undervaluing high-cost items and 

overvaluing low-cost items when an 

estimate of average markup, embodied 

in a single CCR, is applied to items of 

widely varying costs in the same cost 

center. This issue was evaluated in a 

report by the Research Triangle 

Institute, International (RTI). The RTI 

final report can be found on RTI’s Web 

site at: http://www.rti.org/reports/cms/

HHSM–500–2005–0029I/PDF/Refining_

Cost_to_Charge_ratios_200807_

Final.pdf. For a complete discussion of 

the RTI recommendations, public 

comments, and our responses, we refer 

readers to the CY 2009 OPPS/ASC final 

rule with comment period (73 FR 68519 

through 68527). 

We addressed the RTI finding that 

there was aggregation bias in both the 

IPPS and the OPPS cost estimation of 

expensive and inexpensive medical 

supplies in the FY 2009 IPPS final rule 

(73 FR 48458 through 45467). 

Specifically, we created one cost center 

for ‘‘Medical Supplies Charged to 

Patients’’ and one cost center for 

‘‘Implantable Devices Charged to 

Patients,’’ essentially splitting the then 

current cost center for ‘‘Medical 

Supplies Charged to Patients’’ into one 

cost center for low-cost medical 

supplies and another cost center for 

high-cost implantable devices in order 

to mitigate some of the effects of charge 

compression. In determining the items 

that should be reported in these 

respective cost centers, we adopted 

commenters’ recommendations that 

hospitals should use revenue codes 

established by the AHA’s NUBC to 

determine the items that should be 

reported in the ‘‘Medical Supplies 

Charged to Patients’’ and the 

‘‘Implantable Devices Charged to 

Patients’’ cost centers. For a complete 

discussion of the rationale for the 

creation of the new cost center for 

‘‘Implantable Devices Charged to 

Patients,’’ a summary of public 

comments received, and our responses 

to those public comments, we refer 

readers to the FY 2009 IPPS final rule. 

The cost center for ‘‘Implantable 

Devices Charged to Patients’’ has been 

available for use for cost reporting 

periods beginning on or after May 1, 

2009. In the CY 2013 OPPS/ASC final 

rule with comment period, we 

determined that a significant volume of 

hospitals were utilizing the 

‘‘Implantable Devices Charged to 

Patients’’ cost center. Because a 

sufficient amount of data from which to 

generate a meaningful analysis was 

available, we established in the CY 2013 

OPPS/ASC final rule with comment 

period a policy to create a distinct CCR 

using the ‘‘Implantable Devices Charged 

to Patients’’ cost center (77 FR 68225). 

We retained this policy for the CY 2014 

OPPS and, as we proposed, we are 

continuing this practice for the CY 2015 

OPPS. 

In the FY 2011 IPPS/LTCH PPS final 

rule (75 FR 50075 through 50080), we 

finalized our proposal to create new 

standard cost centers for ‘‘Computed 

Tomography (CT),’’ ‘‘Magnetic 

Resonance Imaging (MRI),’’ and 

‘‘Cardiac Catheterization,’’ and to 

require that hospitals report the costs 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66785 

and charges for these services under 

these new cost centers on the revised 

Medicare cost report Form CMS 2552– 

10. As we discussed in the FY 2009 

IPPS and CY 2009 OPPS/ASC proposed 

and final rules, RTI also found that the 

costs and charges of CT scans, MRIs, 

and cardiac catheterization differ 

significantly from the costs and charges 

of other services included in the 

standard associated cost center. RTI 

concluded that both the IPPS and the 

OPPS relative payment weights would 

better estimate the costs of those 

services if CMS were to add standard 

costs centers for CT scans, MRIs, and 

cardiac catheterization in order for 

hospitals to report separately the costs 

and charges for those services and in 

order for CMS to calculate unique CCRs 

to estimate the cost from charges on 

claims data. We refer readers to the FY 

2011 IPPS/LTCH PPS final rule (75 FR 

50075 through 50080) for a more 

detailed discussion on the reasons for 

the creation of standard cost centers for 

CT scans, MRIs, and cardiac 

catheterization. The new standard cost 

centers for CT scans, MRIs, and cardiac 

catheterization were effective for cost 

report periods beginning on or after May 

1, 2010, on the revised cost report Form 

CMS–2552–10. 

Using the HCRIS update for the CY 

2015 final rule cycle, which we used to 

estimate costs in the CY 2015 OPPS 

ratesetting process, as discussed in the 

CY 2015 OPPS/ASC proposed rule (79 

FR 40930), we were able to calculate a 

valid implantable device CCR for 2,895 

hospitals, a valid MRI CCR for 1,934 

hospitals, a valid CT scan CCR for 2,035 

hospitals, and a valid Cardiac 

Catheterization CCR for 1,397 hospitals. 

In our CY 2014 OPPS/ASC proposed 

rule discussion (78 FR 43549), we noted 

that, for CY 2014, the estimated changes 

in geometric mean estimated APC cost 

of using data from the new standard cost 

centers for CT scans and MRIs appeared 

consistent with RTI’s analysis of cost 

report and claims data in the July 2008 

final report (pages 5 and 6). RTI 

concluded that ‘‘in hospitals that 

aggregate data for CT scanning, MRI, or 

nuclear medicine services with the 

standard line for Diagnostic Radiology, 

costs for these services all appear 

substantially overstated, while the costs 

for plain films, ultrasound and other 

imaging procedures are correspondingly 

understated.’’ We also noted that there 

were limited additional impacts in the 

implantable device-related APCs from 

adopting the new cost report Form CMS 

2552–10 because we had used data from 

the standard cost center for implantable 

medical devices beginning in CY 2013 

OPPS ratesetting, as discussed above. 

As we indicated in prior rulemaking 

(77 FR 68223 through 68225), once we 

determined that cost report data for the 

new standard cost centers were 

sufficiently available, we would analyze 

that data and, if appropriate, we would 

propose to use the distinct CCRs for new 

standard cost centers described above in 

the calculation of the OPPS relative 

payment weights. As stated in the CY 

2014 OPPS/ASC proposed rule (78 FR 

43550), we have conducted our analysis 

and concluded that we should develop 

distinct CCRs for each of the new cost 

centers and use them in ratesetting. 

Therefore, we began in the CY 2014 

OPPS, and proposed to continue for the 

CY 2015 OPPS, to calculate the OPPS 

relative payment weights using distinct 

CCRs for cardiac catheterization, CT 

scan, MRI, and implantable medical 

devices. Section XXI. of this final rule 

with comment period includes the 

impacts of calculating the CY 2015 

OPPS relative payment weights using 

these new standard cost centers. 

Comment: A few commenters 

encouraged CMS to ensure data quality 

and continue to test, refine, and 

improve its CCR analysis for CT scans 

and MRI. 

Response: We will continue to 

monitor the CCRs for these services. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to calculate the 

OPPS relative payment weights using 

distinct CCRs for cardiac 

catheterization, CT scan, MRI, and 

implantable medical devices for CY 

2015 without modification. 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 74847), we 

finalized a policy to remove claims from 

providers that use a cost allocation 

method of ‘‘square feet’’ to calculate 

CCRs used to estimate costs associated 

with the CT and MRI APCs. This change 

allows hospitals additional time to use 

one of the more accurate cost allocation 

methods, and thereby improve the 

accuracy of the CCRs on which the 

OPPS relative payment weights are 

developed. In Table 2 below, we display 

CCR values for providers based on 

various cost allocation methods. 

TABLE 2—CCR STATISTICAL VALUES BASED ON USE OF DIFFERENT COST ALLOCATION METHODS

Cost allocation method 

CT MRI 

Median CCR Mean CCR Median CCR Mean CCR 

All Providers ..................................................................................................... 0.0464 0.0608 0.0901 0.1151 

Square Feet Only ............................................................................................ 0.0370 0.0502 0.0787 0.1013 

Direct Assign .................................................................................................... 0.0640 0.0740 0.1063 0.1294 

Dollar Value ..................................................................................................... 0.0555 0.0718 0.1046 0.1298 

Direct Assign and Dollar Value ....................................................................... 0.0554 0.0715 0.1047 0.1297 

As part of this transitional policy to 

estimate the CT and MRI APC relative 

payment weights using only cost data 

from providers that do not use ‘‘square 

feet’’ as the cost allocation statistic, we 

adopted a policy in the CY 2014 OPPS/ 

ASC final rule with comment period 

that we will sunset this policy in 4 years 

once the updated cost report data 

become available for ratesetting 

purposes. We stated that we believe 4 

years is sufficient time for hospitals that 

have not done so to transition to a more 

accurate cost allocation method and for 

the related data to be available for 

ratesetting purposes. Therefore, in CY 

2018, we will estimate the CT and MRI 

APC relative payment weights using 

cost data from all providers, regardless 

of the cost allocation statistic employed. 

In Table 3 below, we display the impact 

of excluding claims based on the 

‘‘square feet’’ cost allocation method 

from estimates of CT and MRI costs in 

CY 2015. 


tkelley on DSK3SPTVN1PROD with RULES2
66786 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

TABLE 3—PERCENTAGE CHANGE IN ESTIMATED COST FOR CT AND MRI APCS WHEN EXCLUDING CLAIMS FROM

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

CY 2015 

APC CY 2015 APC Descriptor Percent change 

0283 ............ Computed Tomography with Contrast ....................................................................................................................... 9.6 

0284 ............ Magnetic Resonance Imaging and Magnetic Resonance Angiography with Contrast ............................................. 4.0 

0331 ............ Combined Abdomen and Pelvis CT without Contrast ............................................................................................... 12.1 

0332 ............ Computed Tomography without Contrast .................................................................................................................. 14.5 

0333 ............ Computed Tomography without Contrast followed by Contrast ................................................................................ 12.3 

0334 ............ Combined Abdomen and Pelvis CT with Contrast .................................................................................................... 10.1 

0336 ............ Magnetic Resonance Imaging and Magnetic Resonance Angiography without Contrast ........................................ 7.5 

0337 ............ Magnetic Resonance Imaging and Magnetic Resonance Angiography without Contrast f ...................................... 6.4 

0383 ............ Cardiac Computed Tomographic Imaging ................................................................................................................. 3.6 

0662 ............ CT Angiography ......................................................................................................................................................... 10.3 

8005 ............ CT and CTA without Contrast Composite ................................................................................................................. 12.8 

8006 ............ CT and CTA with Contrast Composite ...................................................................................................................... 9.4 

8007 ............ MRI and MRA without Contrast Composite ............................................................................................................... 6.7 

8008 ............ MRI and MRA with Contrast Composite .................................................................................................................... 6.9 

Comment: A few commenters 

supported CMS’ proposal to continue 

removing claims from providers that use 

the ‘‘square feet’’ cost allocation method 

from the cost model. One commenter 

suggested that CMS continue removing 

claims from providers that use this 

method in CY 2018 and beyond. 

Response: We thank the commenters 

for their support and are finalizing this 

policy as proposed. We will continue to 

only include cost data from providers 

that do not use ‘‘square feet’’ as the cost 

allocation statistic in relative payment 

weights through CY 2017. For CY 2018 

and beyond, we will estimate the CT 

and MRI APC relative payment weights 

using cost data from all providers, 

regardless of the cost allocation statistic 

employed. 

In summary, as we proposed, we are 

continuing to use data from the 

‘‘Implantable Devices Charged to 

Patients’’ and ‘‘Cardiac Catheterization’’ 

cost centers to create distinct CCRs for 

use in calculating the OPPS relative 

payment weights for the CY 2015 OPPS. 

For the ‘‘Magnetic Resonance Imaging 

(MRI)’’ and ‘‘Computed Tomography 

(CT) Scan’’ APCs identified in Table 3 

of this final rule with comment period, 

we are continuing our policy of 

removing claims from cost modeling for 

those providers using ‘‘square feet’’ as 

the cost allocation statistic for CY 2015. 

2. Data Development Process and 

Calculation of Costs Used for Ratesetting 

In this section of this final rule with 

comment period, we discuss the use of 

claims to calculate the OPPS payment 

rates for CY 2015. The Hospital OPPS 

page on the CMS Web site on which this 

final rule with comment period is 

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

Medicare-Fee-for-Service-Payment/

HospitalOutpatientPPS/index.html) 

provides an accounting of claims used 

in the development of the final payment 

rates. That accounting provides 

additional detail regarding the number 

of claims derived at each stage of the 

process. In addition, below in this 

section we discuss the file of claims that 

comprises the data set that is available 

for purchase under a CMS data use 

agreement. The CMS Web site, http://

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

HospitalOutpatientPPS/index.html, 

includes information about purchasing 

the ‘‘OPPS Limited Data Set,’’ which 

now includes the additional variables 

previously available only in the OPPS 

Identifiable Data Set, including ICD–9– 

CM diagnosis codes and revenue code 

payment amounts. This file is derived 

from the CY 2013 claims that were used 

to calculate the final payment rates for 

the CY 2015 OPPS. 

In the history of the OPPS, we have 

traditionally established the scaled 

relative weights on which payments are 

based using APC median costs, which is 

a process described in the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74188). However, as 

discussed in more detail in section 

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

rule with comment period (77 FR 68259 

through 68271), we finalized the use of 

geometric mean costs to calculate the 

relative weights on which the CY 2013 

OPPS payment rates were based. While 

this policy changed the cost metric on 

which the relative payments are based, 

the data process in general remained the 

same, under the methodologies that we 

used to obtain appropriate claims data 

and accurate cost information in 

determining estimated service cost. For 

CY 2015, as we proposed, we are 

continuing to use geometric mean costs 

to calculate the relative weights on 

which the CY 2015 OPPS payment rates 

are based. 

We used the methodology described 

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

this final rule with comment period to 

calculate the costs we used to establish 

the relative weights used in calculating 

the OPPS payment rates for CY 2015 

shown in Addenda A and B to this final 

rule with comment period (which are 

available via the Internet on the CMS 

Web site). We refer readers to section 

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

period for a discussion of the 

conversion of APC costs to scaled 

payment weights. 

a. Claims Preparation 

For this final rule with comment 

period, we used the CY 2013 hospital 

outpatient claims processed through 

June 30, 2014, to calculate the geometric 

mean costs of APCs that underpin the 

relative payment weights for CY 2015. 

To begin the calculation of the relative 

payment weights for CY 2015, we 

pulled all claims for outpatient services 

furnished in CY 2013 from the national 

claims history file. This is not the 

population of claims paid under the 

OPPS, but all outpatient claims 

(including, for example, critical access 

hospital (CAH) claims and hospital 

claims for clinical laboratory tests for 

persons who are neither inpatients nor 

outpatients of the hospital). 

We then excluded claims with 

condition codes 04, 20, 21, and 77 

because these are claims that providers 

submitted to Medicare knowing that no 

payment would be made. For example, 

providers submit claims with a 

condition code 21 to elicit an official 

denial notice from Medicare and 

document that a service is not covered. 

We then excluded claims for services 

furnished in Maryland, Guam, the U.S. 

Virgin Islands, American Samoa, and 

the Northern Mariana Islands because 

hospitals in those geographic areas are 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66787 

not paid under the OPPS, and, therefore, 

we do not use claims for services 

furnished in these areas in ratesetting. 

We divided the remaining claims into 

the three groups shown below. Groups 

2 and 3 comprise the 123 million claims 

that contain hospital bill types paid 

under the OPPS. 

1. Claims that were not bill types 12X 

(Hospital Inpatient (Medicare Part B 

only)), 13X (Hospital Outpatient), 14X 

(Hospital—Laboratory Services 

Provided to Nonpatients), or 76X 

(Clinic—Community Mental Health 

Center). Other bill types are not paid 

under the OPPS; therefore, these claims 

were not used to set OPPS payment. 

2. Claims that were bill types 12X, 

13X or 14X. Claims with bill types 12X 

and 13X are hospital outpatient claims. 

Claims with bill type 14X are laboratory 

specimen claims. 

3. Claims that were bill type 76X 

(CMHC). 

To convert charges on the claims to 

estimated cost, we multiplied the 

charges on each claim by the 

appropriate hospital-specific CCR 

associated with the revenue code for the 

charge as discussed in section II.A.1.c. 

of this final rule with comment period. 

We then flagged and excluded CAH 

claims (which are not paid under the 

OPPS) and claims from hospitals with 

invalid CCRs. The latter included claims 

from hospitals without a CCR; those 

from hospitals paid an all-inclusive rate; 

those from hospitals with obviously 

erroneous CCRs (greater than 90 or less 

than 0.0001); and those from hospitals 

with overall ancillary CCRs that were 

identified as outliers (that exceeded ± 3 

standard deviations from the geometric 

mean after removing error CCRs). In 

addition, we trimmed the CCRs at the 

cost center (that is, departmental) level 

by removing the CCRs for each cost 

center as outliers if they exceeded ± 3 

standard deviations from the geometric 

mean. We used a four-tiered hierarchy 

of cost center CCRs, which is the 

revenue code-to-cost center crosswalk, 

to match a cost center to every possible 

revenue code appearing in the 

outpatient claims that is relevant to 

OPPS services, with the top tier being 

the most common cost center and the 

last tier being the default CCR. If a 

hospital’s cost center CCR was deleted 

by trimming, we set the CCR for that 

cost center to ‘‘missing’’ so that another 

cost center CCR in the revenue center 

hierarchy could apply. If no other cost 

center CCR could apply to the revenue 

code on the claim, we used the 

hospital’s overall ancillary CCR for the 

revenue code in question as the default 

CCR. For example, if a visit was 

reported under the clinic revenue code 

but the hospital did not have a clinic 

cost center, we mapped the hospitalspecific overall ancillary CCR to the 

clinic revenue code. The revenue codeto-cost center crosswalk is available for 

inspection on the CMS Web site at: 

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

Medicare-Fee-for-Service-Payment/

HospitalOutpatientPPS/index.html. 

Revenue codes that we do not use in 

establishing relative costs or to model 

impacts are identified with an ‘‘N’’ in 

the revenue code-to-cost center 

crosswalk. 

We applied the CCRs as described 

above to claims with bill type 12X, 13X, 

or 14X, excluding all claims from CAHs 

and hospitals in Maryland, Guam, the 

U.S. Virgin Islands, American Samoa, 

and the Northern Mariana Islands and 

claims from all hospitals for which 

CCRs were flagged as invalid. 

We identified claims with condition 

code 41 as partial hospitalization 

services of hospitals and moved them to 

another file. We note that the separate 

file containing partial hospitalization 

claims is included in the files that are 

available for purchase as discussed 

above. 

We then excluded claims without a 

HCPCS code. We moved to another file 

claims that contained only influenza 

and pneumococcal pneumonia (PPV) 

vaccines. Influenza and PPV vaccines 

are paid at reasonable cost; therefore, 

these claims are not used to set OPPS 

rates. 

We next copied line-item costs for 

drugs, blood, and brachytherapy sources 

to a separate file (the lines stay on the 

claim, but are copied onto another file). 

No claims were deleted when we copied 

these lines onto another file. These lineitems are used to calculate a per unit 

arithmetic and geometric mean and 

median cost and a per day arithmetic 

and geometric mean and median cost for 

drugs and nonimplantable biologicals, 

therapeutic radiopharmaceutical agents, 

and brachytherapy sources, as well as 

other information used to set payment 

rates, such as a unit-to-day ratio for 

drugs. 

Prior to CY 2013, our payment policy 

for nonpass-through separately paid 

drugs and biologicals was based on a 

redistribution methodology that 

accounted for pharmacy overhead by 

allocating cost from packaged drugs to 

separately paid drugs. This 

methodology typically would have 

required us to reduce the cost associated 

with packaged coded and uncoded 

drugs in order to allocate that cost. 

However, for CY 2013, we paid for 

separately payable drugs and biologicals 

under the OPPS at ASP+6 percent, 

based upon the statutory default 

described in section 

1833(t)(14)(A)(iii)(II) of the Act. Under 

that policy, we did not redistribute the 

pharmacy overhead costs from packaged 

drugs to separately paid drugs. For the 

CY 2014 OPPS, we continued the CY 

2013 payment policy for separately 

payable drugs and biologicals, and we 

are continuing this payment policy for 

CY 2015. We refer readers to section 

V.B.3. of this final rule with comment 

period for a complete discussion of our 

CY 2015 final payment policy for 

separately paid drugs and biologicals. 

We then removed line-items that were 

not paid during claim processing, 

presumably for a line-item rejection or 

denial. The number of edits for valid 

OPPS payment in the Integrated 

Outpatient Code Editor (I/OCE) and 

elsewhere has grown significantly in the 

past few years, especially with the 

implementation of the full spectrum of 

National Correct Coding Initiative 

(NCCI) edits. To ensure that we are 

using valid claims that represent the 

cost of payable services to set payment 

rates, we removed line-items with an 

OPPS status indicator that were not paid 

during claims processing in the claim 

year, but have a status indicator of ‘‘S,’’ 

‘‘T,’’ and ‘‘V’’ in the prospective year’s 

payment system. This logic preserves 

charges for services that would not have 

been paid in the claim year but for 

which some estimate of cost is needed 

for the prospective year, such as 

services newly removed from the 

inpatient list for CY 2014 that were 

assigned status indicator ‘‘C’’ in the 

claim year. It also preserves charges for 

packaged services so that the costs can 

be included in the cost of the services 

with which they are reported, even if 

the CPT codes for the packaged services 

were not paid because the service is part 

of another service that was reported on 

the same claim or the code otherwise 

violates claims processing edits. 

For CY 2015, as we proposed, we are 

continuing the policy we implemented 

for CY 2013 and CY 2014 to exclude 

line-item data for pass-through drugs 

and biologicals (status indicator ‘‘G’’ for 

CY 2013) and nonpass-through drugs 

and biologicals (status indicator ‘‘K’’ for 

CY 2013) where the charges reported on 

the claim for the line were either denied 

or rejected during claims processing. 

Removing lines that were eligible for 

payment but were not paid ensures that 

we are using appropriate data. The trim 

avoids using cost data on lines that we 

believe were defective or invalid 

because those rejected or denied lines 

did not meet the Medicare requirements 

for payment. For example, edits may 

reject a line for a separately paid drug 

because the number of units billed 


tkelley on DSK3SPTVN1PROD with RULES2
66788 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

exceeded the number of units that 

would be reasonable and, therefore, is 

likely a billing error (for example, a line 

reporting 55 units of a drug for which 

5 units is known to be a fatal dose). As 

with our trimming in the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 74849) of line-items with 

a status indicator of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or 

‘‘X,’’ we believe that unpaid line-items 

represent services that are invalidly 

reported and, therefore, should not be 

used for ratesetting. We believe that 

removing lines with valid status 

indicators that were edited and not paid 

during claims processing increases the 

accuracy of the data used for ratesetting 

purposes. 

For the CY 2015 OPPS, as part of our 

continued packaging of clinical 

diagnostic laboratory tests, we also are 

applying the line item trim to these 

services if they did not receive payment 

in the claims year. Removing these lines 

ensures that, in establishing the CY 

2015 OPPS relative payment weights, 

we appropriately allocate the costs 

associated with packaging these 

services. 

b. Splitting Claims and Creation of 

‘‘Pseudo’’ Single Procedure Claims 

(1) Splitting Claims 

For the CY 2015 OPPS, we then split 

the remaining claims into five groups: 

single majors; multiple majors; single 

minors; multiple minors; and other 

claims. (Specific definitions of these 

groups are presented below.) We note 

that, under the proposed CY 2015 OPPS 

packaging policy (79 FR 40933), we 

proposed to delete status indicator ‘‘X’’ 

and revise the title and description of 

status indicator ‘‘Q1’’ to reflect that 

deletion, as discussed in sections II.A.3. 

and XI. of this final rule with comment 

period. We note that we also proposed 

to create status indicator ‘‘J1’’ to reflect 

the comprehensive APCs (C–APCs) 

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

final rule with comment period. For CY 

2015, we proposed to define major 

procedures as any HCPCS code having 

a status indicator of ‘‘J1,’’ ‘‘S,’’ ‘‘T,’’ or 

‘‘V,’’ define minor procedures as any 

code having a status indicator of ‘‘F,’’ 

‘‘G,’’ ‘‘H,’’ ‘‘K,’’ ‘‘L,’’ ‘‘R,’’ ‘‘U,’’ or ‘‘N,’’ 

and classify ‘‘other’’ procedures as any 

code having a status indicator other 

than one that we have classified as 

major or minor. For CY 2015, we 

proposed to continue to assign status 

indicator ‘‘R’’ to blood and blood 

products; status indicator ‘‘U’’ to 

brachytherapy sources; status indicator 

‘‘Q1’’ to all ‘‘STV-packaged codes;’’ 

status indicator ‘‘Q2’’ to all ‘‘T-packaged 

codes;’’ and status indicator ‘‘Q3’’ to all 

codes that may be paid through a 

composite APC based on compositespecific criteria or paid separately 

through single code APCs when the 

criteria are not met. 

As discussed in the CY 2009 OPPS/ 

ASC final rule with comment period (73 

FR 68709), we established status 

indicators ‘‘Q1,’’ ‘‘Q2,’’ and ‘‘Q3’’ to 

facilitate identification of the different 

categories of codes. As we proposed, we 

are treating these codes in the same 

manner for data purposes for CY 2015 

as we have treated them since CY 2008. 

Specifically, we are continuing to 

evaluate whether the criteria for 

separate payment of codes with status 

indicator ‘‘Q1’’ or ‘‘Q2’’ are met in 

determining whether they are treated as 

major or minor codes. Codes with status 

indicator ‘‘Q1’’ or ‘‘Q2’’ are carried 

through the data either with status 

indicator ‘‘N’’ as packaged or, if they 

meet the criteria for separate payment, 

they are given the status indicator of the 

APC to which they are assigned and are 

considered as ‘‘pseudo’’ single 

procedure claims for major codes. Codes 

assigned status indicator ‘‘Q3’’ are paid 

under individual APCs unless they 

occur in the combinations that qualify 

for payment as composite APCs and, 

therefore, they carry the status indicator 

of the individual APC to which they are 

assigned through the data process and 

are treated as major codes during both 

the split and ‘‘pseudo’’ single creation 

process. The calculation of the 

geometric mean costs for composite 

APCs from multiple procedure major 

claims is discussed in section II.A.2.f. of 

this final rule with comment period. 

Specifically, we divided the 

remaining claims into the following five 

groups: 

1. Single Procedure Major Claims: 

Claims with a single separately payable 

procedure (that is, status indicator ‘‘S,’’ 

‘‘T,’’ or ‘‘V’’ which includes codes with 

status indicator ‘‘Q3’’); claims with 

status indicator ‘‘J1,’’ which receive 

special processing for C–APCs, as 

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

final rule with comment period; claims 

with one unit of a status indicator ‘‘Q1’’ 

code (‘‘STV-packaged’’) where there was 

no code with status indicator ‘‘S,’’ ‘‘T,’’ 

or ‘‘V’’ on the same claim on the same 

date; or claims with one unit of a status 

indicator ‘‘Q2’’ code (‘‘T-packaged’’) 

where there was no code with a status 

indicator ‘‘T’’ on the same claim on the 

same date. 

2. Multiple Procedure Major Claims: 

Claims with more than one separately 

payable procedure (that is, status 

indicator ‘‘S,’’ ‘‘T,’’ or ‘‘V’’ which 

includes codes with status indicator 

‘‘Q3’’), or multiple units of one payable 

procedure. These claims include those 

codes with a status indicator ‘‘Q2’’ code 

(‘‘T-packaged’’) where there was no 

procedure with a status indicator ‘‘T’’ 

on the same claim on the same date of 

service but where there was another 

separately paid procedure on the same 

claim with the same date of service (that 

is, another code with status indicator 

‘‘S’’ or ‘‘V’’). We also include in this set 

claims that contained one unit of one 

code when the bilateral modifier was 

appended to the code and the code was 

conditionally or independently 

bilateral. In these cases, the claims 

represented more than one unit of the 

service described by the code, 

notwithstanding that only one unit was 

billed. 

3. Single Procedure Minor Claims: 

Claims with a single HCPCS code that 

was assigned status indicator ‘‘F,’’ ‘‘G,’’ 

‘‘H,’’ ‘‘K,’’ ‘‘L,’’ ‘‘R,’’ ‘‘U,’’ or ‘‘N’’ and 

not status indicator ‘‘Q1’’ (‘‘STVpackaged’’) or status indicator ‘‘Q2’’ (‘‘Tpackaged’’) code. 

4. Multiple Procedure Minor Claims: 

Claims with multiple HCPCS codes that 

are assigned status indicator ‘‘F,’’ ‘‘G,’’ 

‘‘H,’’ ‘‘K,’’ ‘‘L,’’ ‘‘R,’’ ‘‘U,’’ or ‘‘N;’’ claims 

that contain more than one code with 

status indicator ‘‘Q1’’ (‘‘STV-packaged’’) 

or more than one unit of a code with 

status indicator ‘‘Q1’’ but no codes with 

status indicator ‘‘S,’’ ‘‘T,’’ or ‘‘V’’ on the 

same date of service; or claims that 

contain more than one code with status 

indicator ‘‘Q2’’ (T-packaged), or ‘‘Q2’’ 

and ‘‘Q1,’’ or more than one unit of a 

code with status indicator ‘‘Q2’’ but no 

code with status indicator ‘‘T’’ on the 

same date of service. 

5. Non-OPPS Claims: Claims that 

contain no services payable under the 

OPPS (that is, all status indicators other 

than those listed for major or minor 

status). These claims were excluded 

from the files used for the OPPS. NonOPPS claims have codes paid under 

other fee schedules, for example, 

durable medical equipment, and do not 

contain a code for a separately payable 

or packaged OPPS service. Non-OPPS 

claims include claims for therapy 

services paid sometimes under the 

OPPS but billed, in these non-OPPS 

cases, with revenue codes indicating 

that the therapy services would be paid 

under the Medicare Physician Fee 

Schedule (MPFS). 

The claims listed in numbers 1, 2, 3, 

and 4 above are included in the data file 

that can be purchased as described 

above. Claims that contain codes to 

which we have assigned status 

indicators ‘‘Q1’’ (‘‘STV-packaged’’) and 

‘‘Q2’’ (‘‘T-packaged’’) appear in the data 

for the single major file, the multiple 

major file, and the multiple minor file 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66789 

used for ratesetting. Claims that contain 

codes to which we have assigned status 

indicator ‘‘Q3’’ (composite APC 

members) appear in both the data of the 

single and multiple major files used in 

this final rule with comment period, 

depending on the specific composite 

calculation. 

(2) Creation of ‘‘Pseudo’’ Single 

Procedure Claims 

To develop ‘‘pseudo’’ single 

procedure claims for this final rule with 

comment period, we examined both the 

multiple procedure major claims and 

the multiple procedure minor claims. 

We first examined the multiple major 

procedure claims for dates of service to 

determine if we could break them into 

‘‘pseudo’’ single procedure claims using 

the dates of service for all lines on the 

claim. If we could create claims with 

single major procedures by using dates 

of service, we created a single procedure 

claim record for each separately payable 

procedure on a different date of service 

(that is, a ‘‘pseudo’’ single procedure 

claim). 

As proposed, we also use the bypass 

codes listed in Addendum N to this 

final rule with comment period (which 

is available via the Internet on our Web 

site) and discussed in section II.A.1.b. of 

this final rule with comment period to 

remove separately payable procedures 

which we determined contained limited 

or no packaged costs or that were 

otherwise suitable for inclusion on the 

bypass list from a multiple procedure 

bill. As discussed above, we ignore the 

‘‘overlap bypass codes,’’ that is, those 

HCPCS codes that are both on the 

bypass list and are members of the 

multiple imaging composite APCs, in 

this initial assessment for ‘‘pseudo’’ 

single procedure claims. The final CY 

2015 ‘‘overlap bypass codes’’ are listed 

in Addendum N to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site). 

When one of the two separately payable 

procedures on a multiple procedure 

claim was on the bypass list, we split 

the claim into two ‘‘pseudo’’ single 

procedure claim records. The single 

procedure claim record that contained 

the bypass code did not retain packaged 

services. The single procedure claim 

record that contained the other 

separately payable procedure (but no 

bypass code) retained the packaged 

revenue code charges and the packaged 

HCPCS code charges. We also removed 

lines that contained multiple units of 

codes on the bypass list and treated 

them as ‘‘pseudo’’ single procedure 

claims by dividing the cost for the 

multiple units by the number of units 

on the line. If one unit of a single, 

separately payable procedure code 

remained on the claim after removal of 

the multiple units of the bypass code, 

we created a ‘‘pseudo’’ single procedure 

claim from that residual claim record, 

which retained the costs of packaged 

revenue codes and packaged HCPCS 

codes. This enabled us to use claims 

that would otherwise be multiple 

procedure claims and could not be used. 

We then assessed the claims to 

determine if the criteria for the multiple 

imaging composite APCs, discussed in 

section II.A.2.f.(5) of this final rule with 

comment period, were met. If the 

criteria for the imaging composite APCs 

were met, we created a ‘‘single session’’ 

claim for the applicable imaging 

composite service and determined 

whether we could use the claim in 

ratesetting. For HCPCS codes that are 

both conditionally packaged and are 

members of a multiple imaging 

composite APC, we first assessed 

whether the code would be packaged 

and, if so, the code ceased to be 

available for further assessment as part 

of the composite APC. Because the 

packaged code would not be a 

separately payable procedure, we 

considered it to be unavailable for use 

in setting the composite APC costs on 

which the CY 2015 OPPS relative 

payment weights are based. Having 

identified ‘‘single session’’ claims for 

the imaging composite APCs, we 

reassessed the claim to determine if, 

after removal of all lines for bypass 

codes, including the ‘‘overlap bypass 

codes,’’ a single unit of a single 

separately payable code remained on 

the claim. If so, we attributed the 

packaged costs on the claim to the 

single unit of the single remaining 

separately payable code other than the 

bypass code to create a ‘‘pseudo’’ single 

procedure claim. We also identified 

line-items of overlap bypass codes as a 

‘‘pseudo’’ single procedure claim. This 

allowed us to use more claims data for 

ratesetting purposes. 

As we proposed, we also examined 

the multiple procedure minor claims to 

determine whether we could create 

‘‘pseudo’’ single procedure claims. 

Specifically, where the claim contained 

multiple codes with status indicator 

‘‘Q1’’ (‘‘STV-packaged’’) on the same 

date of service or contained multiple 

units of a single code with status 

indicator ‘‘Q1,’’ we selected the status 

indicator ‘‘Q1’’ HCPCS code that had 

the highest CY 2014 relative payment 

weight, and set the units to one on that 

HCPCS code to reflect our policy of 

paying only one unit of a code with a 

status indicator of ‘‘Q1.’’ We then 

packaged all costs for the following into 

a single cost for the ‘‘Q1’’ HCPCS code 

that had the highest CY 2014 relative 

payment weight to create a ‘‘pseudo’’ 

single procedure claim for that code: 

additional units of the status indicator 

‘‘Q1’’ HCPCS code with the highest CY 

2014 relative payment weight; other 

codes with status indicator ‘‘Q1;’’ and 

all other packaged HCPCS codes and 

packaged revenue code costs. We 

changed the status indicator for the 

selected code from the data status 

indicator of ‘‘N’’ to the status indicator 

of the APC to which the selected 

procedure was assigned for further data 

processing and considered this claim as 

a major procedure claim. We used this 

claim in the calculation of the APC 

geometric mean cost for the status 

indicator ‘‘Q1’’ HCPCS code. 

Similarly, if a multiple procedure 

minor claim contained multiple codes 

with status indicator ‘‘Q2’’ (‘‘Tpackaged’’) or multiple units of a single 

code with status indicator ‘‘Q2,’’ we 

selected the status indicator ‘‘Q2’’ 

HCPCS code that had the highest CY 

2014 relative payment weight and set 

the units to one on that HCPCS code to 

reflect our policy of paying only one 

unit of a code with a status indicator of 

‘‘Q2.’’ We then packaged all costs for the 

following into a single cost for the ‘‘Q2’’ 

HCPCS code that had the highest CY 

2014 relative payment weight to create 

a ‘‘pseudo’’ single procedure claim for 

that code: additional units of the status 

indicator ‘‘Q2’’ HCPCS code with the 

highest CY 2014 relative payment 

weight; other codes with status 

indicator ‘‘Q2’’; and other packaged 

HCPCS codes and packaged revenue 

code costs. We changed the status 

indicator for the selected code from a 

data status indicator of ‘‘N’’ to the status 

indicator of the APC to which the 

selected code was assigned, and we 

considered this claim as a major 

procedure claim. 

If a multiple procedure minor claim 

contained multiple codes with status 

indicator ‘‘Q2’’ (‘‘T-packaged’’) and 

status indicator ‘‘Q1’’ (‘‘STVpackaged’’), we selected the T-packaged 

status indicator ‘‘Q2’’ HCPCS code that 

had the highest relative payment weight 

for CY 2014 and set the units to one on 

that HCPCS code to reflect our policy of 

paying only one unit of a code with a 

status indicator of ‘‘Q2.’’ We then 

packaged all costs for the following into 

a single cost for the selected (‘‘Tpackaged’’) HCPCS code to create a 

‘‘pseudo’’ single procedure claim for 

that code: additional units of the status 

indicator ‘‘Q2’’ HCPCS code with the 

highest CY 2014 relative payment 

weight; other codes with status 

indicator ‘‘Q2;’’ codes with status 

indicator ‘‘Q1’’ (‘‘STV-packaged’’); and 


tkelley on DSK3SPTVN1PROD with RULES2
66790 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

other packaged HCPCS codes and 

packaged revenue code costs. We 

selected status indicator ‘‘Q2’’ HCPCS 

codes instead of ‘‘Q1’’ HCPCS codes 

because ‘‘Q2’’ HCPCS codes have higher 

CY 2014 relative payment weights. If a 

status indicator ‘‘Q1’’ HCPCS code had 

a higher CY 2014 relative payment 

weight, it became the primary code for 

the simulated single bill process. We 

changed the status indicator for the 

selected status indicator ‘‘Q2’’ (‘‘Tpackaged’’) code from a data status 

indicator of ‘‘N’’ to the status indicator 

of the APC to which the selected code 

was assigned and we considered this 

claim as a major procedure claim. 

We then applied our process for 

creating ‘‘pseudo’’ single procedure 

claims to the conditionally packaged 

codes that do not meet the criteria for 

packaging, which enabled us to create 

single procedure claims from them, if 

they met the criteria for single 

procedure claims. Conditionally 

packaged codes are identified using 

status indicators ‘‘Q1’’ and ‘‘Q2,’’ and 

are described in section XI.A. of this 

final rule with comment period. 

Lastly, we excluded those claims that 

we were not able to convert to single 

procedure claims even after applying all 

of the techniques for creation of 

‘‘pseudo’’ single procedure claims to 

multiple procedure major claims and to 

multiple procedure minor claims. As 

has been our practice in recent years, we 

also excluded claims that contained 

codes that were viewed as 

independently or conditionally bilateral 

and that contained the bilateral modifier 

(Modifier 50 (Bilateral procedure)) 

because the line-item cost for the code 

represented the cost of two units of the 

procedure, notwithstanding that 

hospitals billed the code with a unit of 

one. 

We proposed to continue to apply the 

methodology described above for the 

purpose of creating ‘‘pseudo’’ single 

procedure claims for the CY 2015 OPPS. 

We did not receive any public 

comments on this proposal. Therefore, 

we are finalizing our proposal to 

continue to apply the methodology 

described above for the purpose of 

creating ‘‘pseudo’’ single procedure 

claims for the CY 2015 OPPS. 

c. Completion of Claim Records and 

Geometric Mean Cost Calculations 

(1) General Process 

We then packaged the costs of 

packaged HCPCS codes (codes with 

status indicator ‘‘N’’ listed in 

Addendum B to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site) and 

the costs of those lines for codes with 

status indicator ‘‘Q1’’ or ‘‘Q2’’ when 

they are not separately paid), and the 

costs of the services reported under 

packaged revenue codes in Table 4 

below that appeared on the claim 

without a HCPCS code into the cost of 

the single major procedure remaining on 

the claim. For a more complete 

discussion of our final CY 2015 OPPS 

packaging policy, we refer readers to 

section II.A.3. of this final rule with 

comment period. 

As noted in the CY 2008 OPPS/ASC 

final rule with comment period (72 FR 

66606), for the CY 2008 OPPS, we 

adopted an APC Panel recommendation 

that CMS should review the final list of 

packaged revenue codes for consistency 

with OPPS policy and ensure that future 

versions of the I/OCE edit accordingly. 

As we have in the past, and as we 

proposed, we are continuing to compare 

the final list of packaged revenue codes 

that we adopt for CY 2015 to the 

revenue codes that the I/OCE will 

package for CY 2015 to ensure 

consistency. 

In the CY 2009 OPPS/ASC final rule 

with comment period (73 FR 68531), we 

replaced the NUBC standard 

abbreviations for the revenue codes 

listed in Table 2 of the CY 2009 OPPS/ 

ASC proposed rule with the most 

current NUBC descriptions of the 

revenue code categories and 

subcategories to better articulate the 

meanings of the revenue codes without 

changing the list of revenue codes. In 

the CY 2010 OPPS/ASC final rule with 

comment period (74 FR 60362 through 

60363), we finalized changes to the 

packaged revenue code list based on our 

examination of the updated NUBC 

codes and public comment on the CY 

2010 proposed list of packaged revenue 

codes. 

For CY 2015, as we did for CY 2014, 

we reviewed the changes to revenue 

codes that were effective during CY 

2013 for purposes of determining the 

charges reported with revenue codes but 

without HCPCS codes that we proposed 

to package for CY 2015. We believe that 

the charges reported under the revenue 

codes listed in Table 4 of the proposed 

rule continue to reflect ancillary and 

supportive services for which hospitals 

report charges without HCPCS codes. 

Therefore, for CY 2015, we proposed to 

continue to package the costs that we 

derive from the charges reported 

without HCPCS codes under the 

revenue codes displayed in Table 4 of 

the proposed rule for purposes of 

calculating the geometric mean costs on 

which the final CY 2015 OPPS/ASC 

payment rates are based. 

Comment: One commenter 

recommended that CMS include, in the 

list of packaged revenue codes, revenue 

codes 0331 (Radiology—Therapeutic 

and/or Chemotherapy Administration; 

Chemotherapy Admin—Injected), 0332 

(Radiology—Therapeutic and/or 

Chemotherapy Administration; 

Chemotherapy Admin—Oral), 0335 

(Radiology—Therapeutic and/or 

Chemotherapy Administration; 

Chemotherapy Admin—IV), 0360 

(Operating Room Services; General 

Classification), 0361 (Operating Room 

Services; Minor Surgery), 0362 

(Operating Room Services; Organ 

Transplant—Other than Kidney), 0369 

(Operating Room Services; Other OR 

Services), 0410 (Respiratory Services; 

General Classification), 0412 

(Respiratory Services; Inhalation 

Services), 0413 (Respiratory Services; 

Hyperbaric Oxygen Therapy), 0419 

(Respiratory Services; Other Respiratory 

Services), 0722 (Labor Room/Delivery; 

Delivery Room), 0724 (Labor Room/

Delivery; Birthing Center), 0729 (Labor 

Room/Delivery; Other Labor Room/

Delivery), 0760 (Specialty Services; 

General Classification), 0761 (Specialty 

Services; Treatment Room), 0762 

(Specialty Services; Observation), 0769 

(Specialty Services; Other Specialty 

Services), 0770 (Preventive Care 

Services; General Classification). The 

commenter stated that charge data on 

claim lines with these revenue codes is 

currently included in OPPS modeling, 

and including them when they appear 

without a HCPCS would more 

accurately capture the costs from these 

lines. 

Response: On the OPPS revenue codeto-cost center modeling crosswalk that 

we make available online, we indicate 

which revenue codes we believe are 

appropriately used for OPPS ratesetting 

purposes. As the commenter noted, 

coded lines billed using these specific 

revenue codes are already currently 

included for ratesetting purposes. While 

we note that including the packaged 

costs associated with uncoded lines 

billed with these revenue codes has a 

minimal impact on the relative payment 

weights, we believe that including them 

when establishing the OPPS relative 

payment weights would better estimate 

the full range of costs for services to 

which these lines are packaged. 

Including the uncoded lines and 

capturing the costs billed using these 

revenue codes would generally be 

appropriate in establishing the OPPS 

relative payment weights and our 

ratesetting methodology. Therefore, we 

have updated Table 4 which appeared 

in the proposed rule (79 FR 40935 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66791 

through 40936) (also Table 4 in this 

final rule with comment period) to 

reflect the addition of these packaged 

revenue codes and incorporated these 

changes into our cost modeling logic. 

We will also ensure that this list 

corresponds with that used for I/OCE 

purposes. 

After consideration of the public 

comments we received, we are 

finalizing the proposed packaged 

revenue codes for CY 2015, which are 

identified in Table 4 below, with 

modification to include the revenue 

codes described earlier in this section. 

TABLE 4—CY 2015 PACKAGED REVENUE CODES

Revenue code Description 

250 ............................... Pharmacy; General Classification. 

251 ............................... Pharmacy; Generic Drugs. 

252 ............................... Pharmacy; Non-Generic Drugs. 

254 ............................... Pharmacy; Drugs Incident to Other Diagnostic Services. 

255 ............................... Pharmacy; Drugs Incident to Radiology. 

257 ............................... Pharmacy; Non-Prescription. 

258 ............................... Pharmacy; IV Solutions. 

259 ............................... Pharmacy; Other Pharmacy. 

260 ............................... IV Therapy; General Classification. 

261 ............................... IV Therapy; Infusion Pump. 

262 ............................... IV Therapy; IV Therapy/Pharmacy Svcs. 

263 ............................... IV Therapy; IV Therapy/Drug/Supply Delivery. 

264 ............................... IV Therapy; IV Therapy/Supplies. 

269 ............................... IV Therapy; Other IV Therapy. 

270 ............................... Medical/Surgical Supplies and Devices; General Classification. 

271 ............................... Medical/Surgical Supplies and Devices; Non-sterile Supply. 

272 ............................... Medical/Surgical Supplies and Devices; Sterile Supply. 

275 ............................... Medical/Surgical Supplies and Devices; Pacemaker. 

276 ............................... Medical/Surgical Supplies and Devices; Intraocular Lens. 

278 ............................... Medical/Surgical Supplies and Devices; Other Implants. 

279 ............................... Medical/Surgical Supplies and Devices; Other Supplies/Devices. 

280 ............................... Oncology; General Classification. 

289 ............................... Oncology; Other Oncology. 

331 ............................... Radiology—Therapeutic and/or Chemotherapy Administration; Chemotherapy Admin—Injected. 

332 ............................... Radiology—Therapeutic and/or Chemotherapy Administration; Chemotherapy Admin—Oral. 

335 ............................... Radiology—Therapeutic and/or Chemotherapy Administration; Chemotherapy Admin—IV. 

343 ............................... Nuclear Medicine; Diagnostic Radiopharmaceuticals. 

344 ............................... Nuclear Medicine; Therapeutic Radiopharmaceuticals. 

360 ............................... Operating Room Services; General Classification. 

361 ............................... Operating Room Services; Minor Surgery. 

362 ............................... Operating Room Services; Organ Transplant—Other than Kidney. 

369 ............................... Operating Room Services; Other OR Services. 

370 ............................... Anesthesia; General Classification. 

371 ............................... Anesthesia; Anesthesia Incident to Radiology. 

372 ............................... Anesthesia; Anesthesia Incident to Other DX Services. 

379 ............................... Anesthesia; Other Anesthesia. 

390 ............................... Administration, Processing and Storage for Blood and Blood Components; General Classification. 

392 ............................... Administration, Processing and Storage for Blood and Blood Components; Processing and Storage. 

399 ............................... Administration, Processing and Storage for Blood and Blood Components; Other Blood Handling. 

410 ............................... Respiratory Services; General Classification. 

412 ............................... Respiratory Services; Inhalation Services. 

413 ............................... Respiratory Services; Hyperbaric Oxygen Therapy. 

419 ............................... Respiratory Services; Other Respiratory Services. 

621 ............................... Medical Surgical Supplies—Extension of 027X; Supplies Incident to Radiology. 

622 ............................... Medical Surgical Supplies—Extension of 027X; Supplies Incident to Other DX Services. 

623 ............................... Medical Supplies—Extension of 027X, Surgical Dressings. 

624 ............................... Medical Surgical Supplies—Extension of 027X; FDA Investigational Devices. 

630 ............................... Pharmacy—Extension of 025X; Reserved. 

631 ............................... Pharmacy—Extension of 025X; Single Source Drug. 

632 ............................... Pharmacy—Extension of 025X; Multiple Source Drug. 

633 ............................... Pharmacy—Extension of 025X; Restrictive Prescription. 

681 ............................... Trauma Response; Level I Trauma. 

682 ............................... Trauma Response; Level II Trauma. 

683 ............................... Trauma Response; Level III Trauma. 

684 ............................... Trauma Response; Level IV Trauma. 

689 ............................... Trauma Response; Other. 

700 ............................... Cast Room; General Classification. 

710 ............................... Recovery Room; General Classification. 

720 ............................... Labor Room/Delivery; General Classification. 

721 ............................... Labor Room/Delivery; Labor. 

722 ............................... Labor Room/Delivery; Delivery Room. 

724 ............................... Labor Room/Delivery; Birthing Center. 

729 ............................... Labor Room/Delivery; Other Labor Room/Delivery. 

732 ............................... EKG/ECG (Electrocardiogram); Telemetry. 

760 ............................... Specialty Services; General Classification. 

761 ............................... Specialty Services; Treatment Room. 


tkelley on DSK3SPTVN1PROD with RULES2
66792 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

TABLE 4—CY 2015 PACKAGED REVENUE CODES—Continued 

Revenue code Description 

762 ............................... Specialty services; Observation Hours. 

769 ............................... Specialty Services; Other Specialty Services. 

770 ............................... Preventive Care Services; General Classification. 

801 ............................... Inpatient Renal Dialysis; Inpatient Hemodialysis. 

802 ............................... Inpatient Renal Dialysis; Inpatient Peritoneal Dialysis (Non-CAPD). 

803 ............................... Inpatient Renal Dialysis; Inpatient Continuous Ambulatory Peritoneal Dialysis (CAPD). 

804 ............................... Inpatient Renal Dialysis; Inpatient Continuous Cycling Peritoneal Dialysis (CCPD). 

809 ............................... Inpatient Renal Dialysis; Other Inpatient Dialysis. 

810 ............................... Acquisition of Body Components; General Classification. 

819 ............................... Acquisition of Body Components; Other Donor. 

821 ............................... Hemodialysis-Outpatient or Home; Hemodialysis Composite or Other Rate. 

824 ............................... Hemodialysis-Outpatient or Home; Maintenance—100%. 

825 ............................... Hemodialysis-Outpatient or Home; Support Services. 

829 ............................... Hemodialysis-Outpatient or Home; Other OP Hemodialysis. 

942 ............................... Other Therapeutic Services (also see 095X, an extension of 094x); Education/Training. 

943 ............................... Other Therapeutic Services (also see 095X, an extension of 094X), Cardiac Rehabilitation. 

948 ............................... Other Therapeutic Services (also see 095X, an extension of 094X), Pulmonary Rehabilitation. 

In accordance with our longstanding 

policy, we proposed to continue to 

exclude: (1) Claims that had zero costs 

after summing all costs on the claim; 

and (2) claims containing packaging flag 

number 3. Effective for services 

furnished after July 1, 2014, the I/OCE 

assigned packaging flag number 3 to 

claims on which hospitals submitted 

token charges less than $1.01 for a 

service with status indicator ‘‘S’’ or ‘‘T’’ 

(a major separately payable service 

under the OPPS) for which the Medicare 

Administrative Contractor (MAC) was 

required to allocate the sum of charges 

for services with a status indicator 

equaling ‘‘S’’ or ‘‘T’’ based on the 

relative payment weight of the APC to 

which each code was assigned. We do 

not believe that these charges, which 

were token charges as submitted by the 

hospital, are valid reflections of hospital 

resources. Therefore, we deleted these 

claims. We also deleted claims for 

which the charges equaled the revenue 

center payment (that is, the Medicare 

payment) on the assumption that, where 

the charge equaled the payment, to 

apply a CCR to the charge would not 

yield a valid estimate of relative 

provider cost. We proposed to continue 

these processes for the CY 2015 OPPS. 

For the remaining claims, we 

proposed to then standardize 60 percent 

of the costs of the claim (which we have 

previously determined to be the laborrelated portion) for geographic 

differences in labor input costs. We 

made this adjustment by determining 

the wage index that applied to the 

hospital that furnished the service and 

dividing the cost for the separately paid 

HCPCS code furnished by the hospital 

by that wage index. The claims 

accounting that we provide for the 

proposed rule and final rule with 

comment period contains the formula 

we use to standardize the total cost for 

the effects of the wage index. As has 

been our policy since the inception of 

the OPPS, we proposed to use the prereclassified wage indices for 

standardization because we believe that 

they better reflect the true costs of items 

and services in the area in which the 

hospital is located than the postreclassification wage indices and, 

therefore, would result in the most 

accurate unadjusted geometric mean 

costs. We proposed to use these prereclassified wage indices for 

standardization using the new OMB 

labor market area delineations described 

in section II.C. of this final rule with 

comment period. 

In accordance with our longstanding 

practice, we also proposed to exclude 

single and ‘‘pseudo’’ single procedure 

claims for which the total cost on the 

claim was outside 3 standard deviations 

from the geometric mean of units for 

each HCPCS code on the bypass list 

(because, as discussed above, we used 

claims that contain multiple units of the 

bypass codes). 

After removing claims for hospitals 

with error CCRs, claims without HCPCS 

codes, claims for immunizations not 

covered under the OPPS, and claims for 

services not paid under the OPPS, 

approximately 118 million claims were 

left. Using these approximately 118 

million claims, we created 

approximately 100 million single and 

‘‘pseudo’’ single procedure claims, of 

which we used approximately 51 

million single bills (after trimming out 

approximately 1 million claims as 

discussed in section II.A.1.a. of this 

final rule with comment period) in the 

CY 2015 geometric mean cost 

development and ratesetting. 

As discussed above, the OPPS has 

historically developed the relative 

weights on which APC payments are 

based using APC median costs. For the 

CY 2013 OPPS and the CY 2014 OPPS, 

we calculated the APC relative payment 

weights using geometric mean costs, 

and we are continuing this practice for 

CY 2015. Therefore, the following 

discussion of the 2 times rule violation 

and the development of the relative 

payment weight refers to geometric 

means. For more detail about the CY 

2015 OPPS/ASC policy to calculate 

relative payment weights based on 

geometric means, we refer readers to 

section II.A.2.f. of this final rule with 

comment period. 

We proposed to use these claims to 

calculate the CY 2015 geometric mean 

costs for each separately payable HCPCS 

code and each APC. The comparison of 

HCPCS code-specific and APC 

geometric mean costs determines the 

applicability of the 2 times rule. Section 

1833(t)(2) of the Act provides that, 

subject to certain exceptions, the items 

and services within an APC group shall 

not be treated as comparable with 

respect to the use of resources if the 

highest median cost (or mean cost, if 

elected by the Secretary) for an item or 

service within the group is more than 2 

times greater than the lowest median 

cost (or mean cost, if so elected) for an 

item or service within the same group 

(the 2 times rule). While we have 

historically applied the 2 times rule 

based on median costs, in the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68270), as part of the CY 

2013 policy to develop the OPPS 

relative payment weights based on 

geometric mean costs, we also applied 

the 2 times rule based on geometric 

mean costs. For the CY 2015 OPPS, we 

are continuing to develop the APC 

relative payment weights based on 

geometric mean costs. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66793 

We note that, for purposes of 

identifying significant HCPCS codes for 

examination in the 2 times rule, we 

consider codes that have more than 

1,000 single major claims or codes that 

have both greater than 99 single major 

claims and contribute at least 2 percent 

of the single major claims used to 

establish the APC geometric mean cost 

to be significant. This longstanding 

definition of when a HCPCS code is 

significant for purposes of the 2 times 

rule was selected because we believe 

that a subset of 1,000 claims is 

negligible within the set of 

approximately 100 million single 

procedure or single session claims we 

use for establishing geometric mean 

costs. Similarly, a HCPCS code for 

which there are fewer than 99 single 

bills and which comprises less than 2 

percent of the single major claims 

within an APC will have a negligible 

impact on the APC geometric mean. We 

note that this method of identifying 

significant HCPCS codes within an APC 

for purposes of the 2 times rule was 

used in prior years under the medianbased cost methodology. Under our CY 

2015 policy to continue to base the 

relative payment weights on geometric 

mean costs, we believe that this same 

consideration for identifying significant 

HCPCS codes should apply because the 

principles are consistent with their use 

in the median-based cost methodology. 

Unlisted codes are not used in 

establishing the percent of claims 

contributing to the APC, nor are their 

costs used in the calculation of the APC 

geometric mean. Finally, we reviewed 

the geometric mean costs for the 

services for which we pay separately 

under this final rule with comment 

period, and we reassigned HCPCS codes 

to different APCs where it was 

necessary to ensure clinical and 

resource homogeneity within the APCs. 

The APC geometric means were 

recalculated after we reassigned the 

affected HCPCS codes. Both the HCPCS 

code-specific geometric means and the 

APC geometric means were weighted to 

account for the inclusion of multiple 

units of the bypass codes in the creation 

of ‘‘pseudo’’ single procedure claims. 

We did not receive any public 

comments on our proposed CY 2015 

methodology for calculating the 

geometric mean costs upon which the 

CY 2015 OPPS payment rates are based, 

and therefore are finalizing our 

methodology as proposed. 

As we discuss in sections II.A.2.d., 

II.A.2.f., and VIII.B. of this final rule 

with comment period, in some cases, 

APC geometric mean costs are 

calculated using variations of the 

process outlined above. Specifically, 

section II.A.2.d. of this final rule with 

comment period addresses the 

calculation of single APC criteria-based 

geometric mean costs. Section II.A.2.f. 

of this final rule with comment period 

discusses the calculation of composite 

APC criteria-based geometric mean 

costs. Section VIII.B. of this final rule 

with comment period addresses the 

methodology for calculating the 

geometric mean costs for partial 

hospitalization services. 

(2) Recommendations of the Panel 

Regarding Data Development 

At the August 2014 meeting of the 

Panel, we discussed changes in APC 

geometric mean cost between the CY 

2015 Proposed OPPS and the CY 2014 

Final OPPS, the CY 2015 proposed 

comprehensive APC policy, and a study 

examining the packaged codes most 

commonly appearing with clinic visit 

codes. 

At the August 2014 Panel meeting, the 

Panel made a number of 

recommendations related to the data 

process. The Panel’s data-related 

recommendations and our responses 

follow. 

Recommendation: The Panel 

recommends that the work of the Data 

Subcommittee continue. 

CMS Response: We are accepting this 

recommendation. 

Recommendation: The Panel 

recommends that Jim Nelson serve as 

the Chair of the Data Subcommittee. 

CMS Response: We are accepting this 

recommendation. 

Recommendation: The Panel 

recommends that CMS provide the 

Panel with a list of APCs for which costs 

fluctuate by more than 20 percent 

relative to the APCs in the most recent 

prior rulemaking cycle. 

CMS Response: We are accepting this 

recommendation and will provide this 

information regarding fluctuating APC 

costs at the next HOP Panel meeting. 

d. Calculation of Single Procedure APC 

Criteria-Based Costs 

(1) Device-Dependent APCs 

Historically, device-dependent APCs 

are populated by HCPCS codes that 

usually, but not always, require that a 

device be implanted or used to perform 

the procedure. The standard 

methodology for calculating devicedependent APC costs utilizes claims 

data that generally reflect the full cost 

of the required device by using only the 

subset of single procedure claims that 

pass the procedure-to-device and 

device-to-procedure edits; do not 

contain token charges (less than $1.01) 

for devices; and, until January 1, 2014, 

did not contain the ‘‘FB’’ modifier 

signifying that the device was furnished 

without cost to the provider, or where 

a full credit was received; and do not 

contain the ‘‘FC’’ modifier signifying 

that the hospital received partial credit 

for the device. For a full history of how 

we have calculated payment rates for 

device-dependent APCs in previous 

years and a detailed discussion of how 

we developed the standard devicedependent APC ratesetting 

methodology, we refer readers to the CY 

2008 OPPS/ASC final rule with 

comment period (72 FR 66739 through 

66742). Overviews of the procedure-todevice edits and device-to-procedure 

edits used in ratesetting for devicedependent APCs are available in the CY 

2005 OPPS final rule with comment 

period (69 FR 65761 through 65763) and 

the CY 2007 OPPS/ASC final rule with 

comment period (71 FR 68070 through 

68071). 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 74857 

through 74859), we finalized a policy to 

define 29 device-dependent APCs as 

single complete services and to assign 

them to comprehensive APCs (C–APCs) 

that provide all-inclusive payments for 

those services, but we delayed 

implementation of this policy until CY 

2015 (78 FR 74862). This policy is a 

further step toward improving the 

prospective nature of our payments for 

these services where the cost of the 

device is relatively high compared to 

the other costs that contribute to the 

cost of the service. Table 5 of the CY 

2014 OPPS/ASC final rule with 

comment period provided a list of the 

39 APCs recognized as devicedependent APCs and identified the 29 

device-dependent APCs that would 

have been converted to C–APCs. In 

addition, in the CY 2014 OPPS/ASC 

final rule with comment period, we 

finalized a policy for the treatment of 

the remaining 10 device-dependent 

APCs that applied our standard APC 

ratesetting methodology to calculate the 

CY 2014 payment rates for these APCs, 

but implementation of the entire policy 

was delayed until CY 2015. 

In the CY 2014 OPPS/ASC proposed 

rule (78 FR 43556 through 43557) and 

in the CY 2015 OPPS/ASC proposed 

rule (79 FR 40937 through 40938), for 

CY 2015, we proposed to no longer 

implement procedure-to-device edits 

and device-to-procedure edits for any 

APC. Under this proposed policy, which 

was discussed but not finalized in the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 74857 through 

74858), hospitals are still expected to 

adhere to the guidelines of correct 

coding and append the correct device 


tkelley on DSK3SPTVN1PROD with RULES2
66794 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

code to the claim, when applicable. 

However, claims would no longer be 

returned to providers when specific 

procedure and device code pairings do 

not appear on a claim. As we stated in 

both the CY 2014 OPPS/ASC proposed 

rule (78 FR 43556 through 43557) and 

the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 74857 through 

74858), we believe that this is 

appropriate because of hospitals’ 

multiyear experience in coding and 

reporting charges for medical device 

implantation procedures. We also 

believe that the C–APCs will reliably 

reflect the cost of the devices as the C– 

APCs will include all costs on the claim 

(except for the few categories of items 

and services that are excluded from the 

comprehensive APC policy). Therefore, 

we do not believe that the burden 

imposed upon hospitals to adhere to the 

procedure-to-device edits and device-toprocedure edits and the burden imposed 

upon the Medicare program to maintain 

those edits continue to be necessary. As 

with all other items and services 

recognized under the OPPS, we expect 

hospitals to code and report their costs 

appropriately, regardless of whether 

there are claims processing edits in 

place. 

The CY 2015 comprehensive APC 

policy that we proposed in the CY 2015 

OPPS/ASC proposed rule consolidates 

and restructures the 39 current devicedependent APCs into 26 (of the total 28) 

proposed C–APCs, which were listed in 

Table 5 of the proposed rule. The final 

CY 2015 comprehensive APC policy is 

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

final rule with comment period. As a 

result of the final CY 2015 

comprehensive APC policy, only 3 of 

the current 39 device-dependent APCs 

will remain in the CY 2015 OPPS 

because all other device-dependent 

APCs are being converted to C–APCs. 

All of the remaining device-dependent 

APCs were either deleted due to the 

consolidation and restructuring of these 

APCs or they were converted to C– 

APCs. In conjunction with the 

conversion of almost all of the 39 

device-dependent APCs into C–APCs, 

and as discussed in the CY 2014 OPPS/ 

ASC final rule with comment period (78 

FR 74857 through 74858), in the CY 

2015 OPPS/ASC proposed rule, we 

proposed to no longer use procedure-todevice edits and device-to-procedure 

edits for any APC because we continue 

to believe that the elimination of deviceto-procedure edits and procedure-todevice edits is appropriate considering 

the experience that hospitals now have 

in coding and reporting these claims 

fully and, for the more costly devices, 

the C–APCs will reliably reflect the cost 

of the device if it is included anywhere 

on the claim. 

While we believe that device-toprocedure edits and procedure-to-device 

edits are no longer necessary, we are 

sensitive to the concerns raised by 

stakeholders in the past about the costs 

of devices being reported and captured. 

In light of these concerns, in the CY 

2015 OPPS/ASC proposed rule (79 FR 

40937 through 40938), we proposed to 

create claims processing edits that 

require any of the device codes used in 

the previous device-to-procedure edits 

for device-dependent APCs to be 

present on the claim whenever a 

procedure code assigned to any of the 

former device-dependent APCs (most of 

which are being converted to C–APCs) 

is reported on the claim to ensure that 

device costs are captured by hospitals. 

We stated that we expect that hospitals 

would use an appropriate device code 

consistent with correct coding in order 

to ensure that device costs are always 

reported on the claim, so that costs are 

appropriately captured in claims that 

CMS uses for ratesetting. 

Comment: The majority of 

commenters requested that CMS 

maintain device-to-procedure and 

procedure-to-device edits in order to 

ensure continued complete and accurate 

cost reporting by hospitals. One 

commenter recommended that CMS 

adopt its proposal to require any 

appropriate device code used in the 

previous device-to-procedure edits to be 

present on the claim, if CMS 

discontinues the current edits and 

educates hospitals on the continued 

need to report the actual device used in 

the procedure for accurate ratesetting. 

One commenter was cautiously 

optimistic that CMS’ proposal requiring 

any appropriate device code used in the 

previous device-to-procedure edits to be 

present on the claim for most 

comprehensive APCs could promote 

complete reporting in a potentially less 

prescriptive way for hospitals. Another 

commenter believed CMS’ proposed 

policy change would result in 

‘‘ridiculous’’ combinations of device 

and procedure codes for some services 

and thus would result in invalid mean 

costs for the procedures. Other 

commenters recommended that CMS 

modify its proposed policy to 

incorporate edit logic that will allow 

exceptions for comprehensive APCs that 

do not require device codes to be 

reported with every assigned procedural 

code. One commenter recommended 

that the claims edits be implemented 

initially on a 1-year trial/interim basis. 

Other commenters suggested that CMS 

eliminate the device claims processing 

edits altogether. 

Response: We continue to believe that 

the elimination of device-to-procedure 

edits and procedure-to-device edits is 

appropriate due to the experience 

hospitals now have in coding and 

reporting these claims fully. More 

specifically, for the more costly devices, 

we believe the C–APCs will reliably 

reflect the cost of the device if charges 

for the device are included anywhere on 

the claim. We remind commenters that, 

under our proposed policy, hospitals 

would still be expected to adhere to the 

guidelines of correct coding and append 

the correct device code to the claim 

when applicable. We also remind 

commenters that, as with all other items 

and services recognized under the 

OPPS, we expect hospitals to code and 

report their costs appropriately, 

regardless of whether there are claims 

processing edits in place. We do not 

believe that our proposed policy will 

result in ridiculous combinations of 

device and procedure codes for some 

services, as this would require 

deliberate miscoding by hospitals, 

which we do not believe would result 

from this change to the device code 

reporting requirements. We continue to 

expect that hospitals would use an 

appropriate device code consistent with 

correct coding in order to ensure that 

device costs are always reported on the 

claim, so that costs are appropriately 

captured in claims that CMS uses for 

ratesetting. While we believe that 

device-to-procedure edits and 

procedure-to-device edits are no longer 

necessary at this time, we are sensitive 

to commenters’ concerns that all 

relevant costs for the APCs currently 

recognized as device-dependent APCs 

are appropriately included in the claims 

that CMS will use for ratesetting. In 

light of those concerns, we believe 

creating a claims processing edit 

requiring a device code to be present on 

the claim whenever a procedure code 

from the APCs currently recognized as 

a device-dependent APCs will help to 

ensure continued complete and accurate 

cost reporting by hospitals. Device edits 

will not apply to procedures assigned to 

C–APCs that either do not use 

implantable medical devices or 

procedures that do not have device-toprocedure or procedure-to-device edits 

assigned to them currently for CY 2014. 

This will ensure that the proposed 

device edit policy (requiring only that 

any device code be reported on a claim 

containing a procedure assigned to one 

of the formerly device-dependent APCs) 

will only apply to those procedures that 

currently have device-to-procedure or 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66795 

procedure-to-device edits currently 

assigned to them. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to no longer 

implement specific procedure-to-device 

and device-to-procedure edits for any 

APC. We also are finalizing our proposal 

to create claims processing edits that 

require any of the device codes used in 

the previous device-to-procedure edits 

to be present on the claim whenever a 

procedure code assigned to any of the 

current device-dependent APCs (that 

remain after the consolidation and 

restructuring of these APCs) listed in 

Table 5 below is reported on the claim 

to ensure that device costs are captured 

by hospitals. CMS will monitor the 

claims data to ensure that hospitals 

continue reporting appropriate device 

codes on the claims for the formerly 

device-dependent APCs. We note that 

while we proposed to make all 26 of the 

APCs listed in Table 5 C–APCs for CY 

2015, in section II.A.2.e. of this final 

rule with comment period, we are not 

finalizing our proposal to recognize 

APCs 0427, 0622, and 0652 as C–APCs. 

While APCs 0427, 0622, and 0652 will 

not be recognized as comprehensive 

APCs for CY 2015, our finalized device 

edit policy will apply to these 3 APCs, 

as these 3 APCs are formerly devicedependent APCs. The term ‘‘devicedependent APC’’ will no longer be 

employed beginning in CY 2015. We 

will refer to APCs with a device offset 

of more than 40 percent as ‘‘deviceintensive’’ APCs. Device-intensive APCs 

will be subject to the no cost/full credit 

and partial credit device policy. For a 

discussion of device-intensive APCs and 

the no cost/full credit and partial credit 

device policy, we refer readers to 

section IV.B. of this final rule with 

comment period. For a discussion of 

ASC procedures designated as device 

intensive, we refer readers to section 

XII.C.1.c. of this final rule with 

comment period. 

TABLE 5—APCS THAT WILL REQUIRE

A DEVICE CODE TO BE REPORTED

ON A CLAIM WHEN A PROCEDURE

ASSIGNED TO ONE OF THESE APCS

IS REPORTED

APC APC Title 

0039 ..... Level III Neurostimulator. 

0061 ..... Level II Neurostimulator. 

0083 ..... Level I Endovascular. 

0084 ..... Level I EP. 

0085 ..... Level II EP. 

0086 ..... Level III EP. 

0089 ..... Level III Pacemaker. 

0090 ..... Level II Pacemaker. 

0107 ..... Level I ICD. 

TABLE 5—APCS THAT WILL REQUIRE

A DEVICE CODE TO BE REPORTED

ON A CLAIM WHEN A PROCEDURE

ASSIGNED TO ONE OF THESE APCS

IS REPORTED—Continued 

APC APC Title 

0108 ..... Level II ICD. 

0202 ..... Level V Female Reproductive. 

0227 ..... Implantation of Drug Infusion. 

0229 ..... Level II Endovascular. 

0259 ..... Level VII ENT Procedures. 

0293 ..... Level IV Intraocular. 

0318 ..... Level IV Neurostimulator. 

0319 ..... Level III Endovascular. 

0384 ..... GI Procedures with Stents. 

0385 ..... Level I Urogenital. 

0386 ..... Level II Urogenital. 

0425 ..... Level V Musculoskeletal. 

0427 ..... Level II Tube/Catheter. 

0622 ..... Level II Vascular Access. 

0648 ..... Level IV Breast Surgery. 

0652 ..... Insertion of IP/Pl. Cath. 

0655 ..... Level IV Pacemaker. 

(2) Blood and Blood Products 

Since the implementation of the OPPS 

in August 2000, we have made separate 

payments for blood and blood products 

through APCs rather than packaging 

payment for them into payments for the 

procedures with which they are 

administered. Hospital payments for the 

costs of blood and blood products, as 

well as for the costs of collecting, 

processing, and storing blood and blood 

products, are made through the OPPS 

payments for specific blood product 

APCs. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40938), for CY 2015, we 

proposed to continue to establish 

payment rates for blood and blood 

products using our blood-specific CCR 

methodology, which utilizes actual or 

simulated CCRs from the most recently 

available hospital cost reports to convert 

hospital charges for blood and blood 

products to costs. This methodology has 

been our standard ratesetting 

methodology for blood and blood 

products since CY 2005. It was 

developed in response to data analysis 

indicating that there was a significant 

difference in CCRs for those hospitals 

with and without blood-specific cost 

centers, and past public comments 

indicating that the former OPPS policy 

of defaulting to the overall hospital CCR 

for hospitals not reporting a 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 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 2015 payment 

rates for blood and blood products are 

based using the actual blood-specific 

CCR for hospitals that reported costs 

and charges for a blood cost center and 

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

report costs and charges for a blood cost 

center. 

Comment: Commenters supported the 

proposal to continue to separately pay 

for blood and blood products using a 

blood-specific CCR methodology. 

Response: We appreciate the 

commenters’ support. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to continue to 

establish payment rates for blood and 

blood products using our blood-specific 

CCR methodology, which utilizes actual 

or simulated CCRs from the most 

recently available hospital cost reports 

to convert hospital charges for blood 

and blood products to costs. 

We continue to believe that the 

hospital-specific simulated 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 

2015 will result in costs for blood and 

blood products that appropriately reflect 

the relative estimated costs of these 

products for hospitals without blood 

cost centers and, therefore, for these 

blood products in general. 

We note that, as discussed in section 

II.A.2.e. of the CY 2014 OPPS/ASC final 

rule with comment period and this final 

rule with comment period, we 

established comprehensive APCs that 

will provide all-inclusive payments for 

certain device-dependent procedures. 

Under this policy, we include the costs 

of blood and blood products when 

calculating the overall costs of these 

comprehensive APCs. We proposed to 

continue to apply the blood-specific 

CCR methodology described in this 


tkelley on DSK3SPTVN1PROD with RULES2
66796 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

section when calculating the costs of the 

blood and blood products that appear 

on claims with services assigned to the 

comprehensive APCs (79 FR 40939). 

Because the costs of blood and blood 

products will be reflected in the overall 

costs of the comprehensive APCs (and, 

as a result, in the final payment rates of 

the comprehensive APCs), we proposed 

to not make separate payments for blood 

and blood products when they appear 

on the same claims as services assigned 

to the comprehensive APCs (79 FR 

40939). 

We did not receive any public 

comments on this proposal and are 

finalizing the policy as proposed. We 

refer readers to Addendum B to this 

final rule with comment period (which 

is available via the Internet on the CMS 

Web site) for the final CY 2015 payment 

rates for blood and blood products 

(which are identified with status 

indicator ‘‘R’’). For a more detailed 

discussion of the blood-specific CCR 

methodology, we refer readers to the CY 

2005 OPPS proposed rule (69 FR 50524 

through 50525). For a full history of 

OPPS payment for blood and blood 

products, we refer readers to the CY 

2008 OPPS/ASC final rule with 

comment period (72 FR 66807 through 

66810). 

(3) Brachytherapy Sources 

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

mandates the creation of additional 

groups of covered OPD services that 

classify devices of brachytherapy 

consisting of a seed or seeds (or 

radioactive source) (‘‘brachytherapy 

sources’’) separately from other services 

or groups of services. The statute 

provides certain criteria for the 

additional groups. For the history of 

OPPS payment for brachytherapy 

sources, we refer readers to prior OPPS 

final rules, such as the CY 2012 OPPS/ 

ASC final rule with comment period (77 

FR 68240 through 68241). As we have 

stated in prior OPPS updates, we 

believe that adopting the general OPPS 

prospective payment methodology for 

brachytherapy sources is appropriate for 

a number of reasons (77 FR 68240). The 

general OPPS payment methodology 

uses costs based on claims data to set 

the relative payment weights for 

hospital outpatient services. This 

payment methodology results in more 

consistent, predictable, and equitable 

payment amounts per source across 

hospitals by averaging the extremely 

high and low values, in contrast to 

payment based on hospitals’ charges 

adjusted to costs. We believe that the 

OPPS prospective payment 

methodology, as opposed to payment 

based on hospitals’ charges adjusted to 

cost, also would provide hospitals with 

incentives for efficiency in the provision 

of brachytherapy services to Medicare 

beneficiaries. Moreover, this approach is 

consistent with our payment 

methodology for the vast majority of 

items and services paid under the OPPS. 

We refer readers to the CY 2008 OPPS/ 

ASC final rule with comment period (72 

FR 66779 through 66787), the CY 2009 

OPPS/ASC final rule with comment 

period (73 FR 68668 through 68670, the 

CY 2010 OPPS/ASC final rule with 

comment period (74 FR 60533 through 

60537), the CY 2011 OPPS/ASC final 

rule with comment period (75 FR 71978 

through 71981), the CY 2012 OPPS/ASC 

final rule with comment period (76 FR 

74160 through 74163), the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68240 through 68242), 

and the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 74860) for 

further discussion of the history of 

OPPS payment for brachytherapy 

sources. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40939 through 40940), for 

CY 2015, we proposed to use the costs 

derived from CY 2013 claims data to set 

the proposed CY 2015 payment rates for 

brachytherapy sources, as we proposed 

to use to set the proposed payment rates 

for most other items and services that 

would be paid under the CY 2015 OPPS. 

We based the proposed payment rates 

for brachytherapy sources on the 

geometric mean unit costs for each 

source, consistent with the methodology 

proposed for other items and services 

paid under the OPPS, as discussed in 

section II.A.2. of the proposed rule. We 

also proposed to continue the other 

payment policies for brachytherapy 

sources that we finalized and first 

implemented in the CY 2010 OPPS/ASC 

final rule with comment period (74 FR 

60537). We proposed to pay for the 

stranded and non-stranded not 

otherwise specified (NOS) codes, 

HCPCS codes C2698 and C2699, at a 

rate equal to the lowest stranded or 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). That policy is 

intended to enable us to assign new 

HCPCS codes for new brachytherapy 

sources to their own APCs, with 

prospective payment rates set based on 

our consideration of external data and 

other relevant information regarding the 

expected costs of the sources to 

hospitals. 

The proposed CY 2015 payment rates 

for brachytherapy sources were 

included in Addendum B to the 

proposed rule (which is available via 

the Internet on the CMS Web site) and 

were identified with status indicator 

‘‘U.’’ 

We invited public comment on this 

proposed policy and also requested 

recommendations for new HCPCS codes 

to describe new brachytherapy sources 

consisting of a radioactive isotope, 

including a detailed rationale to support 

recommended new sources. In the CY 

2015 OPPS/ASC proposed rule, we 

provided an appropriate address for 

receipt of these recommendations; the 

address is repeated at the end of this 

section. We indicated that we will 

continue to add new brachytherapy 

source codes and descriptors to our 

systems for payment on a quarterly 

basis. 

Comment: Commenters expressed a 

number of concerns regarding CMS’ 

outpatient hospital claims data used to 

set prospective payment rates for 

brachytherapy sources. Commenters 

stated that high dose rate (HDR) 

brachytherapy devices decay over a 90- 

day period and are used to treat 

multiple patients during this time 

period. According to the commenters, 

the true cost of brachytherapy sources 

depends on the number of patients 

treated by a hospital within a 90-day 

period, as well as the number of 

treatments required and the intensity of 

the treatments. For this reason, the 

commenters believed that it is difficult 

to establish fair and adequate 

prospective payment rates for 

brachytherapy sources. Commenters 

also noted that the brachytherapy source 

payment data continue to show huge 

variation in per unit cost across 

hospitals. In addition, the commenters 

believed that CMS’ claims data contain 

rank order anomalies, causing the usual 

cost relationship between the high 

activity palladium-103 source (HCPCS 

code C2635, Brachytherapy source, nonstranded, high activity, palladium-103, 

greater than 2.2 mci (NIST) per source) 

and the low activity palladium-103 

sources (HCPCS codes C2640, 

Brachytherapy source, stranded, 

palladium-103, per source and C2641, 

Brachytherapy source, non-stranded, 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66797 

palladium-103, per source) to be 

reversed. The commenters noted that 

the proposed geometric mean costs of 

the brachytherapy source HCPCS codes 

are approximately $26, $69, and $72, 

respectively. The commenters stated 

that stranded palladium-103 sources 

(HCPCS code C2640) always cost more 

than non-stranded palladium-103 

sources (HCPCS code C2641), which is 

not reflected in the proposed rule claims 

data. 

Response: As stated above, we believe 

that geometric mean costs based on 

hospital claims data for brachytherapy 

sources have produced reasonably 

consistent per-source cost estimates 

over the past several years, comparable 

to the patterns we have observed for 

many other OPPS services whose 

payments are set based upon relative 

payment weights from claims data. We 

believe that our per-source payment 

methodology specific to each source’s 

radioisotope, radioactive intensity, and 

stranded or non-stranded configuration, 

supplemented by payment based on the 

number of sources used in a specific 

clinical case, adequately accounts for 

the major expected sources of variability 

across treatments. (We refer readers to 

the CY 208 OPPS final rule with 

comment period (72 FR 66782); the CY 

2010 OPPS/ASC final rule with 

comment period (74 FR 60534); the CY 

2011 OPPS/ASC final rule with 

comment period (75 FR 71979); the CY 

2012 OPPS/ASC final rule with 

comment period (76 FR 74161); the CY 

2013 OPPS/ASC final rule with 

comment period (77 FR 68241); and the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 74861)). We 

believe that the CY 2013 brachytherapy 

source claims data used for CY 2015 

ratesetting produce adequate payment 

for these services. Also, as we have 

explained previously, a prospective 

payment system relies upon the concept 

of averaging, where the payment may be 

more or less than the estimated cost of 

providing a service for a particular 

patient. With the exception of outlier 

cases, the payment for services is 

adequate to ensure access to appropriate 

care. In the case of brachytherapy 

sources for which the law requires 

separate payment groups, without 

packaging, the costs of these individual 

items could be expected to show greater 

variation than some other APCs under 

the OPPS because higher variability in 

costs for some component items and 

services is not balanced with lower 

variability in costs for others, and 

because relative payment weights are 

typically estimated using a smaller set 

of claims. Nevertheless, we believe that 

prospective payment for brachytherapy 

sources based on geometric mean costs 

of the services reported on claims 

calculated according to the standard 

OPPS methodology is appropriate and 

provides hospitals with the greatest 

incentives for efficiency in furnishing 

brachytherapy treatment. 

Under the budget neutral provision 

for the OPPS, it is the relativity of costs, 

not the absolute costs, that is important, 

and we believe that brachytherapy 

sources are appropriately paid 

according to the standard OPPS 

payment approach. Furthermore, some 

sources may have geometric mean costs 

and payment rates based on 50 or fewer 

providers because it is not uncommon 

for OPPS prospective payment rates to 

be based on claims from a relatively 

small number of hospitals that 

furnished the service in the year of 

claims data available for the OPPS 

update year. Fifty hospitals may report 

hundreds of brachytherapy source 

services on claims for many cases and 

comprise the universe of providers 

using particular low volume sources, for 

which we are required to pay separately 

by statute. Further, our methodology for 

estimating geometric mean costs for 

brachytherapy sources utilizes all lineitem charges for those sources, which 

allows us to use all hospital reported 

charge and estimated cost information 

to set payment rates for these items. 

Therefore, no brachytherapy source 

claims are excluded from the estimate of 

geometric means costs. We have no 

reason to believe that prospective 

payment rates based on claims data 

from those providers furnishing a 

particular source do not appropriately 

reflect the cost of that source to 

hospitals. As for most other OPPS 

services, we note that the geometric 

mean costs for brachytherapy sources 

are based upon the costs of those 

providers sources in CY 2013. Hospitals 

individually determine their charge for 

an item or service, and one of 

Medicare’s primary requirements for 

setting a charge is that it be reasonably 

and consistently related to the cost of 

the item or service for that facility. (We 

refer readers to the Medicare Provider 

Reimbursement Manual, Part I, Section 

2203, which is available on the CMS 

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

Regulations-and-Guidance/Guidance/

Manuals/Paper-Based-Manuals-Items/

CMS021929.html?DLPage=1&

DLSort=0&DLSortDir=ascending.) We 

then estimate a cost from that charge 

using the hospital’s most recent 

Medicare hospital cost report data in 

our standard OPPS ratesetting process. 

We acknowledge that HDR 

brachytherapy sources such as HDR 

iridium-192 have a fixed active life and 

must be replaced every 90 days. As a 

result, a hospital’s per treatment cost for 

the source would be dependent on the 

number of treatments furnished per 

source. The source’s cost must be 

amortized over the life of the source. 

Therefore, when establishing charges for 

HDR iridium-192, we expect hospitals 

to project the number of treatments that 

would be provided over the life of the 

source and establish charges for the 

source accordingly (72 FR 66783; 74 FR 

60535; 75 FR 71980; 76 FR 74162; 77 FR 

68242; and 78 FR 74861). For most 

payable services under the OPPS, our 

practice is to establish prospective 

payment rates based on the geometric 

mean costs determined from hospitals’ 

claims data to provide incentives for 

efficient and cost effective delivery of 

these services. 

In the case of high-activity and lowactivity iodine-125 sources, our CY 2013 

claims data show that the hospitals’ 

relative costs for the high-activity source 

are greater than the costs of the lowactivity sources. As we have stated in 

the past, we do not have any 

information about the expected cost 

differential between high-activity and 

low-activity sources of various isotopes 

other than what is available in our 

claims and hospital cost report data (75 

FR 71979; 76 FR 74162; 77 FR 68242; 

and 78 FR 74861). In the case of the 

relationship between high-activity and 

low-activity palladium-103, our claims 

data consistently have shown higher 

average costs for low-activity palladium103. For the high-activity palladium-103 

sources (HCPCS code C2635), 8 

hospitals reported this service in CY 

2013, compared to 104 and 159 

hospitals that reported services for the 

low-activity palladium-103 sources 

described by HCPCS codes C2640 and 

C2641, respectively. It is clear that fewer 

hospitals furnished the high-activity 

palladium-103 source than the lowactivity palladium-103 sources, and we 

expect that the hospital cost distribution 

for those hospitals could be different 

than the cost distribution of the large 

numbers of hospitals reporting the lowactivity palladium-103 sources, as 

previously stated (74 FR 60535; 75 FR 

71979; 76 FR 74162; 77 FR 68242; and 

78 FR 74861). These varied cost 

distributions clearly contribute to the 

observed relationship in geometric 

mean cost between the different types of 

sources. However, we see no reason 

why our standard ratesetting 

methodology for brachytherapy sources 

that relies on all claims data from all 

hospitals furnishing brachytherapy 

sources would not yield valid geometric 


tkelley on DSK3SPTVN1PROD with RULES2
66798 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

mean costs for those hospitals 

furnishing the different brachytherapy 

sources upon which CY 2015 

prospective payments are based. 

Comment: One commenter, a 

developer of a linear non-stranded 

palladium-103 source described by 

HCPCS code C2636 (Brachytherapy 

linear source, nonstranded, palladium103, per 1 mm), believed that CY 2013 

claims data for services furnished prior 

to November 2013 used to determine the 

CY 2015 payment rates are invalid 

because the claims data do not reflect 

the costs of its linear non-stranded 

palladium-103 source, which became 

commercially available in November 

2013. Further, the commenter stated 

that there were no other linear nonstranded palladium-103 sources 

commercially available prior to 

November 2013. Therefore, the 

commenter requested that payment for 

HCPCS code C2636 remain at the 

current CY 2014 payment rate until 

claims data for HCPCS code C2636 

become available in CY 2016. 

Response: We understand the 

commenter’s claim that its linear nonstranded palladium-103 source 

described by HCPCS code C2636 

became commercially available in 

November 2013. However, we disagree 

with the commenter’s assertion that 

there were no other commercially 

available linear non-stranded 

palladium-103 sources described by 

HCPCS code C2636 prior to November 

2013. We also disagree with the 

commenter that the CY 2013 claims data 

used to determine the CY 2015 payment 

rate for HCPCS code C2636 are invalid. 

As discussed in the CY 2005 OPPS final 

rule (69 FR 65840), we established 

HCPCS code C2636 to uniquely identify 

linear non-stranded Palladium-103 

brachytherapy sources. Since the 

HCPCS code became effective January 1, 

2005, we have used historical claims 

data to set the prospective payment 

rates. To determine the CY 2015 OPPS 

payment rate for HCPCS code C2636, we 

used CY 2013 claims data, which 

include brachytherapy sources costs for 

linear non-stranded palladium-103 

sources. Despite the date of commercial 

availability for the commenter’s linear 

non-stranded palladium-103 

brachytherapy source, we do have CY 

2013 claims data for HCPCS code 

C2636. Therefore, in accordance with 

our above-mentioned methodology and 

consistent with our policy used to set 

the prospective payment rates for 

brachytherapy sources, we are finalizing 

our proposed payment rate for HCPCS 

code C2636 based on CY 2013 claims 

data. 

Comment: One commenter expressed 

concern regarding CMS’ CY 2014 

payment rate for a new brachytherapy 

source described by HCPCS code C2644 

(Brachytherapy source, cesium-131 

chloride solution, per millicurrie), 

which became effective July 1, 2014. In 

the July 2014 OPPS Change Request 

(CR) 8776, dated May 23, 2014, CMS 

established a payment rate for HCPCS 

code C2644 of $18.97. The commenter, 

who also petitioned for the initial 

establishment of HCPCS code C2644 to 

describe the new brachytherapy source, 

requested clarification on how the 

payment rate was established by CMS, 

given that the cost of the new 

brachytherapy source is $25 per 

millicurie and claims data are not yet 

available. 

Response: As discussed in the CY 

2008 OPPS/ASC final rule with 

comment period (72 FR 66786), we 

assign new HCPCS codes that describe 

new brachytherapy sources to their own 

APCs, with prospective payment rates 

set based on consideration of external 

data and other relevant information 

regarding the expected costs of the 

sources to hospitals. The commenter 

provided CMS with clinical information 

on the brachytherapy source cesium-131 

chloride solution within its petition for 

the establishment of the new HCPCS 

code, and noted the source’s clinical 

similarities with the liquid iodine-125 

solution source, which is described by 

HCPCS code A9527 (Iodine I–125 

sodium iodide). The commenter stated 

that both iodine I–125 sodium iodide 

and cesium-131 chloride solution ‘‘have 

similar energies, are capable of 

delivering the same radiation dose to 

the planned treatment volume, are 

supplied in liquid form, and are 

compatible with the GliaSite RTS 

Catheter’’. Based on clinical information 

provided by the commenter and a 

clinical review by CMS’ medical 

advisors, we believe that the 

brachytherapy sources described by 

HCPCS code C2644 and HCPCS code 

A9527 are clinical substitutes. 

Therefore, we set a payment rate for 

HCPCS code C2644 that is equal to the 

payment rate for HCPCS code A9527 

when it became effective in CY 2014, 

and proposed to apply the same 

methodology for CY 2015. We are 

finalizing our proposal for CY 2015 to 

set the payment rate for HCPCS code 

C2644 as the equivalent of the payment 

rate for HCPCS code A9527. (We refer 

readers to Addendum B of this final rule 

with comment period for the CY 2015 

OPPS payment rate. Addendum B is 

available via the Internet on the CMS 

Web site.) 

After consideration of the public 

comments we received, we are 

finalizing our proposal to continue to 

set the payment rates for brachytherapy 

sources using our established 

prospective payment methodology, 

which is based on geometric mean costs. 

The CY 2015 final payment rates for 

brachytherapy sources are found in 

Addendum B to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site). 

As stated in the CY 2015 OPPS/ASC 

proposed rule (79 FR 40940), we 

continue to invite hospitals and other 

parties to submit recommendations to 

CMS for new HCPCS codes that describe 

new brachytherapy sources consisting of 

a radioactive isotope, including a 

detailed rationale to support 

recommended new sources. Such 

recommendations should be directed to 

the Division of Outpatient Care, Mail 

Stop C4–03–27, Centers for Medicare 

and Medicaid Services, 7500 Security 

Boulevard, Baltimore, MD 21244. 

e. Comprehensive APCs 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 74861 

through 74910), we finalized a 

comprehensive payment policy that 

packages payment for adjunctive and 

secondary items, services, and 

procedures into the most costly primary 

procedure (primarily medical device 

implantation procedures) under the 

OPPS at the claim level, effective 

January 1, 2015. We defined a 

comprehensive APC (C–APC) as a 

classification for the provision of a 

primary service and all adjunctive 

services provided to support the 

delivery of the primary service. We 

established comprehensive APCs as a 

category broadly for OPPS payment and 

established 29 C–APCs to prospectively 

pay for 167 of the most costly devicedependent services assigned to these 29 

APCs beginning in CY 2015 (78 FR 

74910). Under this policy, we 

designated each service described by a 

HCPCS code assigned to a C–APC as the 

primary service and, with few 

exceptions described below, consider all 

other services reported on a hospital 

outpatient claim in combination with 

the primary service to be related to the 

delivery of the primary service (78 FR 

74869). In addition, under this policy, 

we calculate a single payment for the 

entire hospital stay, defined by a single 

claim, regardless of the date of service 

span over which the primary service 

and all related services are delivered. 

This comprehensive APC packaging 

policy packages payment for all items 

and services typically packaged under 

the OPPS, but also packages payment 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66799 

for other items and services that are not 

typically packaged under the OPPS (78 

FR 74909). 

Because of the overall complexity of 

this new policy and our introduction of 

complexity adjustments in the CY 2014 

OPPS/ASC final rule with comment 

period, we modeled the policy as if we 

were implementing it for CY 2014, but 

delayed the effective date until January 

1, 2015, to allow additional time for 

further analysis, opportunity for public 

comment, and systems preparation. In 

the CY 2015 OPPS/ASC proposed rule 

(79 FR 40941 through 40953), we 

discussed our review of the policies 

finalized in the CY 2014 OPPS/ASC 

final rule with comment period for C– 

APCs, and summarized and responded 

to public comments received in 

response to the CY 2014 OPPS/ASC 

final rule with comment period relating 

to the comprehensive APC payment 

policy. We then outlined our proposed 

policy for CY 2015, which included 

several clarifications and proposed 

modifications in response to public 

comments received. In this section, we 

use the terms ‘‘service’’ and 

‘‘procedure’’ interchangeably. 

(1) Background 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 74861 

through 74910), we finalized a policy, 

with a delayed implementation date of 

CY 2015, that designated certain 

covered OPD services as primary 

services (identified by a new OPPS 

status indicator of ‘‘J1’’) assigned to C– 

APCs. When such a primary service is 

reported on a hospital outpatient claim, 

taking into consideration the few 

exceptions that are discussed below, we 

treat all other items and services 

reported on the claim as integral, 

ancillary, supportive, dependent, and 

adjunctive to the primary service 

(hereinafter collectively referred to as 

‘‘adjunctive services’’) and representing 

components of a comprehensive service 

(78 FR 74865). This results in a single 

prospective payment for the primary, 

comprehensive service based on the cost 

of all reported services at the claim 

level. We only exclude charges for 

services that are statutorily excluded 

from the OPPS, such as certain 

mammography and ambulance services 

that are never covered OPD services in 

accordance with section 

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

brachytherapy seeds, which must 

receive separate payment under section 

1833(t)(2)(H) of the Act; charges for 

pass-through drugs and devices, which 

also require separate payment under 

section 1833(t)(6) of the Act; and 

charges for self-administered drugs 

(SADs) that are not otherwise packaged 

as supplies because they are not covered 

under Medicare Part B under section 

1861(s)(2)(B) of the Act (78 FR 74865). 

The ratesetting process set forth in the 

CY 2014 OPPS/ASC final rule with 

comment period for the comprehensive 

APC payment policy is summarized as 

follows (78 FR 74887): 

APC assignment of primary (‘‘J1’’) 

services. HCPCS codes assigned to 

status indicator ‘‘J1’’ are assigned to C– 

APCs based on our usual APC 

assignment methodology of evaluating 

the geometric mean cost of the primary 

service claims to establish resource 

similarity and the clinical 

characteristics of each procedure to 

establish clinical similarity within each 

APC. Claims reporting multiple 

procedures described by HCPCS codes 

assigned to status indicator ‘‘J1’’ are 

identified and the procedures are then 

assigned to a C–APC based on the 

primary HCPCS code that has the 

highest APC geometric mean cost. This 

ensures that multiple procedures 

described by HCPCS codes assigned to 

status indicator ‘‘J1’’ reported on claims 

are always paid through and assigned to 

the C–APC that would generate the 

highest APC payment. If multiple 

procedures described by HCPCS codes 

assigned to status indicator ‘‘J1’’ that are 

reported on the same claim have the 

same APC geometric mean estimated 

cost, as would be the case when two 

different procedures described by 

HCPCS codes assigned to status 

indicator ‘‘J1’’ are assigned to the same 

APC, identification of the primary 

service is then based on the procedure 

described by the HCPCS code assigned 

to status indicator ‘‘J1’’ with the highest 

HCPCS-level geometric mean cost. 

When there is no claims data available 

upon which to establish a HCPCS-level 

comprehensive geometric mean cost, we 

use the geometric mean cost for the APC 

to which the HCPCS code is assigned. 

Complexity adjustments and 

determination of final C–APC groupings. 

We then considered reassigning 

complex subsets of claims for each 

primary service described by a HCPCS 

code assigned to status indicator ‘‘J1.’’ 

All claims reporting more than one 

procedure described by HCPCS codes 

assigned to status indicator ‘‘J1’’ are 

evaluated for the existence of commonly 

occurring pairs of procedure codes 

reported on claims that exhibit a 

materially greater comprehensive 

geometric mean cost relative to the 

geometric mean cost of the claims 

reporting that primary service. This 

indicates that the subset of procedures 

identified by the secondary HCPCS code 

has increased resource requirements 

relative to less complex subsets of that 

primary procedure (78 FR 74887). The 

CY 2014 complexity adjustment criteria 

are as follows: 

• The comprehensive geometric mean 

cost of the claims reporting the 

combination of procedures is more than 

two times the comprehensive geometric 

mean cost of the single major claims 

reporting only the primary service; 

• There are more than 100 claims in 

the data year reporting the specific code 

combination; 

• The number of claims reporting the 

specific code combination exceed 5 

percent of the volume of all claims 

reporting the designated primary 

service; and 

• There would be no violation of the 

‘‘2 times’’ rule within the receiving C– 

APC (78 FR 74886). 

If a pair of procedure codes reported 

on claims is identified that meets these 

requirements, that is, commonly 

occurring and exhibiting materially 

greater resource requirements, the pair 

of procedure codes is further evaluated 

to confirm clinical validity as a complex 

subset of the primary procedure and the 

pair of procedure codes is then 

identified as complex, and primary 

service claims with that combination of 

procedure codes are subsequently 

reassigned as appropriate. If a pair of 

procedure codes does not meet the 

requirement for a materially greater 

resource requirement or does not occur 

commonly, the pair of procedure codes 

is not considered to be complex, and 

primary service claims with that 

combination of procedure codes are not 

reassigned. All pairs of procedures 

described by HCPCS codes assigned to 

status indicator ‘‘J1’’ for each primary 

service are similarly evaluated. Once all 

pairs of procedures described by HCPCS 

codes assigned to status indicator ‘‘J1’’ 

have been evaluated, all claims 

identified for reassignment for each 

primary service are combined and the 

group is assigned to a higher level C– 

APC within a clinical family of C–APCs, 

that is, an APC with greater estimated 

resource requirements than the initially 

assigned C–APC and with appropriate 

clinical homogeneity. We assessed 

resource variation for reassigned claims 

within the receiving APC using the 

geometric mean cost for all reassigned 

claims for the primary service relative to 

other services assigned to that APC 

using the 2 times rule criteria (78 FR 

74887). 

For new HCPCS codes and codes 

without data, we use the best 

information available to us to identify 

combinations of procedure codes that 

represent a more complex form of the 

primary service and warrant 


tkelley on DSK3SPTVN1PROD with RULES2
66800 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

reassignment to a higher level APC. In 

the proposed rule, we stated that we 

would reevaluate our APC assignments 

and identification and APC placement 

of complex claims once claims data 

become available. 

(2) CY 2015 Policy for C–APCs 

(a) Methodology 

Basic C–APC Methodology. After 

consideration of the public comments 

we received on the CY 2014 OPPS/ASC 

final rule with comment period, in the 

CY 2015 OPPS/ASC proposed rule (79 

FR 40941 through 40953), we described 

our proposed payment methodology for 

C–APCs for CY 2015. For CY 2015, we 

proposed to establish a policy that 

services assigned to C–APCs would be 

designated as the primary services for 

C–APCs, using new status indicator ‘‘J1’’ 

as listed in Addendum J and Addendum 

B to the CY 2015 OPPS/ASC proposed 

rule (which are available via the Internet 

on the CMS Web site). We stated that 

the basic steps for calculating the C– 

APC payments remain the same as those 

finalized in the CY 2014 OPPS/ASC 

final rule with comment period, except 

for the complexity adjustment criteria 

described briefly above (78 FR 74885 

through 74888). For CY 2015, we 

proposed to restructure and consolidate 

some of the current device-dependent 

APCs to improve both the resource and 

clinical homogeneity of these APCs. In 

addition, instead of assigning any addon codes to status indicator ‘‘J1’’ as 

finalized in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

74873 through 74883), we proposed to 

package all add-on codes, consistent 

with our CY 2014 OPPS policy to 

package add-on codes (78 FR 74942), 

but to allow certain add-on codes to 

qualify a primary J1 procedure codeadd-on code combination for a 

complexity adjustment. For CY 2015, 

similar to other procedures described by 

add-on codes under the OPPS and 

according to 42 CFR 419.2(b)(18), 

procedures described by add-on codes 

furnished in conjunction with primary 

comprehensive services would be 

packaged instead of being assigned to an 

APC with a separately payable status 

indicator in accordance with the CY 

2014 OPPS policy for add-on codes 

assigned to device-dependent APCs. 

However, the add-on codes currently 

assigned to device-dependent APCs 

(that are converted to C–APCs) may 

qualify as a secondary code in a 

complexity adjustment code pair. 

Further, we proposed to convert all 

current device-dependent APCs 

remaining after the proposed 

restructuring and consolidation of some 

of these APCs to C–APCs. We also 

proposed to create two new C–APCs: C– 

APC 0067 for single-session cranial 

stereotactic radiosurgery services (SRS) 

and C–APC 0351 for intraocular 

telescope implantation. In addition, we 

proposed to reassign CPT codes 77424 

and 77425 that describe intraoperative 

radiation therapy (IORT) to C–APC 0648 

(Level IV Breast and Skin Surgery). We 

discuss in detail below our proposed 

new complexity adjustment criteria and 

our proposal to package all add-on 

codes, but to allow complexity 

adjustments for qualifying code 

combinations of primary codes and addon codes currently assigned to deviceintensive C–APCs. 

As stated in the CY 2014 OPPS/ASC 

final rule with comment period, we 

define the comprehensive APC payment 

policy as including all covered OPD 

services on a hospital outpatient claim 

reporting a primary service that is 

assigned to status indicator ‘‘J1,’’ 

excluding services that cannot be 

covered OPD services or that cannot by 

statute be paid under the OPPS. 

Services packaged for payment under 

the comprehensive APC payment 

packaging policy, that is, services that 

are typically integral, ancillary, 

supportive, dependent, or adjunctive to 

the primary service, provided during the 

delivery of the comprehensive service, 

include diagnostic procedures, 

laboratory tests and other diagnostic 

tests and treatments that assist in the 

delivery of the primary procedure; visits 

and evaluations performed in 

association with the procedure; 

uncoded services and supplies used 

during the service; durable medical 

equipment as well as prosthetic and 

orthotic items and supplies when 

provided as part of the outpatient 

service; and any other components 

reported by HCPCS codes that are 

provided during the comprehensive 

service, except excluded services that 

are described below (78 FR 74865). In 

addition, payment for outpatient 

department services that are similar to 

therapy services and delivered either by 

therapists or nontherapists is packaged 

as part of the comprehensive service. 

These services that are provided during 

the perioperative period are adjunctive 

services and not therapy services as 

described in section 1834(k) of the Act, 

regardless of whether the services are 

delivered by therapists or other 

nontherapist health care workers. We 

have previously noted that therapy 

services are those provided by therapists 

under a plan of care in accordance with 

section 1835(a)(2)(C) and section 

1835(a)(2)(D) of the Act and are paid 

under section 1834(k) of the Act subject 

to annual therapy caps, as applicable 

(78 FR 74867). However, certain other 

services similar to therapy services are 

considered and paid as outpatient 

services. Payment for these nontherapy 

outpatient department services that are 

reported with therapy codes and 

provided with a comprehensive service 

is packaged with the comprehensive 

service. We note that these services, 

even though they are reported with 

therapy codes, are outpatient 

department services and not therapy 

services. Therefore, the requirement for 

functional reporting under the 

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

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

Items packaged for payment provided 

in conjunction with the primary service 

also include all drugs, biologicals, and 

radiopharmaceuticals, regardless of cost, 

except those drugs with pass-through 

payment status and those drugs that are 

usually self-administered (SADs), unless 

they function as packaged supplies (78 

FR 74868 through 74869 and 74909). 

We refer readers to the Medicare Benefit 

Policy Manual, Chapter 15, Covered 

Medical and Other Health Services, 

Section 50.2.M, for a description of our 

policy on self-administered drugs 

treated as hospital outpatient supplies, 

including lists of SADs that function as 

supplies and those that do not function 

as supplies. 

Services excluded from the 

comprehensive APC payment policy are 

as follows: SADs that are not considered 

supplies, because they are not covered 

under Medicare Part B under section 

1861(s)(2)(B) of the Act; services 

excluded from the OPPS according to 

section 1833(t)(1)(B) of the Act 

including recurring therapy services, 

which we considered unrelated to the 

comprehensive service (defined as 

therapy services reported on a separate 

facility claim for recurring services), 

ambulance services, diagnostic and 

screening mammography, the annual 

wellness visit providing personalized 

prevention plan services, and passthrough drugs and devices that are paid 

according to section 1833(t)(6) of the 

Act. 

We also exclude preventive services 

defined in 42 CFR 410.2, ‘‘(1) [t]he 

specific services listed in section 

1861(ww)(2) of the Act, with the 

explicit exclusion of electrocardiograms; 

(2) [t]he Initial Preventive Physical 

Examination (IPPE) (as specified by 

section 1861(ww)(1) of the Act); and (3) 

Annual Wellness Visit (AWV), 

providing Personalized Prevention Plan 

Services (PPPS) (as specified by section 

1861(hhh)(1) of the Act).’’ These 

preventive services are listed by their 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66801 

HCPCS codes in Addendum J to this 

final rule with comment period and 

include: Annual wellness visits 

providing personalized prevention plan 

services; initial preventive physical 

examinations; pneumococcal, influenza, 

and hepatitis B vaccines and 

administrations; mammography 

screenings; pap smear screenings and 

pelvic examination screenings; prostate 

cancer screening tests; colorectal cancer 

screening tests; diabetes outpatient selfmanagement training services; bone 

mass measurements; glaucoma 

screenings; medical nutrition therapy 

services; cardiovascular screening blood 

tests; diabetes screening tests; 

ultrasound screenings for abdominal 

aortic aneurysm; and additional 

preventive services as defined in section 

1861(ddd)(1) of the Act. We defined and 

discussed these services in detail for 

hospital billing purposes in the CY 2011 

OPPS/ASC final rule with comment 

period pursuant to coverage and 

payment provisions in the Affordable 

Care Act (75 FR 72013 through 72020). 

This policy is consistent with our 

policy to exclude preventive services 

from the ancillary services packaging 

policy, will encourage the provision of 

preventive services, and provide 

maximum flexibility to beneficiaries 

across different sites of service in 

receiving preventive services. In 

addition, the statute does not permit 

assessment of beneficiary cost-sharing 

for most preventive services, and some 

receive cost-based payment (75 FR 

72013 through 72020 and 78 FR 74962). 

While any beneficiary cost-sharing 

attributable to preventive services, if 

they were packaged, would be very 

small in relation to the comprehensive 

service overall, we believe that we 

should exclude these services from the 

OPPS beneficiary copayment 

calculations, as discussed in section II.I. 

of this final rule with comment period. 

We note that payment for one 

preventive service (HCPCS code G0102 

(Prostate cancer screening; digital rectal 

examination)) will continue to be 

packaged under the OPPS in CY 2015, 

both broadly and in the context of 

comprehensive services. Currently, 

payment for the procedure described by 

this HCPCS code is packaged because it 

is included in evaluation and 

management services. We note that 

beneficiary cost-sharing is not waived 

for the service described by HCPCS code 

G0102. 

Consistent with the policy finalized in 

the CY 2014 OPPS/ASC final rule with 

comment period, we exclude 

brachytherapy services and passthrough drugs, biologicals and devices 

that are separately payable by statute (78 

FR 74868 and 74909). In addition, we 

exclude services assigned to OPPS 

status indicator ‘‘F’’ that are not paid 

under the OPPS and are instead paid on 

a reasonable cost basis (certain CRNA 

services, Hepatitis B vaccines, and 

corneal tissue acquisition, which is not 

part of a comprehensive service for CY 

2015). In Table 6 below, we list the 

services that are excluded from the 

comprehensive APC payment policy. 

TABLE 6—COMPREHENSIVE APC PAYMENT POLICY EXCLUSIONS FOR CY 2015 

Ambulance services 

Brachytherapy 

Diagnostic and mammography screenings 

Physical therapy, speech-language pathology and occupational therapy services—Therapy services reported on a separate facility claim for recurring services 

Pass-through drugs, biologicals and devices 

Preventive services defined in 42 CFR 410.2: 

• Annual wellness visits providing personalized prevention plan services 

• Initial preventive physical examinations 

• Pneumococcal, influenza, and hepatitis B vaccines and administrations 

• Mammography Screenings 

• Pap smear screenings and pelvic examination screenings 

• Prostate cancer screening tests 

• Colorectal cancer screening tests 

• Diabetes outpatient self-management training services 

• Bone mass measurements 

• Glaucoma screenings 

• Medical nutrition therapy services 

• Cardiovascular screening blood tests 

• Diabetes screening tests 

• Ultrasound screenings for abdominal aortic aneurysm 

• Additional preventive services (as defined in section 1861(ddd)(1) of the Act) 

Self-administered drugs—Drugs that are usually self-administered and do not function as supplies in the provision of the comprehensive service 

Services assigned to OPPS status indicator ‘‘F’’ (Certain CRNA services, Hepatitis B vaccines and corneal tissue acquisition) 

Services assigned to OPPS status indicator ‘‘L’’ (Influenza and pneumococcal pneumonia vaccines) 

Certain Part B inpatient services—Ancillary Part B inpatient services payable under Part B when the primary ‘‘J1’’ service for the claim is not a 

payable Part B inpatient service (for example, exhausted Medicare Part A benefits, beneficiaries with Part B only) 

We proposed to continue to define 

each hospital outpatient claim reporting 

a single unit of a single primary service 

assigned to status indicator ‘‘J1’’ as a 

single ‘‘J1’’ unit procedure claim (78 FR 

74871). We proposed to sum all line 

item charges for services included in the 

C–APC payment, convert the charges to 

costs, and calculate the 

‘‘comprehensive’’ geometric mean cost 

of one unit of each service assigned to 

status indicator ‘‘J1.’’ (We note that we 


tkelley on DSK3SPTVN1PROD with RULES2
66802 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

use the term ‘‘comprehensive’’ to 

describe the geometric mean cost of a 

claim reporting ‘‘J1’’ service(s) or the 

geometric mean cost of a C–APC, 

inclusive of all of the items and services 

in the C–APC payment bundle). Charges 

for services that would otherwise have 

been separately payable are added to the 

charges for the primary service. This 

process differs from our traditional cost 

accounting methodology only in that all 

such services on the claim are packaged 

(except certain services as described 

above). We proposed to apply our 

standard data trims, excluding claims 

with extremely high primary units or 

extreme costs. 

The comprehensive geometric mean 

costs are used to establish resource 

similarity and, along with clinical 

similarity, dictate the assignment of the 

primary services to the C–APCs. We 

proposed to establish a ranking of each 

primary service (single unit only) 

assigned to status indicator ‘‘J1’’ 

according to their comprehensive 

geometric mean costs. For the minority 

of claims reporting more than one 

primary service assigned to status 

indicator ‘‘J1’’ or units thereof 

(approximately 20 percent of CY 2013 

claims), we proposed to continue to 

identify one ‘‘J1’’ service as the primary 

service for the claim based on our costbased ranking of primary services. We 

then assign these multiple ‘‘J1’’ 

procedure claims to the C–APC to 

which the service designated as the 

primary service is assigned. If the 

reported ‘‘J1’’ services reported on a 

claim map to different C–APCs, we 

designate the ‘‘J1’’ service assigned to 

the C–APC with the highest 

comprehensive geometric mean cost as 

the primary service for that claim. If the 

reported multiple ‘‘J1’’ services on a 

claim map to the same C–APC, we 

designate the most costly service (at the 

HCPCS code level) as the primary 

service for that claim. This process 

results in initial assignments of claims 

for the primary services assigned to 

status indicator ‘‘J1’’ to the most 

appropriate C–APCs based on both 

single and multiple procedure claims 

reporting these services and clinical and 

resource homogeneity. 

Complexity Adjustments. We 

proposed to use complexity adjustments 

to provide increased payment for certain 

comprehensive services. We proposed 

to apply a complexity adjustment by 

promoting qualifying ‘‘J1’’ service code 

combinations or code combinations of 

‘‘J1’’ services and certain add-on codes 

(as described further below) from the 

originating C–APC (the C–APC to which 

the designated primary service is first 

assigned) to a higher paying C–APC in 

the same clinical family of C–APCs, if 

reassignment is clinically appropriate 

and the reassignment would not create 

a violation of the 2 times rule in the 

receiving APC (the higher paying C– 

APC in the same clinical family of C– 

APCs). We proposed to implement this 

type of complexity adjustment when the 

code combination represents a complex, 

costly form or version of the primary 

service according to the following 

criteria: 

• Frequency of 25 or more claims 

reporting the code combination 

(frequency threshold); and 

• Violation of the 2 times rule (cost 

threshold). 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40947 through 40948, we 

explained in detail in response to a 

comment to the CY 2014 OPPS/ASC 

final rule with comment period the 

differences between the finalized CY 

2014 complexity adjustment criteria and 

the CY 2015 proposed complexity 

adjustment criteria and our rationale for 

the proposed changes. 

After designating a single primary 

service for a claim, we proposed to 

evaluate that service in combination 

with each of the other procedure codes 

reported on the claim assigned to status 

indicator ‘‘J1’’ (or certain add-on codes) 

to determine if they meet the 

complexity adjustment criteria. For new 

HCPCS codes, we proposed to 

determine initial C–APC assignments 

and complexity adjustments using the 

best data available, cross-walking the 

new HCPCS codes to predecessor codes 

wherever possible. 

Once we have determined that a 

particular code combination of ‘‘J1’’ 

services (or combinations of ‘‘J1’’ 

services reported in conjunction with 

certain add-on codes) represents a 

complex version of the primary service 

because it is sufficiently costly, 

frequent, and a subset of the primary 

comprehensive service overall 

according to the criteria described 

above, we proposed to promote the 

complex version of the primary service 

as described by the code combination to 

the next higher cost C–APC within the 

clinical family, unless the APC 

reassignment is not clinically 

appropriate, the reassignment would 

create a violation of the 2 times rule in 

the receiving APC, or the primary 

service is already assigned to the highest 

cost APC within the C–APC clinical 

family or assigned to the only C–APC in 

a clinical family (79 FR 40944). We did 

not propose to create new APCs with a 

geometric mean cost that is higher than 

the highest cost (or only) C–APC in a 

clinical family just to accommodate 

potential complexity adjustments. 

Therefore, the highest payment for any 

code combination for services assigned 

to a C–APC would be the highest paying 

C–APC in the clinical family. 

As discussed below, we proposed that 

add-on codes reported in conjunction 

with a ‘‘J1’’ service would receive 

complexity adjustments when a 

qualifying add-on code is reported in 

conjunction with the primary service 

assigned to status indicator ‘‘J1’’ and 

satisfies the criteria described above for 

a complexity adjustment. Any 

combinations of HCPCS codes that fail 

to meet the proposed complexity 

adjustment criteria (frequency and cost 

thresholds) would not be identified as 

complex subsets of the primary 

procedure and would not be reassigned 

to a higher paying C–APC within the 

same clinical family of C–APCs. We 

provided a proposed list of qualifying 

code combinations (including add-on 

codes) in Addendum J to the proposed 

rule (which is available via the Internet 

on the CMS Web site). 

We proposed to package payment for 

all add-on codes into the payment for 

the C–APC. However, we indicated that 

add-on codes that are assigned to the 

current device-dependent APCs listed in 

Table 5 of the proposed rule (79 FR 

40938) would be evaluated for a 

possible complexity adjustment when 

they are reported in conjunction with a 

designated primary service assigned to 

status indicator ‘‘J1.’’ We proposed to 

only evaluate the add-on codes that are 

assigned to the current devicedependent APCs listed in Table 5 of the 

proposed rule for potential complexity 

adjustments because we believe that, in 

certain cases, these procedure codes 

may represent services with additional 

medical device costs that result in 

significantly more complex and costly 

procedures. To determine which 

combinations of primary service codes 

reported in conjunction with the add-on 

code may qualify for a complexity 

adjustment for CY 2015, we proposed to 

apply the proposed frequency and cost 

criteria discussed above, testing claims 

reporting one unit of a single primary 

service assigned to status indicator ‘‘J1’’ 

and any number of units of a single addon code. If the frequency and cost 

criteria for a complexity adjustment 

were met, and reassignment to the next 

higher cost APC in the clinical family is 

appropriate, we proposed to make a 

complexity adjustment for the code 

combination; that is, we proposed to 

reassign the primary service code 

reported in conjunction with the add-on 

code combination to a higher cost C– 

APC within the same clinical family of 

C–APCs. If any add-on code 

combination reported in conjunction 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66803 

with the primary service code did not 

qualify for a complexity adjustment, 

payment for these services would be 

packaged. We listed the complexity 

adjustments proposed for add-on code 

combinations for CY 2015, along with 

all of the other proposed complexity 

adjustments, in Addendum J to the 

proposed rule (which is available via 

the Internet on the CMS Web site). One 

primary service code and add-on code 

combination (CPT code 37225 and 

37233) that satisfied the frequency and 

cost criteria was not proposed for a 

complexity adjustment because we 

believe that these claims are miscoded. 

Of the 35 qualifying claims reporting 

this code combination, only 3 claims 

contained the appropriate base code 

(CPT code 37228) for CPT add-on code 

37233. 

We provided in Addendum J to the 

proposed rule a breakdown of cost 

statistics for each code combination that 

would qualify for a complexity 

adjustment (including primary code and 

add-on code combinations). Addendum 

J to the proposed rule also contained 

summary cost statistics for each of the 

code combinations proposed to be 

reassigned under a given primary code. 

The combined statistics for all proposed 

reassigned complex code combinations 

are represented by an alphanumeric 

code with the last 4 digits of the 

designated primary service followed by 

‘‘A’’ (indicating ‘‘adjustment’’). For 

example, the geometric mean cost listed 

in Addendum J for the code 

combination described by CPT code 

33208A assigned to C–APC 0655 

included all code combinations that 

were proposed to be reassigned to C– 

APC 0655 when CPT code 33208 is the 

primary code. Providing the information 

contained in Addendum J in the 

proposed rule allowed stakeholders the 

opportunity to better assess the impact 

associated with the proposed 

reassignment of each of the code 

combinations eligible for a complexity 

adjustment. 

(b) Additional C–APCs 

Several commenters to the CY 2014 

OPPS/ASC proposed rule questioned 

why CMS only converted a subset of the 

device-dependent APCs to C–APCs (78 

FR 74864). We responded that while we 

were initially adopting a subset of the 

most costly device-dependent services, 

we may extend comprehensive 

payments to other procedures in future 

years as part of a broader packaging 

initiative (78 FR 74864). Upon further 

review for CY 2015, we stated in the CY 

2015 OPPS/ASC proposed rule (79 FR 

40944 through 40945) that we believe 

that the entire set of the currently 

device-dependent APCs (after the 

proposed reorganization and 

consolidation of the current devicedependent APCs) are appropriate 

candidates for C–APC payment because 

the device-dependent APCs not 

included in last year’s comprehensive 

APC payment proposal are similar to the 

original 29 device-dependent APCs that 

were proposed as C–APCs in CY 2014. 

Similar to the original 29 devicedependent APCs for CY 2014 that were 

converted to C–APCs, the additional 

device-dependent APCs that were 

proposed for conversion to C–APCs 

contain comprehensive services 

primarily intended for the implantation 

of costly medical devices. Therefore, in 

the CY 2015 OPPS/ASC proposed rule, 

we proposed to apply the 

comprehensive APC payment policy to 

the remaining device-dependent APCs 

for CY 2015. 

In addition, since the publication of 

the CY 2014 OPPS/ASC final rule with 

comment period, stakeholders brought 

several services to our attention as 

appropriate candidates for C–APC 

payment. Stakeholders recommended 

that we create C–APCs for these 

procedures and technologies or assign 

them to a previously proposed C–APC. 

We agreed with the stakeholders. 

Similar to the other services designated 

as comprehensive in CY 2014, these 

procedures are comprehensive singlesession services with high-cost 

implantable devices or high-cost 

equipment. For CY 2015, we proposed 

to convert the following existing APCs 

into C–APCs: APC 0067 (Single Session 

Cranial Stereotactic Radiosurgery) and 

APC 0351 (Level V Intraocular 

Surgery)). C–APC 0351 only contains 

one procedure—CPT code 0308T 

(Insertion of ocular telescope prosthesis 

including removal of crystalline lens). 

We also proposed to assign the CPT 

codes for IORT (CPT codes 77424 and 

77425) to C–APC 0648 (Level IV Breast 

and Skin Surgery) because IORT is a 

single session comprehensive service 

that includes breast surgery combined 

with a special type of radiation therapy 

that is delivered inside the surgical 

cavity but is not technically 

brachytherapy. The HCPCS codes that 

we proposed to assign to these C–APCs 

in CY 2015 would be assigned to status 

indicator ‘‘J1.’’ 

(c) Reconfiguration and Restructuring of 

the C–APCs 

Based on further examination of the 

structure of the C–APCs illustrated in 

the CY 2014 OPPS/ASC final rule with 

comment period and an evaluation of 

their comprehensive geometric mean 

costs (using the updated CY 2013 claims 

data), in the CY 2015 OPPS/ASC 

proposed rule (79 FR 40945), we 

proposed to reorganize, combine, and 

restructure some of the C–APCs. The 

purpose of this APC restructuring is to 

improve resource and clinical 

homogeneity among the services 

assigned to certain C–APCs and to 

eliminate APCs for clinically similar 

services, but with overlapping geometric 

mean costs. The services we proposed to 

assign to each of the C–APCs for CY 

2015, along with the relevant cost 

statistics, were provided in Addendum 

J to the proposed rule. Addendum J is 

available at the CMS Web site at: 

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

Medicare-Fee-for-Service-Payment/

HospitalOutpatientPPS/index.html. 

Table 7 of the proposed rule (79 FR 

40952) listed the additional 28 APCs 

proposed under the CY 2015 

comprehensive APC policy. 

In summary, our proposal to 

reorganize, combine, and restructure 

some of the C–APCs included the 

following proposed changes: 

• Endovascular clinical family 

(renamed Vascular Procedures, VASCX). 

We proposed to combine C–APCs 0082, 

0083, 0104, 0229, 0319, and 0656 

illustrated for CY 2014 to form three 

proposed levels of comprehensive 

endovascular procedure APCs: C–APC 

0083 (Level I Endovascular Procedures); 

C–APC 0229 (Level II Endovascular 

Procedures); and C–APC 0319 (Level IV 

Endovascular Procedures). 

• Automatic Implantable Cardiac 

Defibrillators, Pacemakers, and Related 

Devices (AICDP). We proposed to 

combine C–APCs 0089, 0090, 0106, 

0654, 0655, and 0680 as illustrated for 

CY 2014 to form three proposed levels 

of C–APCs within a broader series of 

APCs for pacemaker implantation and 

similar procedures as follows: APC 0105 

(Level I Pacemaker and Similar 

Procedures), a non-comprehensive APC; 

C–APC 0090 (Level II Pacemaker and 

Similar Procedures); C–APC 0089 (Level 

III Pacemaker and Similar Procedures); 

and C–APC 0655 (Level IV Pacemaker 

and Similar Procedures). 

• We proposed to delete the clinical 

family for Event Monitoring, which only 

had one C–APC (C–APC 0680 (Insertion 

of Patient Activated Event)) with a 

single CPT code 33282 as illustrated for 

CY 2014. We also proposed to reassign 

CPT code 33282 to C–APC 0090, which 

contains clinically similar procedures. 

• In the urogenital family, we 

proposed two levels instead of three 

levels for urogenital procedures, and to 

reassign several codes from APC 0195 to 

C–APC 0202 (Level V Female 

Reproductive Procedures). 


tkelley on DSK3SPTVN1PROD with RULES2
66804 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

• We proposed to rename the 

arthroplasty family of APCs to 

‘‘Orthopedic Surgery.’’ We also 

proposed to reassign several codes from 

APC 0052 to C–APC 0425, which we 

proposed to rename ‘‘Level V 

Musculoskeletal Procedures Except 

Hand and Foot.’’ 

• We proposed three levels of 

electrophysiologic procedures, using the 

current inactive APC ‘‘0086’’ instead of 

APC 0444, to have consecutive APC 

grouping numbers for this clinical 

family and to rename APC 0086 ‘‘Level 

III Electrophysiologic Procedures.’’ In 

addition, we proposed to replace 

composite APC 8000 with proposed C– 

APC 0086 as illustrated in the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 74870). 

We also proposed three new clinical 

families: Gastrointestinal Procedures 

(GIXXX) for gastrointestinal stents, 

Tube/Catheter Changes (CATHX) for 

insertion of various catheters, and 

Radiation Oncology (RADTX), which 

would include C–APC 0067 for single 

session cranial SRS. 

(3) Public Comments 

Comment: Commenters were 

generally supportive of the proposed 

changes to the comprehensive APC 

payment policy for CY 2015 when 

compared to the CY 2014 final policy, 

and urged CMS to monitor 

implementation for payment adequacy 

and access to quality care. Some 

commenters requested that CMS delay 

implementation until at least July 1, 

2015, to allow time to fully test systems 

changes. Some commenters requested 

that CMS delay implementation for a 

year or more until CMS addresses 

assorted concerns or so that hospitals 

can continue to analyze the policy and 

budget for the financial impact. 

Response: We appreciate the 

commenters’ support. We plan to 

monitor the implementation of this C– 

APC payment policy and will consider 

future revisions as necessary. We will 

not further delay implementation of this 

policy. We have already delayed 

implementation of the C–APC payment 

policy for a year, which we believe 

provided ample time for hospitals to 

evaluate the policy. 

Comment: We received feedback from 

commenters regarding the data 

resources that CMS provided to support 

the proposed rule. Some commenters 

commended CMS for the technical 

support and assistance provided that 

enabled the commenters to replicate 

CMS’ methodology and match CMS’ 

results. Other commenters expressed 

concern that the data resources were 

insufficient, inconsistent, and unclear. 

Some commenters also requested that 

CMS enhance transparency, expand the 

data resources available to the public, 

and engage stakeholders in future 

comprehensive APC payment policy 

development. Some commenters asked 

that CMS provide cost data on all of the 

code combinations that were evaluated 

for the complexity adjustments, 

including the code combinations that 

qualified for a complexity adjustment. 

One commenter stated that 

discrepancies in some of the number 

entries between Addendum J and 

Addendum B violate the Administrative 

Procedures Act (APA) because these 

discrepancies ‘‘make it impossible to 

understand what CMS is proposing.’’ 

Response: We appreciate the 

commenters’ support for the proposed 

expansion of available data resources 

related to the comprehensive APC 

payment policy methodology. In 

response to the commenters who 

expressed concern regarding the 

insufficiency of the data files provided, 

we understand that the OPPS is 

technically complex. However, we 

believe that the data made available to 

the public as part of the proposed rule 

were appropriate, clear, and sufficient. 

We acknowledge the commenters’ 

concerns regarding the transparency of 

related data and the desire for 

additional resources. Therefore, for this 

final rule with comment period, we are 

providing additional data in Addendum 

J, such as cost statistics related to code 

combinations that are not eligible for 

complexity adjustments. Regarding any 

indications of discrepancies in some of 

the number entries between Addendum 

J and Addendum B, as the commenter 

suggested, we understand and 

acknowledge that minor discrepancies 

may sometimes occur with complex 

payment rules that include various files 

with many different types of data. 

However, we do not believe any such 

discrepancies would limit commenters’ 

ability to understand the proposed 

policies or to evaluate the impacts or 

effects of the proposed policy changes. 

The comprehensive APC payment 

policy has been open for public 

comment during three consecutive 

OPPS rulemaking cycles: the CY 2014 

OPPS/ASC proposed rule; the CY 2014 

OPPS/ASC final rule with comment 

period; and the CY 2015 OPPS/ASC 

proposed rule. Therefore, we do not 

believe that we provided insufficient 

notice of the policies that are a part of 

the comprehensive APC payment 

policy. 

Comment: Commenters expressed 

concern regarding the misalignment 

between hospitals’ billing practices and 

systems and the proposal to package all 

services (except for the few exceptions 

noted above) on a claim into the 

payment for the comprehensive service. 

The commenters observed that a 

significant number of comprehensive 

service claims spanned more than 5 

days, with some claims spanning close 

to 30 days. The commenters 

recommended that CMS limit the 

payment bundle to services provided 

within 1 or 2 days of the primary 

service, or defining the bundle based on 

episodes of care. Commenters also 

requested that CMS clarify the guidance 

provided and educate providers on how 

to report comprehensive services that 

fall within the span of a recurring 

service claim. Some commenters 

expressed concern that policies which 

reduce or eliminate series billing for 

recurring services may create an 

operational burden for hospitals; 

increase claims processing activity for 

Medicare contractors; and increase the 

amount of paperwork sent to a 

beneficiary. 

Response: Our intent is to capture all 

of the services associated with the 

primary service assigned to a C–APC, 

except those services that would still be 

separately paid under the OPPS, even 

when provided in conjunction with a 

comprehensive service. The 219 

procedures assigned to the C–APCs are 

a small fraction of the total services 

provided in HOPDs. We believe that it 

would not be an undue hardship for 

some hospitals to alter their processes 

such that they file separate claims for 

services that are unrelated both 

clinically and in regard to time to the 

comprehensive service. With regard to 

recurring services, we have previously 

issued manual guidance in the Internet 

Only Manual, Pub. 100–4, Chapter 1, 

Section 50.2.2, that provides that only 

recurring services should be billed 

monthly. We also have specified that, in 

the event that a recurring service occurs 

on the same day as an acute service that 

falls within the span of the recurring 

service claim, hospitals should bill 

separately for recurring services on a 

monthly claim (repetitive billing) and 

submit a separate claim for the acute 

service. We also do not expect that these 

claims for comprehensive services in 

the outpatient setting would extend 

beyond a few days because the 219 

procedures assigned to the 25 C–APCs 

are almost entirely surgical procedures. 

If a physician determined that 

furnishing one of these services would 

be medically necessary for the treatment 

of a Medicare beneficiary and expected 

the beneficiary to require hospital care 

for more than 2 midnights, inpatient 

admission would be appropriate. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66805 

Comment: Commenters generally 

supported the proposed packaging of all 

add-on codes reported in conjunction 

with comprehensive service claims with 

the allowance of complexity 

adjustments for add-on codes currently 

assigned to device-dependent APCs in 

CY 2014. One commenter requested that 

CMS assign add-on CPT code 57267 

(Insertion of mesh or other prosthesis 

for repair of pelvic floor defect, each site 

(anterior, posterior compartment), 

vaginal approach (List separately in 

addition to code for primary procedure) 

to C–APC 0202 because this code has 

high device costs. 

Response: We appreciate the 

commenters’ support. According to 42 

CFR 419.2(b)(18), add-on codes are 

packaged under the OPPS. Because 

implementation of the finalized 

comprehensive APC payment policy 

was delayed until CY 2015, for CY 2014 

we maintained the structure and code 

assignments for the device-dependent 

APCs, which continued separate 

payment for add-on codes assigned to 

device-dependent APCs for CY 2014. 

We refer readers to Table 7 of the CY 

2014 OPPS/ASC final rule with 

comment period (78 FR 74859). The 

add-on code complexity adjustment 

policy is limited only to certain add-on 

codes that were previously assigned to 

device-dependent APCs and that, along 

with a primary comprehensive service, 

meet the complexity adjustment criteria. 

We refer readers to Table 9 of the CY 

2015 OPPS/ASC proposed rule (79 FR 

40959) for a listing of these add-on 

codes. Our intent is not to make a higher 

payment in every case that an add-on 

procedure results in higher costs. 

Therefore, we are finalizing the CY 2015 

proposal to package all add-on codes 

reported on a claim in conjunction with 

a comprehensive service, and also to 

allow a limited number of add-on codes 

to be evaluated for a complexity 

adjustment when billed with a primary 

comprehensive service. We are not 

extending the complexity adjustment 

policy beyond those add-on codes that 

were assigned to device-dependent 

APCs. The list of add-on codes that we 

evaluated for a complexity adjustment is 

included later in this section in Table 8. 

Comment: Some commenters 

requested that CMS divide the 

restructured C–APCs into more discrete 

groupings to increase clinical coherence 

and resource cost homogeneity. Some 

commenters believed that improved 

clinical coherence among the 

procedures within the C–APCs would 

increase the stability of C–APC 

payments from year-to-year and 

decrease opportunities for ‘‘gaming’’ the 

system. Some commenters also 

expressed concern with the high 

variation in geometric mean costs for 

services assigned to the C–APCs that do 

not create a violation of the 2 times rule, 

but would result in inadequate payment 

for the highest cost procedures assigned 

to the C–APC. 

Response: We disagree with the 

commenters. We believe that the 

categorization of the restructured C– 

APCs better represents clinical and 

resource homogeneity when compared 

to the CY 2014 structure of the C–APCs. 

We also note that the OPPS is a 

prospective payment system that relies 

on groupings of procedures resulting in 

a weighted-average cost payment based 

on all of the procedures in the group. 

Too much discretization of APC 

groupings would move the OPPS more 

toward a fee schedule, which would 

have individual payments for each 

HCPCS code and presents an 

undesirable outcome for the OPPS. In 

addition, we encourage all members of 

the stakeholder public to report all 

suspected incidents of fraud and abuse 

to the Office of Inspector General or the 

CMS Center for Program Integrity. As 

required by statute, we will review and 

evaluate, on an annual basis, any yearto-year changes in APC and HCPCS 

geometric mean costs. 

Comment: A few commenters 

disagreed with CMS’ proposal to expand 

the C–APCs to include all of the current 

device-dependent APCs. The 

commenters noted that a significant 

percentage of claims for some of the 

lower paying C–APCs (specifically, C– 

APCs 0084 (Level I Electrophysiologic 

Procedures), 0427 (Level II Tube or 

Catheter Changes or Repositioning), 

0622 (Level II Vascular Access 

Procedures), and 0652 (Insertion of 

Intraperitoneal and Pleural Catheters) 

report services assigned to 

noncomprehensive APCs that are 

significantly more costly than the 

primary service that is motivating the 

C–APC payment. Commenters believed 

that procedures assigned to these APCs 

are not infrequently performed as 

secondary procedures to other more 

costly procedures that are assigned to 

noncomprehensive APCs. Commenters 

recommended various approaches for 

addressing this concern: (1) Applying 

complexity adjustments to these claims; 

(2) excluding high-cost procedures from 

the comprehensive APC packaging 

policy; (3) paying for the higher-cost 

service and applying a multiple 

procedure reduction to the C–APC; or 

(4) eliminating the lower paying C– 

APCs from the comprehensive APC 

payment policy methodology. 

Response: Our analysis shows a 

significant number of claims in APCs 

0427 and 0622 that contain 

noncomprehensive services that are 

more costly than the procedures 

assigned to the proposed C–APC. In 

addition, similar to APCs 0427 and 

0622, APC 0652 contains a total of three 

catheter-insertion procedures. These 

procedures are not similar to the other 

major procedures assigned to C–APCs, 

but are sometimes supportive of other 

procedures. For example, APC 0652 

includes the procedure that describes 

the placement of a pleural catheter that 

can be used for drug delivery, but is not 

a definitive therapeutic procedure 

similar to most of the other procedures 

assigned to that C–APC. Also, APCs 

0427, 0622, and 0652 are not deviceintensive APCs, meaning that the device 

offsets are not greater than 40 percent. 

Therefore, we are accepting the 

commenters’ recommendation. We are 

not converting APCs 0427, 0622, and 

0652 into C–APCs for CY 2015. In 

addition, because we are not converting 

APC 0427 into a C–APC, we will not 

evaluate add-on CPT code 49435 for 

complexity adjustments because the 

APC that contains the base codes for 

CPT code 49435 are assigned to APC 

0427. However, we are finalizing the 

proposal to convert APC 0084 into a C– 

APC. We did not find that a significant 

number of higher cost 

noncomprehensive procedures are 

performed in conjunction with the 

procedures assigned to APC 0084. 

Unlike many of the catheter insertion 

procedures assigned to APCs 0427, 

0622, and 0652, the electrophysiology 

procedures assigned to APC 0084 are 

not supportive of other services, but are 

the definitive therapeutic procedures 

intended to treat a patient’s cardiac 

condition. 

Comment: Commenters urged CMS to 

develop adjustments to C–APC 

payments based on patient acuity or 

diagnosis to account for clinical 

complexity and patient characteristics, 

which could help mitigate the negative 

payment impact of expanding the 

comprehensive APC payment policy on 

hospitals that treat more clinically 

complex patients, such as academic 

medical centers, cancer hospitals, and 

trauma centers. 

Response: As we stated in the CY 

2015 OPPS/ASC proposed rule (79 FR 

40951), section 1833(t)(2) of the Act 

provides a procedure-based payment 

methodology for the OPPS, which is 

unlike the IPPS that makes payments 

based on both diagnoses and 

procedures. Currently OPPS payments 

are not based on patient severity or 

diagnosis like payments under the IPPS. 

Therefore, we are unable to make 


tkelley on DSK3SPTVN1PROD with RULES2
66806 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

payment adjustments based on 

diagnoses. 

Comment: Commenters expressed 

concern that not implementing C–APCs 

in the ASC setting distorts the payment 

relationship between ASCs and HOPDs 

and could result in incentives to direct 

patients from one setting to another. 

Commenters recommended that CMS 

reprogram the ASC payment system 

software, as soon as possible, to allow 

the system to perform the complex logic 

needed to implement and provide 

adequate payment for the C–APCs for 

ASCs. 

Response: The commenters are correct 

that the comprehensive APC payment 

policy methodology is not being 

adopted under the ASC payment 

system. However, we do not believe that 

this policy decision will result in siteof-service shifts, but we will continue to 

monitor procedure volumes in both 

settings. Although OPPS payments for 

individual surgical procedures assigned 

to C–APCs are higher than ASC 

payments for the same procedures, 

under the standard noncomprehensive 

service payment methodology that 

applies in the ASC for all APCs and in 

the OPPS for noncomprehensive 

services, there remains separate 

payment for covered procedures and 

covered ancillary services that are not 

packaged under a general packaging 

policy. This continuation of separate 

payment for covered procedures and 

covered ancillary services performed in 

the ASC (which is not available in the 

OPPS for procedures performed in 

addition to the primary procedures 

assigned to C–APCs) should help 

mitigate any incentive to perform 

procedures assigned to C–APCs in the 

HOPD. However, given the significant 

difference between ASC and OPPS 

payment rates, we do not believe that 

separate payment (at the multiple 

procedure reduction reduced rate) for 

additional procedures performed in the 

ASC setting along with a procedure that 

is assigned to a C–APC will draw cases 

away from the HOPD because, in most 

cases, the overall HOPD will be higher 

than the ASC payment for the same set 

of procedures. We will consider the 

commenters’ suggestion that we develop 

new payment software for the ASC 

payment system should an opportunity 

to do so arise in the future. 

Comment: Commenters requested that 

CMS provide separate payment for 

certain services reported on a 

comprehensive claim. Some 

commenters requested that CMS 

exclude the following additional 

services from the packaging provision 

under the comprehensive APC payment 

policy: 

• Dialysis and emergency dialysis 

services. 

• Blood products. 

• Expensive diagnostic tests, such as 

angiography. 

• High-cost drugs and devices that 

account for a high percentage of the 

geometric mean cost of a C–APC. 

• Outpatient services paid under a 

payment schedule, such as laboratory 

services. 

The commenters believed that the C– 

APC payment would not adequately 

cover the cost of these services. One 

commenter believed that packaging 

payment for an otherwise separately 

payable drug when provided in 

conjunction with a comprehensive 

service may cause hospitals, in 

consultation with physicians, to choose 

a less-expensive alternative drug. 

Response: We responded to similar 

comments that disagreed with CMS’ 

proposal to package payment for various 

items and services into the C–APC 

payment in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

74865 through 74910). As previously 

stated, we disagree with the 

commenters. We believe that the central 

attribute of the comprehensive APC 

payment policy is the packaging of all 

adjunctive services, with the exception 

of those services described above that, 

according to the statute, cannot be 

packaged or the list of preventive 

services that generally would not be 

provided at the time of a major 

procedure assigned to a C–APC. We 

note that (as stated above in section 

II.A.3.a. of this final rule with comment 

period) where there are a variety of 

devices, drugs, items, and supplies that 

could be used to furnish a service, some 

of which are more expensive than 

others, packaging encourages hospitals 

to use the most cost-efficient item that 

meets the patient’s needs, rather than 

routinely using a more expensive item, 

which often results if separate payment 

is provided for the items. Furthermore, 

packaging also encourages hospitals to 

effectively negotiate with manufacturers 

and suppliers to reduce the purchase 

price of items and services (including 

drugs) or to explore alternative group 

purchasing arrangements, thereby 

encouraging the most economical health 

care delivery. 

Comment: Commenters asserted that 

the reliance on code combinations based 

on cost ranking of codes would lead to 

instability in the complexity 

adjustments from year to year, and 

overlook a large number of 

comprehensive claims with three or 

more ‘‘J1’’ services, which is common 

for the clinical complexity of 

procedures assigned to the endovascular 

revascularization family of APCs. 

Commenters suggested alternative 

methodologies for determining 

eligibility, such as applying a 

complexity adjustment to any claim that 

has three or more ‘‘J1’’ services or 

applying the cost and frequency criteria 

to all combinations of ‘‘J1’’ services. 

Response: We disagree with the 

commenters that assigning complexity 

adjustments based on cost ranking of 

primary and secondary codes is either 

insufficient or would result in 

instability of the complexity 

adjustments in future years. We 

proposed complexity adjustments for 

certain code pairs to provide a higher 

payment in the next higher APC within 

a clinical family for high cost procedure 

pairs consisting of a primary 

comprehensive procedure and a 

secondary comprehensive procedure 

that represent sufficiently frequent and 

sufficiently costly comprehensive 

procedure pairs such that they are 

separated from and provided a higher 

payment than all of the cases that are 

accounted for in APC assignment of the 

primary service. We do not believe that 

providing a complexity adjustment to 

any claim that has three or more ‘‘J1’’ 

services or to all claims reporting pairs 

of ‘‘J1’’ services that meet the cost and 

frequency criteria would adequately 

serve the stated purpose of the policy. 

The intent of the complexity adjustment 

policy is to identify a limited number of 

costly procedure pairs for a higher 

payment at the next higher paying C– 

APC within the clinical family, not to 

unpackage and separately pay for all of 

the high cost cases that are associated 

with the primary ‘‘J1’’ procedure. 

Although such a policy as the 

commenters requested could be 

beneficial to the procedures assigned to 

the endovascular C–APC family because 

of the high number of codes that can be 

billed per case, we do not believe that 

this approach would serve the other 

clinical families that do not rely on 

component coding to the same extent as 

endovascular procedures. Therefore, we 

are finalizing our proposal to base the 

complexity adjustments on code pairs 

that include the two most costly ‘‘J1’’ 

services reported on the C–APC service 

claim. 

Comment: Commenters believed that 

the cost threshold is too restrictive and 

would cause financial hardship for 

hospitals and jeopardize beneficiary 

access to care. Commenters suggested 

that CMS adjust the cost threshold to 

1.5, 1.75, or within 2 percent of the 2 

times rule limit. 

Response: In response to comments to 

the CY 2014 OPPS/ASC final rule with 

comment period, we significantly 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66807 

lowered the cost criterion for a 

complexity adjustment from two times 

the cost of the primary procedure to two 

times the cost of the lowest cost 

procedure in the APC to which the 

primary procedure is assigned. This 

change made it significantly easier for 

code combinations to qualify for a 

complexity adjustment based on higher 

cost. We do not believe that further 

lowering of the cost criterion would be 

consistent with the objective of the 

comprehensive APC payment policy. 

We believe that lowering the cost 

criterion would result in effectively 

unpackaging too many cases from the 

primary C–APC assignment and, 

therefore, defeat the purpose of the 

policy, which is to create a 

comprehensive prospective payment for 

major, primary device-intensive 

procedures. 

Comment: Commenters expressed 

concern that claims assigned to the only 

level or the highest level C–APC within 

a clinical family are ineligible to receive 

a complexity adjustment because there 

is no higher paying APC in the clinical 

family in which to assign these code 

combinations. Commenters requested 

that CMS add an additional C–APC 

level to these clinical families to 

provide for more granular payment 

levels and accommodate potential 

complexity adjustments. 

Response: As we stated in the CY 

2015 OPPS/ASC proposed rule, we 

would not create new APCs with a 

geometric mean cost that is higher than 

the highest cost C–APC in a clinical 

family just to accommodate potential 

complexity adjustments. Therefore, the 

highest payment for any code 

combination for services assigned to a 

C–APC would be the highest paying C– 

APC in the clinical family. We only 

found 7 code pairs out of the 219 

procedures that are assigned to the 25 

final C–APCs that would qualify for a 

complexity adjustment if a higher 

paying APC were available for 

assignment of the code combination. We 

do not believe that this small number of 

code combinations from the highest 

paying APCs in the final 12 clinical 

families of C–APCs that satisfy the 

complexity adjustment criteria 

necessitates creating additional APCs, 

especially if these APCs would be 

populated with only a few multiple 

procedure claims. In addition, in 

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

the Act, APCs are defined as ‘‘groups of 

covered OPD services’’ that are 

comparable clinically and with respect 

to the use of resources. If we created an 

additional new higher level APC within 

each C–APC clinical family that did not 

contain any primary comprehensive 

services and instead only contained a 

very small volume of complexityadjusted code pairs, we do not believe 

that such APCs would constitute 

appropriate ‘‘groups of covered OPD 

services.’’ 

Comment: One commenter urged 

CMS to finalize the proposal to assign 

CPT code 0308T to APC 0351 and to 

convert APC 0351 into a C–APC. 

Response: We appreciate the 

commenter’s support. For this final rule 

with comment period, we are finalizing 

our proposal to assign CPT code 0308T 

to APC 0351 and to convert APC 0351 

into a C–APC for CY 2015. 

Comment: Commenters generally 

agreed with the proposed structure of 

the Automatic Implantable Cardiac 

Defibrillators, Pacemakers, and Related 

Devices (AICDP) C–APCs. One 

commenter specifically supported the 

assignment of CPT code 0319T to C– 

APC 108. 

Response: We appreciate the 

commenters’ support. 

Comment: Several commenters 

supported CMS’ proposed assignment of 

CPT codes 77424 and 77425 to C–APC 

0648. Another commenter believed that 

the services assigned to C–APC 0648 are 

not similar clinically or similar in 

resource costs, and suggested that CMS 

divide this C–APC into two levels. 

Response: We appreciate the 

commenters’ support for our proposal 

regarding C–APC 0648. However, we 

disagree with the commenter that the 

services assigned to C–APC 0648 are not 

similar clinically or in regard to 

resource costs. All of the seven services 

proposed to be assigned to C–APC 0648 

involve the breast. The current clinical 

application of intraoperative radiation 

therapy (IORT CPT codes 77424 and 

77425) is for breast cancer following 

lumpectomy. In regard to resource costs 

of the services assigned to C–APC 0648, 

the range from the lowest cost 

significant procedure to the highest cost 

significant procedure is between 

approximately $5,584 and $9,325, 

which is well within the 2 times rule 

limit. In addition, C–APC 0648 is a 

small APC with only 7 services and a 

total of approximately 5,000 claims 

based on CY2013 claims data. To further 

divide this C–APC would be less 

consistent with a prospective payment 

system than its proposed structure. 

Therefore, we are finalizing our 

proposal to assign CPT codes 77424 and 

77425 to C–APC 0648. 

Comment: One commenter requested 

that CMS exclude C–APC 0259 from the 

comprehensive APC payment policy. 

The commenter believed that the change 

in the procedure-to-device claim edits 

policy would result in more incorrectly 

coded claims for the procedure 

described by CPT code 69930 (Cochlear 

device implantation, with or without 

mastoidectomy), which is the only 

service assigned to C–APC 0259. 

Response: We do not believe that C– 

APC 0259 should be excluded from the 

comprehensive APC payment policy. 

The discussion of the device edits 

policy is in section II.A.2.d.1. of this 

final rule with comment period. We 

believe that hospitals will continue to 

report the cost of the cochlear implant 

when one of these devices is implanted 

into a Medicare beneficiary because the 

cost of this device is 84 percent of the 

total cost of the procedure. After 

consideration of this comment, we see 

no reason to exempt C–APC 0259 from 

the comprehensive APC payment 

policy. We are finalizing our proposal to 

convert APC 0259 into a C–APC for CY 

2015. 

Comment: Several commenters agreed 

with CMS’ proposed structure of the 

cardiac electrophysiology C–APCs: C– 

APC 0084 (Level I Electrophysiologic 

Procedures); C–APC 0085; and C–APC 

0086 (Level III Electrophysiologic 

Procedures). One commenter requested 

that CMS reassign CPT code 93603 

(Right ventricular recording) from C– 

APC 0084 to C–APC 0085 because the 

commenter believed that the procedure 

described by CPT code 93603 is more 

similar to the procedures assigned to C– 

APC 0085 than the other procedures 

assigned to C–APC 0084. 

Response: We appreciate the 

commenters’ support. However, we 

disagree with the commenter that CPT 

code 93603 should be reassigned from 

C–APC 0084 to C–APC 0085. CPT code 

93603 is a very low-volume procedure, 

with a total of 12 claims for CY 2013. 

The geometric mean cost for CPT code 

93603 (based on these 12 claims) is 

$1,807. The geometric mean cost of the 

lowest cost significant service in C–APC 

0085 is $4,064 (CPT code 93619). 

Therefore, we believe that CPT code 

93603 lacks resource similarity to the 

procedures assigned to C–APC 0085. We 

are finalizing the structure of the cardiac 

electrophysiology C–APCs, as proposed 

for CY 2015. 

Comment: Several commenters agreed 

with CMS’ proposed structure of the 

neurostimulator APCs. Two commenters 

believed that the difference in cost 

between CPT code 61885 (Insertion or 

replacement of cranial neurostimulator 

pulse generator or receiver, direct or 

inductive coupling; with connection to 

a single electrode array) and CPT code 

61886 (Insertion or replacement of 

cranial neurostimulator pulse generator 

or receiver, direct or inductive coupling; 

with connection to 2 or more electrode 


tkelley on DSK3SPTVN1PROD with RULES2
66808 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

arrays) is too low and that the device 

costs may not be adequately captured 

based on the accuracy of the claims 

data. Another commenter recommended 

that CMS restructure the 

neurostimulator APCs to improve 

clinical coherence by limiting C–APC 

0318 to only certain full-system 

procedures, assigning all lead placement 

procedures to C–APC 0061, and 

assigning the remaining neurostimulator 

procedures to C–APC 0039. 

Response: We appreciate the 

commenters’ support. Regarding the 

commenters’ concern about the 

geometric mean cost of CPT codes 

61885 and 61886, the geometric mean 

cost of CPT code 61886 (dual channel 

procedure) is higher than CPT code 

61885 (single channel procedure), 

which is to be expected. It is important 

to remember that the C–APC payment 

policy packages all procedures 

performed with the primary procedure, 

so the cost for the primary service in a 

C–APC may be higher than the cost 

associated with single claims for the 

same service. We note that APC 

groupings are based on two factors, 

clinical similarity and resource 

similarity. The OPPS requires that we 

group services into APCs for payment 

purposes based on these two factors. 

Clinical similarity in the APC grouping 

context is by definition, and by 

necessity, is much broader than the 

comparisons that distinguish individual 

CPT codes. All of the procedures 

assigned to C–APCs 0061, 0039, and 

0318 include the various 

neurostimulator-related procedures. The 

neurostimulator family of C–APCs 

groups these procedures based on the 

geometric mean cost and clinical 

similarity of the primary service. In 

some cases, an APC includes 

implantation of a complete system of 

one type of neurostimulator and the 

implantation of either a generator alone 

or a complete system of other types. 

This is a function of the CPT coding 

system and the prospective nature of the 

comprehensive APC payment policy. 

Overall, we believe that the proposed 

structure of the neurostimulator family 

of C–APCs strikes the proper balance of 

both factors for APC construction and 

resource and clinical similarity. We are 

finalizing the proposed structure of the 

neurostimulator C–APCs, as proposed, 

and without modification. 

Comment: One commenter requested 

that CMS divide C–APC 0425 into two 

APCs because the range of procedure 

costs in this APC is too significant. 

Another commenter requested that CMS 

reassign the following CPT codes from 

APC 0208 to C–APC 0425 based on 

more appropriate resource homogeneity 

to the other procedures assigned to C– 

APC 0425: CPT codes 22551, 22554, 

22612, and 22856. 

Response: We disagree with the 

commenters’ recommendation to divide 

C–APC 0425 into two C–APCs. The cost 

range for significant procedures within 

C–APC 0425 (using the proposed rule 

code assignments) is between 

approximately $9,087 (for CPT code 

69714) and $15,740 (for CPT code 

24363), which is well within the 2 times 

rule limit. We agree with the 

commenters that CPT codes 22551 (with 

a geometric mean cost of $10,052), 

22554 (with a geometric mean cost of 

$8,129), 22612 (with a geometric mean 

cost of $8,451), and 22856 (with a 

geometric mean cost of $12,958) should 

be reassigned from APC 0208 (with a 

geometric mean cost of $4,267) to C– 

APC 0425 (with a geometric mean cost 

of $10,606). We believe that assigning 

these four CPT codes to C–APC 0425 

supports more appropriate resource and 

clinical similarity when compared to 

the current assignment to APC 0208. 

Otherwise, we are finalizing the 

proposed structure for C–APC 0425. 

With these additions to C–APC 0425, 

the cost range for significant procedures 

within C–APC 0425 (using the final rule 

code assignments) is between 

approximately $8,451 (for CPT code 

22612) and $15,740 (for CPT code 

24363). 

Comment: One commenter believed 

that the proposed C–APCs that include 

drug pumps would provide inadequate 

payment for its developing therapy 

because the therapy uses an advanced 

technology drug pump and a very costly 

drug. The commenter requested that 

CMS either provide complexity 

adjustments for high-cost drugs or 

unpackage the payment for certain highcost drugs. 

Response: As we stated in the CY 

2014 OPPS/ASC final rule with 

comment period (78 FR 74908 through 

74909), we do not believe that drugs 

being supplied to the patient to fill the 

reservoir of a pump at the time of pump 

implantation should be excluded from 

the comprehensive APC payment policy 

because drugs supplied to fill the pump 

during implantation of the pump are 

adjunctive to the procedure. The costs 

of costly adjunctive services are 

included proportionally into the cost 

estimation for the primary services 

through our ability to use almost all 

claims for a service and adoption of the 

geometric mean cost upon which to 

establish relative payment weights. In 

addition, we do not believe that we 

should make complexity adjustments 

for higher cost drugs. Complexity 

adjustments are for more complex 

procedure variations that differ 

significantly from the primary ‘‘J1’’ 

procedure. Complexity adjustments are 

not intended as a way to provide 

separate payment for adjunctive drugs 

and supplies under the guise of a 

complexity adjustment. Therefore, we 

are not adopting this commenter’s 

suggested changes to the comprehensive 

APC payment policy. We will continue 

to monitor the development of this 

technology and consider future 

revisions to this policy as needed. 

Comment: Commenters opinions 

varied regarding CMS’ proposal to 

include C–APCs 0202 (Level V 

Gynecologic Procedures), 0385 (Level I 

Urogenital Procedures), and 0386 (Level 

II Urogenital Procedures) in the 

urogenital procedures clinical family of 

C–APCs and to allow complexity 

adjustments from C–APC 0202 to C– 

APC 0385 and complexity adjustments 

from C–APC 0385 to C–APC 0386. Some 

commenters agreed with CMS’ proposed 

structure of the urogenital procedures 

family of C–APCs, while other 

commenters opposed the proposal to 

reassign complexity adjustment code 

combinations from C–APC 0202 to C– 

APC 0385. The commenters believed 

that the procedures assigned to C–APC 

0202, which are related to female 

urogenital anatomy, are not sufficiently 

clinically similar to the primary 

procedures assigned to C–APC 0385, 

which relate to the male urogenital 

anatomy. 

Response: We appreciate the 

commenters’ support for the proposed 

structure of the urogenital procedures 

C–APC clinical family and the proposed 

approach for complexity adjustments. 

However, we disagree with the 

commenters that complexity 

adjustments should not be made from 

C–APC 0202 to C–APC 0385 because of 

insufficient clinical similarity between 

the complex procedures with a primary 

code assigned to C–APC 0202 that have 

been reassigned according to the 

complexity adjustment policy to C–APC 

0385 and the primary procedures 

assigned to C–APC 0385. Although we 

acknowledge that there are differences 

in the male and female human 

urogenital anatomy, we believe that 

many of these procedures involve 

relatively complex repairs of the 

urogenital region involving implantable 

medical devices and, therefore, it is 

appropriate to assign complexity 

adjusted code combinations from C– 

APC 0202 to the next higher paying APC 

in the urogenital procedures clinical 

family, which is C–APC 0385. 

Comment: Some commenters 

supported the proposed structure of the 

C–APCs in the endovascular clinical 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66809 

family. Other commenters noted that 

payments for some endovascular 

procedure code combinations would be 

negatively impacted by the proposed 

structure for C–APCs 0083 (Level I 

Endovascular Procedures), 0229 Level II 

Endovascular Procedures), and 0319 

(Level III Endovascular Procedures). The 

commenters recommended reviewing 

and revising these C–APCs and creating 

more levels beyond the proposed three 

levels of endovascular C–APCs. 

Response: We appreciate the 

commenters’ support for the proposed 

structure of the endovascular C–APC 

clinical family. We do not believe that 

additional levels of endovascular C– 

APCs are necessary at this time. We 

believe that the restructured 

endovascular C–APCs better reflect 

resource homogeneity than the CY 2014 

final structure of these C–APCs because 

the new structure has clearer 

delineations between the cost ranges of 

the procedures assigned to the three 

levels. In addition, in response to 

comments to the CY 2014 OPPS/ASC 

final rule with comment period (79 FR 

40951), we proposed less stricter 

complexity adjustment criteria, which 

resulted in more code combinations 

qualifying for higher payment than 

would have qualified under the CY 2014 

OPPS final rule complexity adjustment 

criteria. We also proposed evaluating 

certain add-on codes that are currently 

assigned to device-dependent APCs for 

complexity adjustments, and the 

overwhelming majority of these add-on 

codes are endovascular add-on codes. 

We believe that these two changes to the 

CY 2014 comprehensive APC payment 

policy sufficiently mitigate much of any 

negative payment impact for 

endovascular procedures in this 

transition from the current payment 

methodology to the comprehensive APC 

payment methodology. As we do 

annually, we will reevaluate the need 

for adjustments to the endovascular 

family of C–APCs. 

Comment: In the CY 2015 OPPS/ASC 

proposed rule (79 FR 40950 through 

40951) in response to a comment to the 

CY 2014 OPPS/ASC final rule with 

comment period, we proposed to 

continue to pay for stem cell transplant 

procedures as we have done for many 

years through APCs 0111 (Blood 

Product Exchange) and 0112 (Apheresis 

and Stem Cell Procedures). We stated 

that we would not create a C–APC for 

stem cell transplant procedures. Some 

commenters supported this approach. 

Other commenters requested that CMS 

create a C–APC for these procedures. 

Response: Based on the rationale 

discussed in the CY 2015 OPPS/ASC 

proposed rule (79 FR 40950 through 

40951), we will continue to pay for stem 

cell transplant procedures through APCs 

0111 and 0112 in CY 2015. 

(4) Statement of Final Policy and List 

of CY 2015 C–APCs. 

As we discussed earlier, in the CY 

2015 OPPS/ASC proposed rule (79 FR 

40941 through 40953), we proposed to 

continue to define a comprehensive 

service as a classification for the 

provision of a primary service and all 

adjunctive services and supplies 

reported on the hospital Medicare Part 

B claim, with few exceptions, resulting 

in a single beneficiary copayment per 

claim. The comprehensive APC 

payment bundle policy includes all 

hospital services reported on the claim 

that are covered under Medicare Part B, 

except for the excluded services or 

services requiring separate payment by 

statute as noted above. We proposed to 

continue to define a clinical family of 

C–APCs as a set of clinically related C– 

APCs that represent different resource 

levels of clinically comparable services. 

After consideration of the public 

comments we received, we are 

finalizing our proposals, with some 

minor modifications, for establishment 

of C–APCs. In this final rule with 

comment period, we are establishing a 

total of 25 C–APCs within 12 clinical 

families for CY 2015, as described below 

in Table 7. 

We are establishing a comprehensive 

APC payment methodology that adheres 

to the same basic principles as those 

finalized in the CY 2014 OPPS/ASC 

final rule with comment period, with 

the following changes for CY 2015: 

• We are reorganizing and 

consolidating several of the current 

device-dependent APCs and the CY 

2014 C–APCs. 

• We are expanding the 

comprehensive APC payment policy to 

include all device-dependent APCs, 

except for APCs 0427, 0622, and 0652. 

• We are creating two other new C– 

APCs (C–APC 0067 and C–APC 0351). 

• We are establishing new complexity 

adjustment criteria: 

D Frequency of 25 or more claims 

reporting the HCPCS code combination 

(the frequency threshold); and 

D Violation of the ‘‘2 times’’ rule (the 

cost threshold). 

• We are establishing a policy to 

package all add-on codes, although we 

evaluate claims reporting a single 

primary service code reported in 

combination with an applicable add-on 

code (we refer readers to Table 8 below 

for the list of applicable add-on codes) 

for complexity adjustments. 

Addendum J to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site) 

contains all of the data related to the 

comprehensive APC payment policy, 

including the list of complexity 

adjustments. 

TABLE 7—CY 2015 C–APCS

Clinical family * C–APC APC title CY 2015 

payment 

AICDP ............................. 0090 Level II Pacemaker/Similar Procedures ................................................................................. $6,542.78 

AICDP ............................. 0089 Level III Pacemaker/Similar Procedures ................................................................................ 9,489.74 

AICDP ............................. 0655 Level IV Pacemaker/Similar Procedures ............................................................................... 16,400.98 

AICDP ............................. 0107 Level I ICD and Similar Procedures ...................................................................................... 22,907.64 

AICDP ............................. 0108 Level II ICD and Similar Procedures ..................................................................................... 30,806.39 

BREAS ............................ 0648 Level IV Breast and Skin Surgery ......................................................................................... 7,461.40 

ENTXX ............................ 0259 Level VII ENT Procedures ..................................................................................................... 29,706.85 

EPHYS ............................ 0084 Level I Electrophysiologic Procedures ................................................................................... 872.92 

EPHYS ............................ 0085 Level II Electrophysiologic Procedures .................................................................................. 4,633.33 

EPHYS ............................ 0086 Level III Electrophysiologic Procedures ................................................................................. 14,356.62 

EYEXX ............................ 0293 Level IV Intraocular Procedures ............................................................................................ 8,446.54 

EYEXX ............................ 0351 Level V Intraocular Procedures ............................................................................................. 23,075.30 

GIXXX ............................. 0384 GI Procedures with Stents ..................................................................................................... 3,173.83 

NSTIM ............................. 0061 Level II Neurostim./Related Procedures ................................................................................ 5,288.58 

NSTIM ............................. 0039 Level III Neurostim./Related Procedures ............................................................................... 17,099.35 

NSTIM ............................. 0318 Level IV Neurostim./Related Procedures ............................................................................... 26,152.16 

ORTHO ........................... 0425 Level V Musculoskeletal Procedures ..................................................................................... 10,220.00 


tkelley on DSK3SPTVN1PROD with RULES2
66810 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

TABLE 7—CY 2015 C–APCS—Continued 

Clinical family * C–APC APC title CY 2015 

payment 

PUMPS ........................... 0227 Implantation of Drug Infusion Device ..................................................................................... 15,566.34 

RADTX ............................ 0067 Single Session Cranial SRS .................................................................................................. 9,765.40 

UROGN ........................... 0202 Level V Gynecologic Procedures ........................................................................................... 3,977.63 

UROGN ........................... 0385 Level I Urogenital Procedures ............................................................................................... 6,822.35 

UROGN ........................... 0386 Level II Urogenital Procedures .............................................................................................. 13,967.97 

VASCX ............................ 0083 Level I Endovascular Procedures .......................................................................................... 4,537.45 

VASCX ............................ 0229 Level II Endovascular Procedures ......................................................................................... 9,624.10 

VASCX ............................ 0319 Level III Endovascular Procedures ........................................................................................ 14,840.64 

* Clinical Family Descriptor Key: 

AICDP = Automatic Implantable Cardiac Defibrillators, Pacemakers, and Related Devices. 

BREAS = Breast Surgery. 

ENTXX = ENT Procedures. 

EPHYS = Cardiac Electrophysiology. 

EYEXX = Ophthalmic Surgery. 

GIXXX = Gastrointestinal Procedures. 

NSTIM = Neurostimulators. 

ORTHO = Orthopedic Surgery. 

PUMPS = Implantable Drug Delivery Systems. 

RADTX = Radiation Oncology. 

UROGN = Urogenital Procedures. 

VASCX = Vascular Procedures. 

TABLE 8—CY 2015 PACKAGED CPT 

ADD–ON CODES THAT ARE EVALUATED FOR A COMPLEXITY ADJUSTMENT

CY 2015 

CPT/

HCPCS 

add-on 

code 

CY 2015 short descriptor 

19297 ....... Place breast cath for rad. 

33225 ....... L ventric pacing lead add-on. 

37222 ....... Iliac revasc add-on. 

37223 ....... Iliac revasc w/stent add-on. 

37232 ....... Tib/per revasc add-on. 

37233 ....... Tibper revasc w/ather add-on. 

37234 ....... Revsc opn/prq tib/pero stent. 

37235 ....... Tib/per revasc stnt & ather. 

37237 ....... Open/perq place stent ea add. 

37239 ....... Open/perq place stent ea add. 

92921 ....... Prq cardiac angio addl art. 

92925 ....... Prq card angio/athrect addl. 

92929 ....... Prq card stent w/angio addl. 

92934 ....... Prq card stent/ath/angio. 

92938 ....... Prq revasc byp graft addl. 

92944 ....... Prq card revasc chronic addl. 

92998 ....... Pul art balloon repr precut. 

C9601 ...... Perc drug-el cor stent bran. 

C9603 ...... Perc d-e cor stent ather br. 

C9605 ...... Perc d-e cor revasc t cabg b. 

C9608 ...... Perc d-e cor revasc chro add. 

f. Calculation of Composite APC 

Criteria-Based Costs 

As discussed in the CY 2008 OPPS/ 

ASC final rule with comment period (72 

FR 66613), we believe it is important 

that the OPPS enhance incentives for 

hospitals to provide necessary, high 

quality care as efficiently as possible. 

For CY 2008, we developed composite 

APCs to provide a single payment for 

groups of services that are typically 

performed together during a single 

clinical encounter and that result in the 

provision of a complete service. 

Combining payment for multiple, 

independent services into a single OPPS 

payment in this way enables hospitals 

to manage their resources with 

maximum flexibility by monitoring and 

adjusting the volume and efficiency of 

services themselves. An additional 

advantage to the composite APC model 

is that we can use data from correctly 

coded multiple procedure claims to 

calculate payment rates for the specified 

combinations of services, rather than 

relying upon single procedure claims 

which may be low in volume and/or 

incorrectly coded. Under the OPPS, we 

currently have composite policies for 

extended assessment and management 

services, low dose rate (LDR) prostate 

brachytherapy, cardiac 

electrophysiologic evaluation and 

ablation services, mental health 

services, multiple imaging services, and 

cardiac resynchronization therapy 

services. We refer readers to the CY 

2008 OPPS/ASC final rule with 

comment period for a full discussion of 

the development of the composite APC 

methodology (72 FR 66611 through 

66614 and 66650 through 66652) and 

the CY 2012 OPPS/ASC final rule with 

comment period (76 FR 74163) for more 

recent background. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40953), for CY 2015, we 

proposed to continue our composite 

APC payment policies for LDR prostate 

brachytherapy services, mental health 

services, and multiple imaging services, 

as discussed below. In addition, we 

noted that we finalized a policy in the 

CY 2014 OPPS/ASC final rule with 

comment period to modify our 

longstanding policy to provide payment 

to hospitals in certain circumstances 

when extended assessment and 

management of a patient occur (78 FR 

74910 through 74912). For CY 2014, we 

created one new composite APC, 

entitled ‘‘Extended Assessment and 

Management (EAM) Composite’’ (APC 

8009), to provide payment for all 

qualifying extended assessment and 

management encounters rather than 

recognize two levels of EAM composite 

APCs (78 FR 74910 through 74912). 

Under this policy, we allow any visits, 

a Level 4 or 5 Type A ED visit or a Level 

5 Type B ED visit furnished by a 

hospital in conjunction with 

observation services of substantial 

duration to qualify for payment through 

EAM composite APC 8009. In the CY 

2015 OPPS/ASC proposed rule (79 FR 

40953 to 40954), we proposed to pay for 

qualifying extended assessment and 

management services through composite 

APC 8009. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40953), we also proposed to 

discontinue our composite APC 

payment policies for cardiac 

electrophysiologic evaluation and 

ablation services (APC 8000), and to pay 

for these services through 

comprehensive APC 0086 (Level III 

Electrophysiologic Procedures), as 

presented in a proposal included under 

section II.A.2.e. of the CY 2015 OPPS/ 

ASC proposed rule. As such, in the CY 

2015 OPPS/ASC proposed rule, we 

proposed to delete APC 8000 for CY 

2015 (79 FR 40953). 

We note that we finalized a policy to 

discontinue and supersede the cardiac 

resynchronization therapy composite 

APC with comprehensive APC 0108 

(Level II Implantation of CardioverterDefibrillators (ICDs)), as discussed in 

section II.A.2.e. of the CY 2014 OPPS/ 

ASC final rule with comment period (78 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66811 

FR 74902). For CY 2014, APC 0108 is 

classified as a composite APC, as 

discussed in the CY 2014 OPPS/ASC 

final rule with comment period, because 

comprehensive APCs were not made 

effective until CY 2015 (78 FR 74925). 

For CY 2015, with the implementation 

of our new comprehensive APC policy, 

in the CY 2015 OPPS/ASC proposed 

rule, we proposed to effectuate the 

policy finalized in the CY 2014 OPPS/ 

ASC final rule with comment period, 

and pay for cardiac resynchronization 

therapy services through comprehensive 

APC 0108 (proposed to be renamed 

‘‘Level II ICD and Similar Procedures’’), 

which is discussed in section II.A.2.e. of 

the CY 2015 proposed rule (79 FR 

40953). 

(1) Extended Assessment and 

Management Composite APC (APC 

8009) 

Beginning in CY 2008, we included 

composite APC 8002 (Level I Extended 

Assessment and Management (EAM) 

Composite) and composite APC 8003 

(Level II Extended Assessment and 

Management (EAM) Composite) in the 

OPPS to provide payment to hospitals 

in certain circumstances when extended 

assessment and management of a patient 

occur (an extended visit). In most of 

these circumstances, observation 

services are furnished in conjunction 

with evaluation and management 

services as an integral part of a patient’s 

extended encounter of care. From CY 

2008 through CY 2013, in the 

circumstances when 8 or more hours of 

observation care was provided in 

conjunction with a high level visit, 

critical care, or direct referral for 

observation, was an integral part of a 

patient’s extended encounter of care, 

and was not furnished on the same day 

as surgery or post-operatively, a single 

OPPS payment was made for the 

observation and evaluation and 

management services through one of the 

two composite APCs, as appropriate. We 

refer readers to the CY 2012 OPPS/ASC 

final rule with comment period (76 FR 

74163 through 74165) for a full 

discussion of this longstanding policy 

for CY 2013 and prior years. In the CY 

2014 OPPS/ASC final rule with 

comment period (78 FR 74910), we 

created one new composite APC, APC 

8009 (Extended Assessment and 

Management (EAM) Composite), to 

provide payment for all qualifying 

extended assessment and management 

encounters rather than recognizing two 

levels of EAM composite services. 

Under the CY 2014 finalized policy, we 

no longer recognize composite APC 

8002 or APC 8003. Beginning in CY 

2014, we allowed services identified by 

the new single clinic visit HCPCS code 

G0463, a Level 4 or 5 Type A ED visit 

(CPT code 99284 or 99285), a Level 5 

Type B ED visit (HCPCS code G0384), 

or critical care (CPT code 99291) 

provided by a hospital in conjunction 

with observation services of substantial 

duration (8 or more hours) (provided the 

observation was not furnished on the 

same day as surgery or post-operatively) 

(78 FR 74910 through 74912) to qualify 

for payment through EAM composite 

APC 8009. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40953 through 40954), for 

CY 2015, we proposed to continue our 

CY 2014 finalized policy to provide 

payment for all qualifying extended 

assessment and management encounters 

through composite APC 8009. As we did 

for CY 2014, in the CY 2015 OPPS/ASC 

proposed rule, for CY 2015, we 

proposed to allow a clinic visit and 

certain high level ED visits furnished by 

a hospital in conjunction with 

observation services of substantial 

duration (8 or more hours) to qualify for 

payment through the EAM composite 

APC 8009 (provided the observation is 

not furnished on the same day as 

surgery or post-operatively). 

Specifically, we proposed to continue to 

allow a clinic visit, a Level 4 or Level 

5 Type A ED visit, or a Level 5 Type B 

ED visit furnished by a hospital or a 

direct referral for observation (identified 

by HCPCS code G0379) performed in 

conjunction with observation services of 

substantial duration to qualify for 

payment through composite APC 8009 

(provided the observation is not 

furnished on the same day as surgery or 

post-operatively). We note that, for CY 

2015, we also proposed to continue our 

current policy where one service code 

describes all clinic visits. We refer 

readers to the CY 2014 OPPS/ASC final 

rule with comment period (78 FR 74910 

through 74912) for a full discussion of 

the creation of composite APC 8009. 

As we noted in the CY 2014 OPPS/

ASC final rule with comment period, 

the historical cost data used annually to 

calculate the geometric mean costs and 

payment rate for composite APC 8009 

would not reflect the single clinic visit 

code that was new for CY 2014 (HCPCS 

code G0463) until our CY 2016 

rulemaking cycle. We stated in the CY 

2014 OPPS/ASC final rule with 

comment period (78 FR 74910 through 

74912) that when hospital claims data 

for the CY 2014 clinic and ED visit 

codes become available, we would 

calculate the geometric mean cost for 

EAM composite APC 8009 using CY 

2014 single and ‘‘pseudo’’ single 

procedure claims that meet each of the 

following criteria: 

• The claims do not contain a HCPCS 

code to which we have assigned status 

indicator ‘‘T’’ that is reported with a 

date of service 1 day earlier than the 

date of service associated with HCPCS 

code G0378. (By selecting these claims 

from single and ‘‘pseudo’’ single claims, 

we ensure that they would not contain 

a code for a service with status indicator 

‘‘T’’ on the same date of service.) 

• The claims contain 8 or more units 

of services described by HCPCS code 

G0378 (Observation services, per hour.) 

• The claims contain one of the 

following codes: HCPCS code G0379 

(Direct referral of patient for hospital 

observation care) on the same date of 

service as HCPCS code G0378; CPT code 

99291 (Critical care, evaluation and 

management of the critically ill or 

critically injured patient; first 30–74 

minutes); or HCPCS code G0463 

(Hospital outpatient clinic visit for 

assessment and management of a 

patient) provided on the same date of 

service or 1 day before the date of 

service for HCPCS code G0378. 

Because we have no available cost 

data for HCPCS code G0463, for CY 

2015, we proposed to calculate the 

geometric mean cost for procedures 

assigned to APC 8009 using CY 2013 

single and ‘‘pseudo’’ single procedure 

claims that met each of the following 

criteria: 

• The claim did not contain a HCPCS 

code to which we have assigned status 

indicator ‘‘T’’ that is reported with a 

date of service 1 day earlier than the 

date of service associated with HCPCS 

code G0378. (By selecting these claims 

from single and ‘‘pseudo’’ single claims, 

we assured that they would not contain 

a code for a service with status indicator 

‘‘T’’ on the same date of service.) 

• The claim contained 8 or more 

units of services described by HCPCS 

code G0378 (Observation services, per 

hour.) 

• The claim contained one of the 

following codes: HCPCS code G0379 

(Direct referral of patient for hospital 

observation care) on the same date of 

service as HCPCS code G0378; or CPT 

code 99201 (Office or other outpatient 

visit for the evaluation and management 

of a new patient (Level 1)); CPT code 

99202 (Office or other outpatient visit 

for the evaluation and management of a 

new patient (Level 2)); CPT code 99203 

(Office or other outpatient visit for the 

evaluation and management of a new 

patient (Level 3)); CPT code 99204 

(Office or other outpatient visit for the 

evaluation and management of a new 

patient (Level 4)); CPT code 99205 

(Office or other outpatient visit for the 

evaluation and management of a new 

patient (Level 5)); CPT code 99211 


tkelley on DSK3SPTVN1PROD with RULES2
66812 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

(Office or other outpatient visit for the 

evaluation and management of an 

established patient (Level 1)); CPT code 

99212 (Office or other outpatient visit 

for the evaluation and management of 

an established patient (Level 2)); CPT 

code 99213 (Office or other outpatient 

visit for the evaluation and management 

of an established patient (Level 3)); CPT 

code 99214 (Office or other outpatient 

visit for the evaluation and management 

of an established patient (Level 4)); CPT 

code 99215 (Office or other outpatient 

visit for the evaluation and management 

of an established patient (Level 5)); CPT 

code 99284 (Emergency department 

visit for the evaluation and management 

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

(Emergency department visit for the 

evaluation and management of a patient 

(Level 5)); HCPCS code G0384 (Type B 

emergency department visit (Level 5)); 

or CPT code 99291 (Critical care, 

evaluation and management of the 

critically ill or critically injured patient; 

first 30–74 minutes) provided on the 

same date of service or 1 day before the 

date of service for HCPCS code G0378. 

The proposed CY 2015 geometric 

mean cost resulting from this 

methodology for EAM composite APC 

8009 was approximately $1,287. 

Comment: One commenter urged 

CMS to consider options to minimize 

the financial burden for the beneficiary 

associated with self-administered drugs 

while the beneficiary is receiving 

observation services. The commenter 

also supported efforts to count 

outpatient observation toward the 

Medicare skilled nursing facility (SNF) 

3-day stay requirement. Another 

commenter expressed concern that 

paying for all qualifying EAM 

encounters through a single composite 

APC is likely to penalize certain 

outpatient facilities, such as those that 

are attached to safety-net or teaching 

hospitals, which treat more complex 

patients and populations. The 

commenter urged CMS to monitor and 

accept provider feedback concerning the 

impact of this coding change to ensure 

that it does not create financial pressure 

or incentives to admit borderline cases, 

deny treatment, or otherwise negatively 

affect clinical decision making. 

Response: The comments related to 

beneficiary liability associated with selfadministered drugs and counting 

outpatient observation toward the SNF 

3-day qualifying stay are outside the 

scope of the proposed regulations. We 

do not believe that paying for all 

qualifying EAM encounters through a 

single composite APC is likely to 

penalize certain outpatient facilities that 

treat more complex patients and 

populations. We believe that this 

proposal accurately accounts for the 

cost of providing an extended 

assessment and management service 

and that this proposal does not have any 

substantial impact on any particular 

type of facility or patient type. We also 

do not believe that paying for all 

qualifying EAM encounters through a 

single composite APC creates any 

financial pressure or incentives to admit 

borderline cases, deny treatment, or 

otherwise negatively affect clinical 

decision making. We continue to expect 

hospitals to provide the appropriate 

medical care to all beneficiaries. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to continue our CY 2014 

finalized policy to provide payment for 

all qualifying extended assessment and 

management encounters through 

composite APC 8009 for CY 2015. We 

also are finalizing our proposal, without 

modification, to continue to allow a 

clinic visit and certain high level ED 

visits furnished by a hospital in 

conjunction with observation services of 

substantial duration (8 or more hours) to 

qualify for payment through EAM 

composite APC 8009 (provided the 

observation is not furnished on the same 

day as surgery or post-operatively). The 

final CY 2015 geometric mean cost 

resulting from this methodology for 

EAM composite APC 8009 is 

approximately $1,281. 

(2) Low Dose Rate (LDR) Prostate 

Brachytherapy Composite APC (APC 

8001) 

LDR prostate brachytherapy is a 

treatment for prostate cancer in which 

hollow needles or catheters are inserted 

into the prostate, followed by 

permanent implantation of radioactive 

sources into the prostate through the 

needles/catheters. At least two CPT 

codes are used to report the composite 

treatment service because there are 

separate codes that describe placement 

of the needles/catheters and the 

application of the brachytherapy 

sources: CPT code 55875 (Transperineal 

placement of needles or catheters into 

prostate for interstitial radioelement 

application, with or without cystoscopy) 

and CPT code 77778 (Interstitial 

radiation source application; complex), 

which are generally present together on 

claims for the same date of service in 

the same operative session. In order to 

base payment on claims for the most 

common clinical scenario, and to 

further our goal of providing payment 

under the OPPS for a larger bundle of 

component services provided in a single 

hospital encounter, beginning in CY 

2008, we began providing a single 

payment for LDR prostate brachytherapy 

when the composite service, reported as 

CPT codes 55875 and 77778, is 

furnished in a single hospital encounter. 

We base the payment for composite APC 

8001 (LDR Prostate Brachytherapy 

Composite) on the geometric mean cost 

derived from claims for the same date of 

service that contain both CPT codes 

55875 and 77778 and that do not 

contain other separately paid codes that 

are not on the bypass list. We refer 

readers to the CY 2008 OPPS/ASC final 

rule with comment period (72 FR 66652 

through 66655) for a full history of 

OPPS payment for LDR prostate 

brachytherapy services and a detailed 

description of how we developed the 

LDR prostate brachytherapy composite 

APC. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40955), for CY 2015, we 

proposed to continue to pay for LDR 

prostate brachytherapy services using 

the composite APC payment 

methodology proposed and 

implemented for CY 2008 through CY 

2014. That is, we proposed to use CY 

2013 claims reporting charges for both 

CPT codes 55875 and 77778 on the 

same date of service with no other 

separately paid procedure codes (other 

than those on the bypass list) to 

calculate the proposed payment rate for 

composite APC 8001. Consistent with 

our CY 2008 through CY 2014 practice, 

in the CY 2015 OPPS/ASC proposed 

rule (79 FR 40955), we proposed not to 

use the claims that meet these criteria in 

the calculation of the geometric mean 

costs of procedures or services assigned 

to APC 0163 (Level IV 

Cystourethroscopy and Other 

Genitourinary Procedures) and APC 

0651 (Complex Interstitial Radiation 

Source Application), the APCs to which 

CPT codes 55875 and 77778 are 

assigned, respectively. We proposed to 

continue to calculate the geometric 

mean costs of procedures or services 

assigned to APCs 0163 and 0651 using 

single and ‘‘pseudo’’ single procedure 

claims. We continue to believe that this 

composite APC contributes to our goal 

of creating hospital incentives for 

efficiency and cost containment, while 

providing hospitals with the most 

flexibility to manage their resources. We 

also continue to believe that data from 

claims reporting both services required 

for LDR prostate brachytherapy provide 

the most accurate geometric mean cost 

upon which to base the proposed 

composite APC payment rate. 

Using a partial year of CY 2013 claims 

data available for the CY 2015 OPPS/

ASC proposed rule, we were able to use 

379 claims that contained both CPT 

codes 55875 and 77778 to calculate the 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66813 

proposed geometric mean cost of 

approximately $3,669 for these 

procedures upon which the proposed 

CY 2015 payment rate for composite 

APC 8001 is based. 

Comment: Several commenters 

expressed concern that the proposed 

payment rate for APC 8001 is based only 

on 379 claims that reported both CPT 

codes 55875 and 77778 on the same 

date of service, a significant decrease 

from the CY 2014 final rule claims data 

used for ratesetting when 591 claims 

were available. Commenters also noted 

that the proposed payment rate of 

$3,504.02 yields an 8.9 percent decrease 

in payment compared to the CY 2014 

payment rate of $3,844.64. One 

commenter opined that the decrease in 

payment for these services is partially 

due to the number of brachytherapy 

procedures provided in the hospital 

outpatient setting. A few commenters 

urged CMS to closely monitor the 

number of claims used to set the 

payment rate for this APC and to 

consider other ratesetting methodologies 

if the number of claims continues to 

decrease. Several commenters expressed 

that the low volume of claims reporting 

outpatient brachytherapy services also 

affected other APCs, notably APC 0312 

(Radioelement Applications) and APC 

0651 (Complex Interstitial Radiation 

Source Application), and cited 

additional decreases in the volume of 

claims used for ratesetting for these 

APCs. 

Response: The CY 2015 final rule 

claims data show that 406 claims were 

available and used to set the payment 

rate for APC 8001, with a geometric 

mean cost of approximately $3,745, 

compared to the proposed rule claims 

data that showed 379 claims available 

and used for ratesetting, with a 

geometric mean cost of approximately 

$3,669. In response to comments 

regarding the decrease in the number of 

claims available for CY 2015 ratesetting 

and the geometric mean cost relative to 

the number of claims available for CY 

2014 ratesetting and the geometric mean 

cost, we note that there is typically 

some fluctuation in costs from year to 

year. We acknowledge that the number 

of claims available and used for 

ratesetting for APC 8001 has decreased 

over recent years. However, the 

percentage of single frequency claims 

compared to total claims that we were 

able to use for ratesetting in this final 

rule with comment period is 

comparable to prior years. In addition, 

evaluation of the claims data for the 4 

years prior to CY 2014 indicated that the 

mean or median costs used for 

ratesetting for APC 8001 were lower in 

those years than CY 2014 or CY 2015 

cost levels. For APC 0651, based on 

final rule claims data, there are 62 single 

frequency claims out of a total of 3,785 

claims, with a geometric mean cost of 

approximately $988. For APC 0312, 

based on final rule claims data, there are 

26 single frequency claims out of a total 

of 378 claims, with a geometric mean 

cost of approximately $411. We agree 

with the commenters’ assertion that it 

appears that there are an increasing 

number of radiation oncological 

technologies that are competing with 

prostate brachytherapy, which may be 

contributing to a decreased number of 

claims available for ratesetting for these 

APCs. As we stated in the CY 2014 

OPPS/ASC final rule with comment 

period, we will continue to evaluate 

additional refinements and 

improvements to our ratesetting 

methodologies in order to maximize the 

use of claims data (78 FR 74913). In 

addition, we will continue to explore 

means by which we can use a larger 

volume of claims to establish the 

payment rate for APC 0312 and APC 

0651. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to continue use of 

composite APC 8001 for CY 2015 and to 

set the payment rate for this APC using 

our established methodology. The final 

geometric mean cost for composite APC 

8001 for CY 2015 is approximately 

$3,745. 

(3) Mental Health Services Composite 

APC (APC 0034) 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40955), for CY 2015, we 

proposed to continue our longstanding 

policy of limiting the aggregate payment 

for specified less resource-intensive 

mental health services furnished on the 

same date to the payment for a day of 

partial hospitalization services provided 

by a hospital, which we consider to be 

the most resource-intensive of all 

outpatient mental health services. We 

refer readers to the April 7, 2000 OPPS 

final rule with comment period (65 FR 

18452 through 18455) for the initial 

discussion of this longstanding policy 

and the CY 2012 OPPS/ASC final rule 

with comment period (76 FR 74168) for 

more recent background. 

Specifically, in the CY 2015 OPPS/

ASC proposed rule (79 FR 40955), we 

proposed that when the aggregate 

payment for specified mental health 

services provided by one hospital to a 

single beneficiary on one date of service 

based on the payment rates associated 

with the APCs for the individual 

services exceeds the maximum per diem 

payment rate for partial hospitalization 

services provided by a hospital, those 

specified mental health services would 

be assigned to APC 0034 (Mental Health 

Services Composite). We also proposed 

to continue to set the payment rate for 

APC 0034 at the same payment rate that 

we proposed to establish for APC 0176 

(Level II Partial Hospitalization (4 or 

more services) for hospital-based PHPs), 

which is the maximum partial 

hospitalization per diem payment rate 

for a hospital, and that the hospital 

continue to be paid one unit of APC 

0034 (79 FR 40955). Under this policy, 

the I/OCE would continue to determine 

whether to pay for these specified 

mental health services individually, or 

to make a single payment at the same 

payment rate established for APC 0176 

for all of the specified mental health 

services furnished by the hospital on 

that single date of service. We continue 

to believe that the costs associated with 

administering a partial hospitalization 

program at a hospital represent the most 

resource-intensive of all outpatient 

mental health services. Therefore, we do 

not believe that we should pay more for 

mental health services under the OPPS 

than the highest partial hospitalization 

per diem payment rate for hospitals. 

We did not receive any public 

comments on this proposal. Therefore, 

we are finalizing our CY 2015 proposal, 

without modification, to continue our 

longstanding policy of limiting the 

aggregate payment for specified less 

resource-intensive mental health 

services furnished on the same date to 

a single beneficiary by a hospital to the 

payment rate for APC 0176, which is the 

maximum partial hospitalization per 

diem payment for a hospital for CY 

2015. 

(4) Multiple Imaging Composite APCs 

(APCs 8004, 8005, 8006, 8007, and 

8008) 

Effective January 1, 2009, we provide 

a single payment each time a hospital 

bills more than one imaging procedure 

within an imaging family on the same 

date of service, in order to reflect and 

promote the efficiencies hospitals can 

achieve when performing multiple 

imaging procedures during a single 

session (73 FR 41448 through 41450). 

We utilize three imaging families based 

on imaging modality for purposes of this 

methodology: (1) Ultrasound; (2) 

computed tomography (CT) and 

computed tomographic angiography 

(CTA); and (3) magnetic resonance 

imaging (MRI) and magnetic resonance 

angiography (MRA). The HCPCS codes 

subject to the multiple imaging 

composite policy and their respective 

families are listed in Table 12 of the CY 

2014 OPPS/ASC final rule with 


tkelley on DSK3SPTVN1PROD with RULES2
66814 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

comment period (78 FR 74920 through 

74924). 

While there are three imaging 

families, there are five multiple imaging 

composite APCs due to the statutory 

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

of the Act that we differentiate payment 

for OPPS imaging services provided 

with and without contrast. While the 

ultrasound procedures included in the 

policy do not involve contrast, both CT/ 

CTA and MRI/MRA scans can be 

provided either with or without 

contrast. The five multiple imaging 

composite APCs established in CY 2009 

are: 

• APC 8004 (Ultrasound Composite); 

• APC 8005 (CT and CTA without 

Contrast Composite); 

• APC 8006 (CT and CTA with 

Contrast Composite); 

• APC 8007 (MRI and MRA without 

Contrast Composite); and 

• APC 8008 (MRI and MRA with 

Contrast Composite). 

We define the single imaging session 

for the ‘‘with contrast’’ composite APCs 

as having at least one or more imaging 

procedures from the same family 

performed with contrast on the same 

date of service. For example, if the 

hospital performs an MRI without 

contrast during the same session as at 

least one other MRI with contrast, the 

hospital will receive payment for APC 

8008, the ‘‘with contrast’’ composite 

APC. 

We make a single payment for those 

imaging procedures that qualify for 

composite APC payment, as well as any 

packaged services furnished on the 

same date of service. The standard 

(noncomposite) APC assignments 

continue to apply for single imaging 

procedures and multiple imaging 

procedures performed across families. 

For a full discussion of the development 

of the multiple imaging composite APC 

methodology, we refer readers to the CY 

2009 OPPS/ASC final rule with 

comment period (73 FR 68559 through 

68569). 

In the CY 2015 OPPS/ASC proposed 

rule, for CY 2015, we proposed to 

continue to pay for all multiple imaging 

procedures within an imaging family 

performed on the same date of service 

using the multiple imaging composite 

APC payment methodology (79 FR 

40956). We continue to believe that this 

policy will reflect and promote the 

efficiencies hospitals can achieve when 

performing multiple imaging procedures 

during a single session. 

The proposed CY 2015 payment rates 

for the five multiple imaging composite 

APCs (APC 8004, APC 8005, APC 8006, 

APC 8007, and APC 8008) were based 

on geometric mean costs calculated 

from a partial year of CY 2013 claims 

available for the proposed rule that 

qualified for composite payment under 

the current policy (that is, those claims 

with more than one procedure within 

the same family on a single date of 

service). To calculate the proposed 

geometric mean costs, we used the same 

methodology that we used to calculate 

the final CY 2013 and CY 2014 

geometric mean costs for these 

composite APCs, as described in the CY 

2014 OPPS/ASC final rule with 

comment period (78 FR 74918). The 

imaging HCPCS codes referred to as 

‘‘overlap bypass codes’’ that we 

removed from the bypass list for 

purposes of calculating the proposed 

multiple imaging composite APC 

geometric mean costs, pursuant to our 

established methodology as stated in the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 74918), are 

identified by asterisks in Addendum N 

to the CY 2015 OPPS/ASC proposed 

rule (which is available via the Internet 

on the CMS Web site) and are discussed 

in more detail in section II.A.1.b. of that 

proposed rule. 

For the CY 2015 OPPS/ASC proposed 

rule, we were able to identify 

approximately 636,000 ‘‘single session’’ 

claims out of an estimated 1.6 million 

potential composite APC cases from our 

ratesetting claims data, approximately 

40 percent of all eligible claims, to 

calculate the proposed CY 2015 

geometric mean costs for the multiple 

imaging composite APCs. 

Table 8 of the proposed rule (79 FR 

40956 through 40958) listed the 

proposed HCPCS codes that would be 

subject to the multiple imaging 

composite APC policy and their 

respective families and approximate 

composite APC geometric mean costs 

for CY 2015. 

Comment: A few commenters 

expressed concern that the multiple 

imaging composite APCs may 

undercompensate providers for imaging 

procedures. These commenters 

recommended that CMS provide an 

analysis of the effects of reductions in 

imaging payments due to the composite 

APC policy on utilization. The 

commenters recommended that CMS 

provide separate payment for each 

imaging procedure in light of reductions 

to payment for imaging procedures. 

Response: We continue to believe that 

our multiple imaging composite policies 

reflect and promote the efficiencies 

hospitals can achieve when performing 

multiple imaging procedures during a 

single session, and some of those 

efficiencies result in lower payments 

due to cost savings from furnishing 

multiple imaging services on the same 

date. We will continue to monitor the 

multiple imaging composite APC 

ratesetting methodology and the cost of 

providing imaging services. If 

appropriate, we may report any 

information to the HOP Panel, or 

discuss and propose changes to the 

multiple imaging composite APCs in 

rulemaking in the future. 

After consideration of the public 

comments received, we are finalizing 

our proposal to continue the use of 

multiple imaging composites without 

modification. We were able to identify 

approximately 661,000 million ‘‘single 

session’’ claims out of an estimated 1.68 

million potential composite cases from 

our CY 2013 ratesetting claims data, 

approximately 39 percent of all eligible 

claims, to calculate the final CY 2015 

geometric mean costs for the multiple 

imaging composite APCs. 

Table 9 below lists the HCPCS codes 

that will be subject to the multiple 

imaging composite APC policy and their 

respective families and approximate 

composite APC geometric mean costs 

for CY 2015. 

TABLE 9—OPPS IMAGING FAMILIES AND MULTIPLE IMAGING PROCEDURE COMPOSITE APCS

Family 1—Ultrasound 

CY 2015 APC 8004 (Ultrasound composite) CY 2015 Approximate APC geometric mean cost = $296 

76604 ........................................................................................ Us exam, chest. 

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

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

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

76775 ........................................................................................ Us exam abdo back wall, lim. 

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

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


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66815 

TABLE 9—OPPS IMAGING FAMILIES AND MULTIPLE IMAGING PROCEDURE COMPOSITE APCS—Continued 

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

76870 ........................................................................................ Us exam, scrotum. 

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

Family 2—CT and CTA with and without Contrast 

CY 2015 APC 8005 (CT and CTA without Contrast 

Composite)* 

CY 2015 Approximate APC Geometric Mean Cost = $325 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

CY 2015 APC 8006 (CT and CTA with Contrast Composite) CY 2015 Approximate APC Geometric Mean Cost = $548 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

would assign APC 8006 rather than APC 8005. 

Family 3—MRI and MRA with and without Contrast 

CY 2015 APC 8007 (MRI and MRA without Contrast 

Composite)* 

CY 2015 Approximate APC Geometric Mean Cost = $631 

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

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

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

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

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


tkelley on DSK3SPTVN1PROD with RULES2
66816 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

TABLE 9—OPPS IMAGING FAMILIES AND MULTIPLE IMAGING PROCEDURE COMPOSITE APCS—Continued 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

CY 2015 APC 8008 (MRI and MRA with Contrast Composite) CY 2015 Approximate APC Geometric Mean Cost = $945 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

would assign APC 8008 rather than APC 8007. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66817 

3. Changes to Packaged Items and 

Services 

a. Background and Rationale for 

Packaging in the OPPS 

Like other prospective payment 

systems, the OPPS relies on the concept 

of averaging to establish a payment rate 

for services. The payment may be more 

or less than the estimated cost of 

providing a specific service or bundle of 

specific services for a particular patient. 

The OPPS packages payment for 

multiple interrelated items and services 

into a single payment to create 

incentives for hospitals to furnish 

services most efficiently and to manage 

their resources with maximum 

flexibility. Our packaging policies 

support our strategic goal of using larger 

payment bundles in the OPPS to 

maximize hospitals’ incentives to 

provide care in the most efficient 

manner. For example, where there are a 

variety of devices, drugs, items, and 

supplies that could be used to furnish 

a service, some of which are more 

expensive than others, packaging 

encourages hospitals to use the most 

cost-efficient item that meets the 

patient’s needs, rather than to routinely 

use a more expensive item, which often 

results if separate payment is provided 

for the items. 

Packaging also encourages hospitals 

to effectively negotiate with 

manufacturers and suppliers to reduce 

the purchase price of items and services 

or to explore alternative group 

purchasing arrangements, thereby 

encouraging the most economical health 

care delivery. Similarly, packaging 

encourages hospitals to establish 

protocols that ensure that necessary 

services are furnished, while 

scrutinizing the services ordered by 

practitioners to maximize the efficient 

use of hospital resources. Packaging 

payments into larger payment bundles 

promotes the predictability and 

accuracy of payment for services over 

time. Finally, packaging may reduce the 

importance of refining service-specific 

payment because packaged payments 

include costs associated with higher 

cost cases requiring many ancillary 

items and services and lower cost cases 

requiring fewer ancillary items and 

services. Because packaging encourages 

efficiency and is an essential component 

of a prospective payment system, 

packaging payment for items and 

services that are typically integral, 

ancillary, supportive, dependent, or 

adjunctive to a primary service has been 

a fundamental part of the OPPS since its 

implementation in August 2000. Over 

the last 15 years, as we have refined our 

understanding of the OPPS as a 

prospective payment system, we have 

packaged numerous services that we 

originally paid as primary services. As 

we continue to develop larger payment 

groups that more broadly reflect services 

provided in an encounter or episode of 

care, we have expanded the OPPS 

packaging policies. Most, but not 

necessarily all, items and services 

currently packaged in the OPPS are 

listed in 42 CFR 419.2(b), including the 

five packaging policies that were added 

in CY 2014 (78 FR 74925). Our 

overarching goal is to make OPPS 

payments for all services paid under the 

OPPS more consistent with those of a 

prospective payment system and less 

like those of a per service fee schedule, 

which pays separately for each coded 

item. As a part of this effort, we have 

continued to examine the payment for 

items and services provided in the 

OPPS to determine which OPPS 

services can be packaged to achieve the 

objective of advancing the OPPS as a 

prospective payment system. 

We have examined the items and 

services currently provided under the 

OPPS, reviewing categories of integral, 

ancillary, supportive, dependent, or 

adjunctive items and services for which 

we believe payment would be 

appropriately packaged into payment of 

the primary service they support. 

Specifically, we examined the HCPCS 

code definitions (including CPT code 

descriptors) to determine whether there 

were categories of codes for which 

packaging would be appropriate 

according to existing OPPS packaging 

policies or a logical expansion of those 

existing OPPS packaging policies. In 

general, in the CY 2015 OPPS/ASC 

proposed rule (79 FR 40958 through 

40961), we proposed to package the 

costs of selected HCPCS codes into 

payment for services reported with 

other HCPCS codes where we believe 

that one code reported an item or 

service that was integral, ancillary, 

supportive, dependent, or adjunctive to 

the provision of care that was reported 

by another HCPCS code. Below we 

discuss categories and classes of items 

and services that we proposed to 

package beginning in CY 2015. For an 

extensive discussion of the history and 

background of the OPPS packaging 

policy, we refer readers to the CY 2000 

OPPS final rule (65 FR 18434), the CY 

2008 OPPS/ASC final rule with 

comment period (72 FR 66580), and the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 74925). 

b. Revisions of a Packaging Policy 

Established in CY 2014—Procedures 

Described by Add-On Codes 

In the CY 2014 OPPS/ASC final rule 

with comment period, we packaged 

add-on codes in the OPPS, with the 

exception of add-on codes describing 

drug administration services (78 FR 

74943; 42 CFR 419.2(b)(18)). With 

regard to the packaging of add-on 

procedures that use expensive medical 

devices, we stated in the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 74943) that the most 

expensive medical devices used in 

procedures to insert or implant devices 

in the hospital outpatient setting are 

included in procedures that are assigned 

to comprehensive APCs. Comprehensive 

APCs are discussed in section II.A.2.e. 

of this final rule with comment period. 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 74864), we 

discussed the comprehensive APC 

policy, which we adopted, with 

modification, but delayed the 

implementation of, until CY 2015. We 

stated that, for CY 2014, we would 

continue to pay separately for only 

those add-on codes (except for drug 

administration add-on codes) that were 

assigned to device-dependent APCs in 

CY 2014, but that, after CY 2014, these 

device-dependent add-on codes would 

be paid under the comprehensive APC 

policy. According to the proposed 

changes to the comprehensive APC 

policy described in section II.A.2.e. of 

this final rule with comment period, we 

proposed to package all of the 

procedures described by add-on codes 

that are currently assigned to devicedependent APCs, which will be 

replaced by comprehensive APCs. The 

device-dependent add-on codes that are 

separately paid in CY 2014 that we 

proposed to package in CY 2015 were 

listed in Table 9 of the CY 2015 OPPS/ 

ASC proposed rule (79 FR 40959). 

Comment: A few commenters 

disagreed with the proposal to package 

payment for the add-on codes listed in 

Table 9 of the proposed rule for the 

following reasons: 

• Some commenters requested that 

CMS delay packaging the devicedependent add-on codes remaining for 

CY 2015 while additional data analysis 

is performed and refinements are 

adopted to ensure accurate payment for 

the full range of add-on procedures, 

including those not assigned to 

comprehensive APCs. 

• A few commenters suggested that 

add-on codes are separate and distinct 

clinical procedures having unique, 

independent values determined by the 

American Medical Association (AMA) 


tkelley on DSK3SPTVN1PROD with RULES2
66818 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

and, therefore, should not be treated as 

ancillary services. 

• Some commenters requested that 

CMS establish exceptions to its proposal 

to package add-on codes for specific 

add-on procedures with high cost 

supply items that commenters believed 

would be underpaid under the policy 

and impede patient access to care. 

Response: We disagree with the 

commenters that oppose packaging 

these remaining add-on codes. We 

received similar public comments 

during the CY 2014 rulemaking cycle 

and responded to those comments in the 

CY 2014 OPPS/ASC final rule with 

comment period. Generally, we disagree 

because add-on codes describe services 

that are integral, ancillary, supportive, 

dependent, or adjunctive to the primary 

service. In other words, add-on codes do 

not represent a stand-alone procedure 

and are inclusive to other procedures 

performed at the same time. For a full 

discussion of our response to these 

public comments, we refer readers to 

the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 74942 through 

74943). 

We also disagree with commenters’ 

assertion that add-on code services are 

separate and distinct clinical procedures 

and should not be treated as ancillary 

services. We received a similar public 

comment last year where commenters 

suggested that procedures described by 

add-on codes are not integral, ancillary, 

supportive, dependent, or adjunctive to 

the primary service. As we noted 

previously (78 FR 74942 through 

74943), the fundamental nature of an 

add-on code procedure is that it 

typically describes some form of a 

related extension of or addition to the 

primary procedure or service described 

by the primary procedure. The 

definition of an add-on code is that it is 

an extension of a primary, base service. 

CPT defines add-on codes as codes that 

describe ‘‘procedures [that] are 

commonly carried out in addition to the 

primary procedure performed’’ (2014 

CPT Codebook Professional Edition, 

page xiv). Further, CPT states that ‘‘addon codes describe additional intraservice work associated with the 

primary procedure (emphasis added) 

(2014 CPT Codebook Professional 

Edition, page xiv). We also disagree 

with commenters that some add-on 

codes are not related to the primary 

procedure but represent a separate 

procedure that should be paid 

separately from the primary procedure. 

If such procedures were in fact separate 

procedures, they would not be 

described by an add-on code. Thus, we 

believe that add-on code procedures are 

not always separate and distinct clinical 

procedures, but rather are related 

extensions, supportive, integral, or 

adjunctive of the primary procedure 

and, therefore, it is appropriate to 

package the cost of the add-on codes 

into the payment calculation for the 

primary procedure. Finally, in response 

to commenters who requested that CMS 

establish exceptions to its proposal for 

add-on code with high cost supply 

items, we are allowing certain add-on 

codes to be evaluated for a complexity 

adjustment when billed with a 

comprehensive APC primary procedure. 

We refer readers to section II.A.2.e. of 

this final rule with comment period for 

further discussion of that policy. We see 

no reason to grant exceptions to the addon code packaging policy to specifically 

account for add-on procedures with 

high cost supply items, as any 

associated costs are accounted for in the 

payment for the primary procedure. The 

only reason we did not package the addon codes listed in Table 9 of the 

proposed rule was that implementation 

of the comprehensive APC policy was 

delayed for 1 year (78 FR 74943). 

Because the comprehensive APC policy 

will be implemented in CY 2015, we are 

packaging these remaining add-on 

codes. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to package all of 

the procedures described by add-on 

codes that are currently assigned to 

device-dependent APCs, which will be 

replaced by comprehensive APCs, as 

listed in Table 9 of the CY 2015 OPPS/ 

ASC proposed rule (79 FR 40959) and 

included in Table 10 below. The current 

device-dependent add-on codes that are 

separately paid in CY 2014 that will be 

packaged in CY 2015 are included in 

Table 8 under section II.A.2.e. of this 

final rule with comment period, which 

addresses the comprehensive APC 

policy. 

TABLE 10—ADD-ON CODES ASSIGNED TO DEVICE-DEPENDENT APCS FOR CY 2014 THAT ARE PACKAGED IN CY 2015 

CY 2015 add-on code Short descriptor 

19297 .......................................................................................................................................................... Place breast cath for rad. 

33225 .......................................................................................................................................................... L ventric pacing lead add-on. 

37222 .......................................................................................................................................................... Iliac revasc add-on. 

37223 .......................................................................................................................................................... Iliac revasc w/stent add-on. 

37232 .......................................................................................................................................................... Tib/per revasc add-on. 

37233 .......................................................................................................................................................... Tibper revasc w/ather add-on. 

37234 .......................................................................................................................................................... Revsc opn/prq tib/pero stent. 

37235 .......................................................................................................................................................... Tib/per revasc stnt & ather. 

37237 .......................................................................................................................................................... Open/perq place stent ea add. 

37239 .......................................................................................................................................................... Open/perq place stent ea add. 

49435 .......................................................................................................................................................... Insert subq exten to ip cath. 

92921 .......................................................................................................................................................... Prq cardiac angio addl art. 

92925 .......................................................................................................................................................... Prq card angio/athrect addl. 

92929 .......................................................................................................................................................... Prq card stent w/angio addl. 

92934 .......................................................................................................................................................... Prq card stent/ath/angio. 

92938 .......................................................................................................................................................... Prq revasc byp graft addl. 

92944 .......................................................................................................................................................... Prq card revasc chronic addl. 

92998 .......................................................................................................................................................... Pul art balloon repr precut. 

C9601 ......................................................................................................................................................... Perc drug-el cor stent bran. 

C9603 ......................................................................................................................................................... Perc d-e cor stent ather br. 

C9605 ......................................................................................................................................................... Perc d-e cor revasc t cabg b. 

C9608 ......................................................................................................................................................... Perc d-e cor revasc chro add. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66819 

c. Packaging Policies for CY 2015 

(1) Ancillary Services 

Under the OPPS, we currently pay 

separately for certain ancillary services. 

Some of these ancillary services are 

currently assigned to status indicator 

‘‘X,’’ which is defined as ‘‘ancillary 

services,’’ but some other ancillary 

services are currently assigned to status 

indicators other than ‘‘X.’’ This is 

because the current use of status 

indicator ‘‘X’’ in the OPPS is incomplete 

and imprecise. Some procedures and 

services that are ancillary, for example, 

a chest X-ray, are assigned to an APC 

with services assigned status indicator 

‘‘S.’’ As discussed in the CY 2015 OPPS/ 

ASC proposed rule (79 FR 40959 

through 40961), we reviewed all of the 

covered services provided in the HOPD 

and identified those that are commonly 

performed when provided with other 

HOPD services, and also provided as 

ancillary to a primary service in the 

HOPD. These ancillary services that we 

identified are primarily minor 

diagnostic tests and procedures that are 

often performed with a primary service, 

although there are instances where 

hospitals provide such services alone 

and without another primary service 

during the same encounter. 

As discussed in section II.A.3.a. of 

this final rule with comment period, our 

intent is that the OPPS be more of a 

prospective payment system with 

expanded packaging of items and 

services that are typically integral, 

ancillary, supportive, dependent, or 

adjunctive to a primary service. Given 

that the longstanding OPPS policy is to 

package items and services that are 

integral, ancillary, supportive, 

dependent, or adjunctive to a primary 

service, we stated in the CY 2014 OPPS/ 

ASC final rule with comment period (78 

FR 74945) that we believe that ancillary 

services should be packaged when they 

are performed with another service, but 

should continue to be separately paid 

when performed alone. We indicated 

that this packaging approach is most 

consistent with a prospective payment 

system and the regulation at 42 CFR 

419.2(b) that packages many ancillary 

services into primary services while 

preserving separate payment for those 

instances in which one of these 

ancillary services is provided alone (not 

with any other service paid under the 

OPPS) to a hospital outpatient. We did 

not finalize the ancillary packaging 

policy for CY 2014 because we believed 

that further evaluation was necessary 

(78 FR 74946). 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40959 through 40961), we 

proposed to conditionally package 

certain ancillary services for CY 2015. 

Specifically, we proposed to limit the 

initial set of APCs that contain 

conditionally packaged services to those 

ancillary service APCs with a proposed 

geometric mean cost of less than or 

equal to $100 (prior to application of the 

conditional packaging status indicator). 

We limited this initial set of packaged 

ancillary service APCs to those with a 

proposed geometric mean cost of less 

than or equal to $100 in response to 

public comments on the CY 2014 

ancillary service packaging proposal in 

which commenters expressed concern 

that certain low volume but relatively 

costly ancillary services would have 

been packaged into high volume but 

relatively inexpensive primary services 

(for example, a visit) (74 FR 74945). We 

noted that the proposed $100 geometric 

mean cost limit for selecting this initial 

group of conditionally packaged 

ancillary service APCs is less than the 

geometric mean cost of APC 0634, 

which contains the single clinic visit 

HCPCS code G0463, which is a single 

payment rate for clinic visits beginning 

in CY 2014, and had a CY 2015 OPPS/ 

ASC proposed rule geometric mean cost 

of approximately $103. This proposed 

$100 geometric mean cost limit is part 

of the methodology of selecting the 

initial set of conditionally packaged 

ancillary service APCs under this 

proposed packaging policy. It is not 

meant to represent a threshold above 

which ancillary services will not be 

packaged, but as a basis for selecting 

this initial set of APCs, which will 

likely be updated and expanded in 

future years. In future years, we may 

package ancillary services assigned to 

APCs with geometric mean costs higher 

than $100. In addition, geometric mean 

costs can change over time. An increase 

in the geometric mean cost of any of the 

proposed APCs to above $100 in future 

years would not change the 

conditionally packaged status of 

services assigned to the APCs selected 

in CY 2015 in a future year. We would 

continue to consider these APCs to be 

conditionally packaged. However, we 

would review the conditionally 

packaged status of ancillary services 

annually. 

We proposed to exclude certain 

services from this packaging policy even 

though they are assigned to APCs with 

a geometric mean cost of less than or 

equal to $100. Preventive services will 

continue to be paid separately, and 

include the following services listed in 

Table 11 below that would otherwise be 

packaged under this policy. 

TABLE 11—PREVENTIVE SERVICES EXEMPTED FROM THE ANCILLARY SERVICE PACKAGING POLICY

HCPCS Code Short descriptor APC 

76977 ............................... Us bone density measure ..................................................................................................................... 0340 

77078 ............................... Ct bone density axial ............................................................................................................................. 0260 

77080 ............................... Dxa bone density axial .......................................................................................................................... 0261 

77081 ............................... Dxa bone density/peripheral ................................................................................................................. 0260 

G0117 .............................. Glaucoma scrn hgh risk direc ............................................................................................................... 0260 

G0118 .............................. Glaucoma scrn hgh risk direc ............................................................................................................... 0230 

G0130 .............................. Single energy x-ray study ..................................................................................................................... 0230 

G0389 .............................. Ultrasound exam aaa screen ................................................................................................................ 0265 

G0404 .............................. Ekg tracing for initial prev ..................................................................................................................... 0450 

Q0091 .............................. Obtaining screen pap smear ................................................................................................................. 0450 

In addition, we did not propose to 

package certain psychiatry and 

counseling-related services as we see 

similarities to a visit and, at the time of 

issuance of the CY 2015 OPPS/ASC 

proposed rule, did not consider them to 

be ancillary services. We also did not 

propose to package certain low cost 

drug administration services as we are 

examining various alternative payment 

policies for drug administration 

services, including the associated drug 

administration add-on codes. 

Finally, we proposed to delete status 

indicator ‘‘X’’ (Ancillary Services) 

because the majority of the services 

assigned to status indicator ‘‘X’’ were 

proposed to be assigned to status 

indicator ‘‘Q1’’ (STV-Packaged Codes). 

For the services that are currently 


tkelley on DSK3SPTVN1PROD with RULES2
66820 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

assigned status indicator ‘‘X’’ that were 

not proposed to be conditionally 

packaged under this policy, we 

proposed to assign those services status 

indicator ‘‘S’’ (Procedure or Service, Not 

Discounted When Multiple), indicating 

separate payment and that the services 

are not subject to the multiple 

procedure reduction. The APCs that we 

proposed for conditional packaging as 

ancillary services in CY 2015 were 

listed in Table 11 of the CY 2015 OPPS/ 

ASC proposed rule (79 FR 40960 

through 40961). 

The HCPCS codes that we proposed to 

conditionally package as ancillary 

services for CY 2015 were displayed in 

Addendum B to the CY 2015 OPPS/ASC 

proposed rule (which is available via 

the Internet on the CMS Web site). The 

supporting documents for the proposed 

rule are available at the CMS Web site 

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

Medicare-Fee-for-Service-Payment/

HospitalOutpatientPPS/index.html. 

We also proposed to revise the 

regulations at 42 CFR 419.2(b)(7) to 

replace the phrase ‘‘Incidental services 

such as venipuncture’’ with ‘‘Ancillary 

services’’ to more accurately reflect the 

proposed packaging policy discussed 

above. 

Comment: A number of commenters, 

which included hospital associations, 

health systems, and individual 

hospitals, supported conditionally 

packaging ancillary services with a 

geometric mean cost of $100 prior to 

application of the ‘‘Q1’’ status indicator. 

Response: We appreciate the 

commenters’ support. 

Comment: A few commenters 

expressed concern that conditionally 

packaging ancillary services would 

disproportionately affect teaching 

hospitals because of the types of 

patients these hospitals serve and the 

types of services that they typically 

provide. One commenter submitted 

results from its data analysis that 

estimated major teaching hospitals will 

lose approximately ¥0.4 percent on 

average as a result of this packaging 

proposal, compared to nonteaching 

hospitals, which would gain 

approximately 0.2 percent. The 

commenter’s concern was that the 

negative impact is a direct result of 

academic medical centers’ caring for 

unique and complex patient 

populations, for example, trauma 

patients who are seen in teaching 

hospital emergency departments. The 

commenter’s analysis suggested that a 

large proportion of certain APCs listed 

on Table 11 of the proposed rule (APCs 

0012, 0099, 0260, 0261, 0340, and 0420) 

are packaged into emergency 

department visits and related services. 

Response: Conditional packaging of 

ancillary services results in packaging of 

these services when provided with other 

primary services and separate payment 

for the services when they are 

performed alone. It is possible that, as 

the commenter asserted, the case-mix at 

teaching hospitals results in greater 

packaging of ancillary services than at 

nonteaching hospitals. This may be due 

to teaching hospitals being more likely 

to provide services in addition to the 

ancillary service, which would result in 

packaging of the ancillary service into 

the other primary service or services 

provided to the patient. Even if the 

commenter’s observation is reflective of 

a difference between teaching and 

nonteaching hospitals, we do not 

believe that such an observation is a 

sufficient reason to not package 

ancillary services in the OPPS. 

Packaging is a fundamental element of 

a prospective payment system. As stated 

above, in the OPPS, we packaged items 

and services that are typically integral, 

ancillary, supportive, dependent, or 

adjunctive to a primary service. We 

believe that the ancillary services 

proposed for conditional packaging are 

ancillary when provided with other 

primary services and, therefore, are 

appropriately conditionally packaged in 

the OPPS. As for the impact of the CY 

2015 OPPS policies on teaching 

hospitals, we refer the commenter to the 

impact table (Table 49) in section XXI. 

of this final rule with comment period, 

which shows that teaching hospitals 

will receive an overall 2.3 percent 

payment update compared to a 2.0 

percent payment update for nonteaching 

hospitals. Therefore, overall teaching 

hospitals stand to benefit more than 

nonteaching hospitals from the policies 

adopted in this final rule with comment 

period, despite any relative negative 

impacts from the ancillary packaging 

policy. 

Comment: Several commenters 

requested clarification of the 

methodology used to identify APCs with 

a geometric mean cost less than or equal 

to $100 prior to application of the ‘‘Q1’’ 

status indicator, given that the 

geometric mean cost of some of the 

APCs listed in Table 11 of the proposed 

rule exceeds $100. Also, commenters 

requested that the $100 threshold be 

held constant for future years or 

updated annually based on inflation 

akin to the drug threshold methodology. 

Response: As we stated in the CY 

2015 OPPS/ASC proposed rule (79 FR 

40960), the ancillary services APCs 

proposed for conditional packaging 

were those with a geometric mean cost 

of less than or equal to $100 prior to 

application of the ‘‘Q1’’ status indicator 

to the APC. In other words, it was 

ancillary service APCs with a geometric 

mean cost of $100 or less with all of the 

services assigned to the APC that had 

either status indicator ‘‘X’’ or ‘‘S.’’ Once 

status indicator ‘‘Q1’’ was assigned, 

some of the geometric mean costs of 

some of the APCs increased to above 

$100 due to conditional packaging 

according to the ‘‘Q1’’ status indicator 

logic. We remind the commenters that 

the APCs listed in Table 11 of the 

proposed rule (79 FR 40960 through 

40961) displayed the APC geometric 

mean costs after application of the ‘‘Q1’’ 

status indicator, which resulted in some 

of the APC geometric mean costs that 

were below $100 prior to application of 

the ‘‘Q1’’ status indicator to exceed $100 

after application of the ‘‘Q1’’ status 

indicator. We also clarify that the $100 

geometric mean cost initial selection 

criteria for this packaging policy is not 

a threshold above which ancillary 

services will not be conditionally 

packaged. As we stated in the CY 2015 

OPPS/ASC proposed rule, ‘‘[the $100 

limit] is not meant to represent a 

threshold above which ancillary 

services will not be packaged, but as a 

basis for selecting this initial set of 

APCs, which will likely be updated and 

expanded in future years’’ (79 FR 

40960). As we stated in the proposed 

rule, in future years, we may package 

additional ancillary services in APCs 

with a geometric mean cost (prior to the 

application of the conditional packaging 

status indicator) that exceeds $100. 

Comment: One commenter expressed 

concern regarding the composition of 

APC 0077 (Level I Pulmonary 

Treatment), which was proposed to be 

conditionally packaged. The commenter 

believed that HCPCS code G0424 

(Pulmonary rehabilitation, including 

exercise (includes monitoring), one 

hour, per session, up to two sessions per 

day) is not clinically similar to HCPCS 

code G0237 (Therapeutic procedures to 

increase strength or endurance of 

respiratory muscles, face to face, one on 

one, each 15 minutes (includes 

monitoring) and HCPCS code G0238 

(Therapeutic procedures to improve 

respiratory function, other than 

described by G0237, one on one, face to 

face, per 15 minutes (includes 

monitoring), which also are assigned to 

APC 0077. In addition, the commenter 

stated that the assignment of HCPCS 

code G0424 to APC 0077 would create 

a 2 times rule violation. The commenter 

recommended that CMS reassign 

HCPCS code G0424 to APC 0078 (Level 

II Pulmonary Treatment). 

Response: We disagree with the 

commenter’s assertion that the 

assignment of HCPCS code G0424 to 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66821 

APC 0077 would create a 2 times rule 

violation. Section 1833(t)(9) of the Act 

requires that we annually review all the 

items and services within an APC group 

and revise the APC structures 

accordingly. Included in this review is 

the identification of any 2 times rule 

violations as provided under section 

1833(t)(2) of the Act and, to the extent 

possible, rectification of these 

violations. We review our claims data 

and determine whether we need to 

make changes to the current APC 

assignment for the following year. For 

HCPCS codes G0238 and G0424, we 

evaluated their APC assignment for the 

CY 2015 update and determined that 

APC 0340 (Level II Minor Procedures) is 

the more appropriate assignment for 

these services based on resource 

similarity to the other services assigned 

to APC 0340. In addition, with the 

reassignment of HCPCS codes G0424 

and G0238 to APC 0340, only four 

HCPCS codes (31270, 94668, 94669, and 

G0237) remained in APC 0077, one 

(HCPCS code 94669) of which did not 

have any claims volume in CY 2013. 

The commenter suggested that we 

reassign HCPCS code G0424 to APC 

0078. APC 0078 has a mean cost of 

approximately $90, which is under the 

$100 initial selection criteria for 

conditionally packaged ancillary 

services. With the reduced size of APC 

0077 and the mean cost of APC 0078 

being less than $100, we are reassigning 

the procedure codes remaining in APC 

0078 to APC 0077 and revising the title 

of APC 0077 to read ‘‘Pulmonary 

Treatment.’’ The new combined APC 

0077 is assigned status indicator ‘‘Q1’’ 

under the conditional packaging policy. 

We note that the mean cost of this 

revised APC 0077 (after application of 

the ‘‘Q1’’ status indicator) is 

approximately $154. 

Comment: One commenter requested 

that CMS continue separate payment, by 

assigning status indicator ‘‘S,’’ for CPT 

codes 92557 (comprehensive hearing 

test), 92601 through 92604 (cochlear 

implant programming), and 92640 

(auditory brainstem implant 

programming) which are assigned to 

APC 0364, an APC that is proposed for 

conditional packaging. The commenter 

stated that these CPT codes are primary 

audiology services and are not 

dependent or incident to other services 

in the hospital. 

Response: We do not believe that it is 

necessary to change the status indicator 

to ‘‘S’’ as we disagree that these CPT 

codes represent primary audiology 

services. Conditional packaging 

provides separate payment when the 

otherwise packaged services are 

provided alone without other primary 

services. Therefore, these services will 

continue to be separately paid when 

performed without other primary 

services. 

Comment: Some commenters 

expressed concern that packaging 

payment for ancillary services could 

have a negative impact on patient access 

because hospitals will not have an 

incentive to perform ancillary services 

at the time of other therapeutic or 

evaluation/management services, even 

when providing such services at the 

same encounter would be efficient and 

offer patients the most appropriate and 

complete care. Commenters cautioned 

that expanded packaging policies will 

impede the accuracy and stability of 

future ratesetting under the OPPS. 

Response: We appreciate 

stakeholders’ concerns and predictions 

about the effect that this conditional 

packaging policy may have on patient 

access to ancillary services. We will 

continue to monitor service utilization 

trends in the HOPD. We disagree with 

commenters that packaging services 

impedes the accuracy and stability of 

future OPPS ratesetting. As a reminder, 

hospitals include HCPCS codes and 

charges for packaged services on their 

claims, and the costs associated with 

those packaged services are included in 

the costs of the separately payable 

procedure on the claim. We also 

continue to emphasize that hospitals 

should report all HCPCS codes for all 

services, including those for packaged 

services, according to correct coding 

principles. 

Comment: One commenter disagreed 

with the proposed assignment of status 

indicator ‘‘Q1’’ to CPT code 95012 

(Expired nitric oxide gas determination). 

The commenter requested that CMS 

assign status indicator ‘‘S’’ to CPT code 

95012 because the code describes an 

independent, primary procedure that is 

not ancillary to any other procedure. 

The commenter also requested that CMS 

reassign CPT code 95012 to APC 0078 

(Level II Pulmonary Treatment) because 

of its clinical homogeneity to other 

services assigned to that APC. 

Response: We disagree with the 

commenter. We believe the procedure or 

service described by CPT code 95012 to 

be an ancillary diagnostic test and, 

therefore, appropriate for conditional 

packaging under the ancillary services 

policy. We believe that existing 

assignment to APC 0340 (Level II Minor 

Procedures) is appropriate in that CPT 

code 95012 is a minor test and that its 

mean cost of approximately $41 is 

similar to the mean cost of APC 0340 of 

approximately $53. Therefore, we are 

finalizing our proposal to maintain 

assignment of CPT code 95012 to APC 

0340 with a ‘‘Q1’’ status indicator for 

CY 2015. 

Comment: A few commenters 

requested that CMS make an exception 

to the ancillary packaging policy for 

pathology services, specifically those 

services assigned to APC 0342 (Level I 

Pathology) and APC 0433 (Level II 

Pathology). These commenters were 

concerned about inadequate payment 

for pathology services. 

Response: We disagree with 

commenters’ concern regarding 

inadequate payment for pathology 

services and do not believe that an 

exception to this packaging policy for 

the pathology services assigned to APCs 

0342 and 0433 is appropriate at this 

time. We remind the commenters that 

this policy only affects the facility 

payment for the technical aspect of the 

services and does not affect the 

physician fee schedule payment to the 

pathologist for the physician work in 

performing pathology services. We 

believe that pathology services are some 

of the best examples of ancillary 

services as they typically follow a 

surgical or other specimen-generating 

procedure for the purposes of diagnosis. 

We also remind the commenters that in 

the event a patient receives a pathology 

test in isolation from other primary 

HOPD services, the test would be 

separately paid because the ancillary 

services packaging policy is a 

conditional packaging policy. Therefore, 

we are not creating an exception to this 

ancillary packaging policy for pathology 

services. 

After consideration of the public 

comments we received, we are 

finalizing our ancillary services 

packaging policy as proposed, including 

deletion of status indicator ‘‘X.’’ We also 

are adopting as final our proposed 

revision of the regulations at 42 CFR 

419.2(b)(7) to replace the phrase 

‘‘Incidental services such as 

venipuncture’’ with ‘‘Ancillary 

services’’ to more accurately reflect the 

final packaging policy for CY 2015. 

The APCs that we are conditionally 

packaging as ancillary services in CY 

2015 are listed in Table 12 below. 


tkelley on DSK3SPTVN1PROD with RULES2
66822 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

TABLE 12—APCS FOR CONDITIONALLY PACKAGED ANCILLARY SERVICES FOR CY 2015 

APC 

CY 2015 OPPS Geometric mean cost (with 

application of Q1 status 

indicator) 

Final CY 

2015 

OPPS SI 

Group title 

0012 ........................ $102.18 Q1 Level I Debridement & Destruction. 

0060 ........................ 20.57 Q1 Manipulation Therapy. 

0077 ........................ 170.77 Q1 Level I Pulmonary Treatment. 

0099 ........................ 81.40 Q1 Electrocardiograms/Cardiography. 

0215 ........................ 98.52 Q1 Level I Nerve and Muscle Services. 

0230 ........................ 54.01 Q1 Level I Eye Tests & Treatments. 

0260 ........................ 61.59 Q1 Level I Plain Film Including Bone Density Measurement. 

0261 ........................ 98.56 Q1 Level II Plain Film Including Bone Density Measurement. 

0265 ........................ 95.12 Q1 Level I Diagnostic and Screening Ultrasound. 

0340 ........................ 54.33 Q1 Level II Minor Procedures. 

0342 ........................ 56.31 Q1 Level I Pathology. 

0345 ........................ 78.91 Q1 Level I Transfusion Laboratory Procedures. 

0364 ........................ 44.94 Q1 Level I Audiometry. 

0365 ........................ 122.36 Q1 Level II Audiometry. 

0367 ........................ 167.31 Q1 Level I Pulmonary Tests. 

0420 ........................ 136.66 Q1 Level III Minor Procedures. 

0433 ........................ 190.55 Q1 Level II Pathology. 

0450 ........................ 30.33 Q1 Level I Minor Procedures. 

0624 ........................ 81.76 Q1 Phlebotomy and Minor Vascular Access Device Procedures. 

0690 ........................ 36.47 Q1 Level I Electronic Analysis of Devices. 

0698 ........................ 104.61 Q1 Level II Eye Tests & Treatments. 

The HCPCS codes that we are 

conditionally package as ancillary 

services for CY 2015 are displayed in 

Addendum B to this CY 2015 OPPS/

ASC final rule with comment period 

(which is available via the Internet on 

the CMS Web site). The supporting 

documents for this final rule with 

comment period are available at the 

CMS Web site at: http://

www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/

HospitalOutpatientPPS/index.html. 

(2) Prosthetic Supplies 

We have a longstanding policy of 

providing payment under the OPPS for 

implantable DME, implantable 

prosthetics, and medical and surgical 

supplies, as provided at sections 

1833(t)(1)(B)(i) and (t)(1)(B)(iii) of the 

Act and 42 CFR 419.2(b)(4), (b)(10), and 

(b)(11). In the CY 2014 OPPS/ASC final 

rule with comment period, we clarified 

that medical and surgical supplies 

under § 419.2(b)(4) include (but are not 

limited to) all supplies on the DMEPOS 

Fee Schedule except prosthetic supplies 

(78 FR 74947). Under 42 CFR 419.22(j), 

prosthetic supplies are currently 

excluded from payment under the OPPS 

and are paid under the DMEPOS Fee 

Schedule, even when provided in the 

HOPD. However, as we discussed in the 

CY 2015 OPPS/ASC proposed rule (79 

FR 40961), under section 1833(t)(1)(B)(i) 

of the Act, the Secretary has the 

authority to designate prosthetic 

supplies provided in the hospital 

outpatient setting as covered OPD 

services payable under the OPPS. 

As we stated in the CY 2015 OPPS/ 

ASC proposed rule (79 FR 40961) and 

as mentioned above, implantable 

prosthetic devices are packaged in the 

OPPS under 42 CFR 419.2(b)(11). It is 

common for implantable prosthetic 

devices to be provided as a part of a 

device system. Such device systems 

include the implantable part or parts of 

the overall device system and also 

certain nonimplantable prosthetic 

supplies that are integral to the overall 

function of the medical device, part of 

which is implanted and part of which 

is external to the patient. These 

prosthetic supplies are integral to the 

implantable prosthetic because typically 

shortly after the surgical procedure to 

implant the implantable prosthetic 

device in the hospital, the surgeon and/ 

or his or her colleagues will have to 

attach, fit, and program certain 

prosthetic supplies that are not 

surgically implanted into the patient but 

are a part of a system and that are 

essential to the overall function of an 

implanted device. Because these 

supplies are integral to the overall 

function of the implanted prosthetic, 

and because, as mentioned above, we 

package in the OPPS items and services 

that are typically integral, ancillary, 

supportive, dependent, or adjunctive to 

a primary service, we believe that it is 

most consistent with a prospective 

payment system to package the payment 

of prosthetic supplies (along with the 

implantable prosthetic device) into the 

surgical procedure that implants the 

prosthetic device, as all of the 

components are typically necessary for 

the performance of the system and the 

hospital typically purchases the system 

as a single unit. Patients requiring 

replacement supplies at a time later 

than the initial surgical procedure and 

outside of the hospital would obtain 

them as they typically do from a 

DMEPOS supplier with payment for 

such supplies made under the DMEPOS 

Fee Schedule. 

In addition to prosthetic supplies that 

are components of device systems, part 

of which are implanted, many other 

prosthetic supplies on the DMEPOS Fee 

Schedule are typical medical and 

surgical supplies and of the type that are 

packaged in the OPPS under 

§ 419.2(b)(4). Consistent with our 

change from status indicator ‘‘A’’ to ‘‘N’’ 

for all nonprosthetic DMEPOS supplies 

in the CY 2014 OPPS final rule with 

comment period (78 FR 74947), in the 

CY 2015 OPPS/ASC proposed rule (79 

FR 40961), we proposed to package and 

change the status indicator from ‘‘A’’ to 

‘‘N’’ for all DMEPOS prosthetic 

supplies. With this proposed change, all 

medical and surgical supplies would be 

packaged in the OPPS. 

Therefore, we proposed to delete 

‘‘prosthetic supplies’’ from the 

regulations at § 419.22(j) because we 

proposed that prosthetic supplies be 

packaged covered OPD services in the 

OPPS for CY 2015. Prosthetic supplies 

provided in the HOPD would be 

included in ‘‘medical and surgical 

supplies’’ (as are all other supplies 

currently provided in the HOPD) under 

§ 419.2(b)(4). The HCPCS codes for 

prosthetic supplies that we proposed to 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66823 

package for CY 2015 were displayed in 

Addendum B to the CY 2015 OPPS/ASC 

proposed rule (which is available via 

the Internet on the CMS Web site). The 

supporting documents for the proposed 

rule, including but not limited to 

Addendum B, are available at the CMS 

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

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

index.html. 

Comment: Many commenters agreed 

with CMS’ proposal to conditionally 

package prosthetic supplies furnished in 

the HOPD. 

Response: We appreciate the 

commenters’ support. 

Comment: A few commenters 

requested to be informed of the fund 

transfer amount from the DMEPOS Fee 

Schedule to the OPPS as a result of this 

proposed policy. 

Response: Our CY 2013 claims 

analysis shows that packaging payment 

for prosthetic supplies under the OPPS 

would redistribute approximately $1 

million. 

Comment: Some commenters 

recommended that CMS implement an 

exception to the ‘‘unbundling’’ rule that 

currently exists for the inpatient 

prospective payment systems (IPPS). 

(We refer readers to the Medicare 

Claims Processing Manual, Pub. 100–04, 

Chapter 20—Durable Medical 

Equipment, Prosthetics, Orthotic 

Devices, and Supplies, Section 110— 

General Billing Requirements—for DME, 

Prosthetics, Orthotic Devices, and 

Supplies.) The commenters believed 

that such an exception would allow 

DME suppliers to bill Medicare directly 

for prosthetic supplies furnished to 

patients during an outpatient visit when 

the supplies are intended primarily for 

home use. 

Response: We do not believe that an 

additional exception to the 

‘‘unbundling’’ rule is necessary for the 

provision of prosthetic supplies in the 

HOPD. We remind commenters that 

DME, prosthetics, and orthotics can be 

billed by hospitals for outpatients and 

are paid according to the DMEPOS Fee 

Schedule. Only prosthetic supplies are 

packaged in the OPPS. Unlike inpatient 

stays, hospital outpatient stays are 

typically brief and the need for 

replacement supplies during a hospital 

outpatient stay should be minimal. If a 

hospital wants to provide a patient with 

some basic supplies for immediate 

home use (for example, tape, a syringe, 

or gauze), such supplies are packaged 

into the payment for whatever service 

the patient received at the hospital. 

DME suppliers can furnish additional or 

replacement prosthetic supplies to the 

patient’s home and receive payment 

under the DMEPOS Fee Schedule. 

After consideration of the public 

comments we received, we are adopting 

as final our proposed deletion of 

‘‘prosthetic supplies’’ from the 

regulations at § 419.22(j) because 

prosthetic supplies are packaged 

covered OPD services in the OPPS for 

CY 2015. Prosthetic supplies provided 

in the HOPD will be included in the 

packaged category of ‘‘medical and 

surgical supplies’’ (as are all other 

supplies currently provided in the 

HOPD) under § 419.2(b)(4). The HCPCS 

codes for prosthetic supplies that we are 

packaging for CY 2015 are displayed in 

Addendum B to this CY 2015 OPPS/

ASC final rule with comment period 

(which is available via Internet on the 

CMS Web site). The supporting 

documents for this final rule with 

comment period, including but not 

limited to Addendum B, are available at 

the CMS Web site at: http://

www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/

HospitalOutpatientPPS/index.html. 

4. Calculation of OPPS Scaled Payment 

Weights 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40961 through 40962), for 

CY 2015, we proposed to calculate the 

relative payment weights for each APC 

shown in Addenda A and B to the 

proposed rule (which are available via 

the Internet on the CMS Web site) using 

the APC costs discussed in sections 

II.A.1. and II.A.2. of the proposed rule. 

Prior to CY 2007, we standardized all 

the relative payment weights to APC 

0601 (Mid-Level Clinic Visit) because 

mid-level clinic visits were among the 

most frequently performed services in 

the hospital outpatient setting. We 

assigned APC 0601 a relative payment 

weight of 1.00 and divided the median 

cost for each APC by the median cost for 

APC 0601 to derive the relative payment 

weight for each APC. 

Beginning with the CY 2007 OPPS (71 

FR 67990), we standardized all of the 

relative payment weights to APC 0606 

(Level 3 Clinic Visits) because we 

deleted APC 0601 as part of the 

reconfiguration of the clinic visit APCs. 

We selected APC 0606 as the base 

because it was the mid-level clinic visit 

APC (that is, Level 3 of five levels). For 

the CY 2013 OPPS (77 FR 68283), we 

established a policy of using geometric 

mean-based APC costs rather than 

median-based APC costs to calculate 

relative payment weights. For CY 2015, 

we proposed to continue this policy. 

For the CY 2014 OPPS, we 

standardized all of the relative payment 

weights to clinic visit APC 0634 as 

discussed in section VII. of the CY 2015 

OPPS/ASC proposed rule (79 FR 41008). 

For CY 2015, we proposed to continue 

this policy to maintain consistency in 

calculating unscaled weights that 

represent the cost of some of the most 

frequently provided services. We 

proposed to assign APC 0634 a relative 

payment weight of 1.00 and to divide 

the geometric mean cost of each APC by 

the proposed geometric mean cost for 

APC 0634 to derive the proposed 

unscaled relative payment weight for 

each APC. The choice of the APC on 

which to base the proposed relative 

payment weights does not affect 

payments made under the OPPS 

because we scale the weights for budget 

neutrality. 

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

requires that APC reclassification and 

recalibration changes, wage index 

changes, and other adjustments be made 

in a budget neutral manner. Budget 

neutrality ensures that the estimated 

aggregate weight under the OPPS for CY 

2015 is neither greater than nor less 

than the estimated aggregate weight that 

would have been made without the 

changes. To comply with this 

requirement concerning the APC 

changes, we proposed to compare the 

estimated aggregate weight using the CY 

2014 scaled relative payment weights to 

the estimated aggregate weight using the 

proposed CY 2015 unscaled relative 

payment weights. 

We did not receive any public 

comments on our proposed policy for 

the CY 2015 unscaled relative payment 

weights. Therefore, we are finalizing our 

proposed policy to maintain consistency 

in calculating unscaled weights that 

represent the cost of some of the most 

frequently provided services by 

assigning APC 0634 a relative payment 

weight of 1.00 and dividing the 

geometric mean cost of each APC by the 

geometric mean cost for APC 0634 to 

derive the unscaled relative payment 

weight for each APC for CY 2015. 

For CY 2014, we multiplied the CY 

2014 scaled APC relative payment 

weight applicable to a service paid 

under the OPPS by the volume of that 

service from CY 2013 claims to calculate 

the total relative payment weight for 

each service. We then added together 

the total relative payment weight for 

each of these services in order to 

calculate an estimated aggregate weight 

for the year. For CY 2015, we proposed 

to apply the same process using the CY 

2015 unscaled relative payment weights 

rather than scaled relative payment 

weights. We proposed to calculate the 

weight scaler by dividing the CY 2014 

estimated aggregate weight by the CY 

2015 estimated aggregate weight (79 FR 


tkelley on DSK3SPTVN1PROD with RULES2
66824 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

40962). The service-mix is the same in 

the current and prospective years 

because we use the same set of claims 

for service volume in calculating the 

aggregate weight for each year. We note 

that the CY 2014 OPPS scaled relative 

weights incorporate the estimated 

payment weight from packaged 

laboratory tests previously paid at CLFS 

rates. 

For a detailed discussion of the 

weight scaler calculation, we refer 

readers to the OPPS claims accounting 

document available on the CMS Web 

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

Medicare-Fee-for-Service-Payment/

HospitalOutpatientPPS/index.html. 

Click on the CY 2015 OPPS final rule 

link, then open the claims accounting 

document link at the bottom of the page. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40962), we proposed to 

include estimated payments to CMHCs 

in our comparison of the estimated 

unscaled relative payment weights in 

CY 2015 to the estimated total relative 

payment weights in CY 2014 using CY 

2013 claims data, holding all other 

components of the payment system 

constant to isolate changes in total 

weight. Based on this comparison, we 

proposed to adjust the proposed CY 

2015 unscaled relative payment weights 

for purposes of budget neutrality. The 

proposed CY 2015 unscaled relative 

payment weights were adjusted by 

multiplying them by a weight scaler of 

1.3220 to ensure that the proposed CY 

2015 relative payment weights are 

budget neutral. 

Section 1833(t)(14) of the Act 

provides the payment rates for certain 

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

Act states that ‘‘Additional expenditures 

resulting from this paragraph shall not 

be taken into account in establishing the 

conversion factor, weighting, and other 

adjustment factors for 2004 and 2005 

under paragraph (9), but shall be taken 

into account for subsequent years.’’ 

Therefore, the cost of those SCODs (as 

discussed in section V.B.3. of this final 

rule with comment period) is included 

in the budget neutrality calculations for 

the CY 2015 OPPS. 

Comment: One commenter expressed 

concern that CMS did not provide 

detailed data on the weight scaling 

process. The commenter noted that it 

could not find the claims accounting 

document to which the proposed rule 

referenced. 

Response: The direct link to the 

proposed rule claims accounting 

document is located on the CMS Web 

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

Medicare-Fee-for-Service-Payment/

HospitalOutpatientPPS/Downloads/

CMS-1613-P-claims-accountingnarrative.pdf. 

After consideration of the public 

comments we received, we are 

finalizing our proposed methodology for 

calculating the OPPS scaled relative 

payment weights without modification, 

including updating of the budget 

neutrality scaler for this final rule with 

comment period. Under this 

methodology, the final unscaled relative 

payment weights were adjusted by a 

weight scaler of 1.2977 for this final rule 

with comment period. The CY 2015 

unscaled relative payment weights 

listed in Addenda A and B to this final 

rule with comment period (which are 

available via the Internet on the CMS 

Web site) incorporate the recalibration 

adjustments discussed in sections II.A.1. 

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

comment period. 

B. Conversion Factor Update 

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

requires the Secretary to update the 

conversion factor used to determine the 

payment rates under the OPPS on an 

annual basis by applying the OPD fee 

schedule increase factor. For purposes 

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

subject to sections 1833(t)(17) and 

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

schedule increase factor is equal to the 

hospital inpatient market basket 

percentage increase applicable to 

hospital discharges under section 

1886(b)(3)(B)(iii) of the Act. In the FY 

2015 IPPS/LTCH PPS final rule (79 FR 

49994), consistent with current law, 

based on IHS Global Insight, Inc.’s 

second quarter 2014 forecast of the FY 

2015 market basket increase, the FY 

2015 IPPS market basket update is 2.9 

percent. However, sections 1833(t)(3)(F) 

and 1833(t)(3)(G)(iv) of the Act, as 

added by section 3401(i) of the Patient 

Protection and Affordable Care Act of 

2010 (Pub. L. 111–148) and as amended 

by section 10319(g) of that law and 

further amended by section 1105(e) of 

the Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111– 

152), provide adjustments to the OPD 

fee schedule increase factor for CY 2015. 

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

the Act requires that, for 2012 and 

subsequent years, the OPD fee schedule 

increase factor under subparagraph 

(C)(iv) be reduced by the productivity 

adjustment described in section 

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

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

the productivity adjustment as equal to 

the 10-year moving average of changes 

in annual economy-wide, private 

nonfarm business multifactor 

productivity (MFP) (as projected by the 

Secretary for the 10-year period ending 

with the applicable fiscal year, year, 

cost reporting period, or other annual 

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

FY 2012 IPPS/LTCH PPS final rule (76 

FR 51689 through 51692), we finalized 

our methodology for calculating and 

applying the MFP adjustment. In the FY 

2015 IPPS/LTCH PPS final rule (79 FR 

49994), we discussed the calculation of 

the MFP adjustment for FY 2015, which 

is 0.5 percentage point. 

As we proposed, based on more 

recent data that became subsequently 

available after the publication of the CY 

2015 OPPS/ASC proposed rule (for 

example, a more recent estimate of the 

market basket increase and the MFP 

adjustment), we are using such updated 

data, if appropriate, to determine the CY 

2015 market basket update and the MFP 

adjustment, components in calculating 

the OPD fee schedule increase factor 

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

1833(t)(3)(F) of the Act, in this CY 2015 

OPPS/ASC final rule with comment 

period. 

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

the Act requires that, for each of years 

2010 through 2019, the OPD fee 

schedule increase factor under section 

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

by the adjustment described in section 

1833(t)(3)(G) of the Act. For CY 2015, 

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

provides a 0.2 percentage point 

reduction to the OPD fee schedule 

increase factor under section 

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

accordance with sections 

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

the Act, as we proposed, we are 

applying a 0.2 percentage point 

reduction to the OPD fee schedule 

increase factor for CY 2015. 

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

the Act provides that application of this 

subparagraph may result in the OPD fee 

schedule increase factor under section 

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

than 0.0 percent for a year, and may 

result in OPPS payment rates being less 

than rates for the preceding year. As 

described in further detail below, we are 

finalizing an OPD fee schedule increase 

factor of 2.2 percent for the CY 2015 

OPPS (which is 2.9 percent, the estimate 

of the hospital inpatient market basket 

percentage increase, less the 0.5 

percentage point MFP adjustment, and 

less the 0.2 percentage point additional 

adjustment). 

Hospitals that fail to meet the 

Hospital OQR Program reporting 

requirements are subject to an 

additional reduction of 2.0 percentage 

points from the OPD fee schedule 

increase factor adjustment to the 

conversion factor that would be used to 

calculate the OPPS payment rates for 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66825 

their services, as required by section 

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

discussion of the Hospital OQR 

Program, we refer readers to section 

XIII. of this final rule with comment 

period. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40963), we proposed to 

amend 42 CFR 419.32(b)(1)(iv)(B) by 

adding a new paragraph (6) to reflect the 

requirement in section 1833(t)(3)(F)(i) of 

the Act that, for CY 2015, we reduce the 

OPD fee schedule increase factor by the 

MFP adjustment as determined by CMS, 

and to reflect the requirement in section 

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

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

that we reduce the OPD fee schedule 

increase factor by an additional 0.2 

percentage point for CY 2015. 

We did not receive any public 

comments on our proposed adjustments 

to the OPD fee schedule increase factor 

or the proposed amendment to 

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

paragraph (6) to reflect the requirement 

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

Therefore, for the reasons discussed 

above, we are adjusting the OPD fee 

schedule increase factor for CY 2015 as 

proposed. We also are finalizing the 

amendment to § 419.32(b)(1)(iv)(B) as 

proposed. 

To set the OPPS conversion factor for 

CY 2015, we proposed to increase the 

CY 2014 conversion factor of $72.672 by 

2.1 percent. In accordance with section 

1833(t)(9)(B) of the Act, we further 

adjusted the conversion factor for CY 

2015 to ensure that any revisions made 

to the wage index and rural adjustment 

were made on a budget neutral basis. 

We proposed a calculated overall budget 

neutrality factor of 0.9998 for wage 

index changes by comparing total 

estimated payments from our simulation 

model using the FY 2015 IPPS wage 

indexes to those payments using the FY 

2014 IPPS wage indexes, as adopted on 

a calendar year basis for the OPPS. 

For CY 2015, we proposed to 

maintain current rural adjustment 

policy, as discussed in section II.E. of 

this final rule with comment period. 

Therefore, the budget neutrality factor 

for the rural adjustment would be 

1.0000. 

For CY 2015, we proposed to continue 

previously established policies for 

implementing the cancer hospital 

payment adjustment described in 

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

discussed in section II.F. of this final 

rule with comment period. We 

calculated a CY 2015 budget neutrality 

adjustment factor for the cancer hospital 

payment adjustment by comparing 

estimated total CY 2015 payments under 

section 1833(t) of the Act, including the 

CY 2015 cancer hospital payment 

adjustment, to estimated CY 2015 total 

payments using the CY 2014 final 

cancer hospital payment adjustment as 

required under section 1833(t)(18)(B) of 

the Act. The CY 2015 estimated 

payments applying the CY 2015 cancer 

hospital payment adjustment are 

identical to estimated payments 

applying the CY 2014 final cancer 

hospital payment adjustment. Therefore, 

we applied a budget neutrality 

adjustment factor of 1.0000 to the 

conversion factor for the cancer hospital 

payment adjustment. 

For the proposed rule, we estimated 

that pass-through spending for drugs, 

biologicals, and devices for CY 2015 

would equal approximately $15.5 

million, which represented 0.03 percent 

of total projected CY 2015 OPPS 

spending. Therefore, the proposed 

conversion factor would be adjusted by 

the difference between the 0.02 percent 

estimate of pass-through spending for 

CY 2014 and the 0.03 percent estimate 

of pass-through spending for CY 2015, 

resulting in a proposed adjustment for 

CY 2015 of 0.01 percent. Finally, 

estimated payments for outliers would 

remain at 1.0 percent of total OPPS 

payments for CY 2015. 

For the proposed rule, we proposed 

that hospitals that fail to meet the 

reporting requirements of the Hospital 

OQR Program would continue to be 

subject to a further reduction of 2.0 

percentage points to the OPD fee 

schedule increase factor. For hospitals 

that fail to meet the requirements of the 

Hospital OQR Program, we would make 

all other adjustments discussed above, 

but use a reduced OPD fee schedule 

update factor of 0.2 percent (that is, the 

OPD fee schedule increase factor of 2.1 

percent further reduced by 2.0 

percentage points). This resulted in a 

proposed reduced conversion factor for 

CY 2015 of $72.692 for hospitals that 

fail to meet the Hospital OQR 

requirements (a difference of ¥$1.484 

in the conversion factor relative to 

hospitals that met the requirements). 

Comment: MedPAC noted that CMS is 

required by law to implement the 2015 

update to the conversion factor as stated 

in the Affordable Care Act. In its March 

2014 Report to Congress, MedPAC 

recommended an update of 3.25 percent 

and Congressional action to direct the 

Secretary to reduce or eliminate 

differences in payment rates between 

HOPDs and physician offices, which is 

different from the Affordable Care Act 

requirement. 

Response: As discussed above, section 

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

Secretary to update the conversion 

factor used to determine the payment 

rates under the OPPS on an annual basis 

by applying the OPD fee schedule 

increase factor. Section 1833(t)(3)(C)(iv) 

provides that the OPD fee schedule 

increase factor, subject to sections 

1833(t)(3)(F) and 1833(t)(3)(G)(iv) of the 

Act, is equal to the hospital inpatient 

market basket percentage increase 

applicable to hospital discharges under 

section 1886(b)(3)(B)(iii) of the Act. 

After consideration of the public 

comment we received, we are finalizing 

the calculation of the CY 2015 OPPS 

conversion factor as proposed. We are 

finalizing the proposed amendment to 

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

paragraph (6) to reflect the reductions to 

the OPD fee schedule increase factor 

that are required for CY 2015 to satisfy 

the statutory requirements of sections 

1833(t)(3)(F) and (t)(3)(G)(iv) of the Act. 

We are using a reduced conversion 

factor of $72.661 in the calculation of 

payments for hospitals that fail to meet 

the Hospital OQR Program requirements 

(a difference of ¥$1.483 in the 

conversion factor relative to hospitals 

that met the requirements). 

For CY 2015, we are finalizing our 

proposal to continue previously 

established policies for implementing 

the cancer hospital payment adjustment 

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

Act, as discussed in section II.F. of this 

final rule with comment period. 

For this final rule with comment 

period, we estimate that pass-through 

spending for drugs, biologicals, and 

devices for CY 2015 will equal 

approximately $82.8 million, which 

represents 0.15 percent of total 

projected CY 2015 OPPS spending. 

Therefore, the conversion factor is also 

adjusted by the difference between the 

0.02 percent estimate of pass-through 

spending for CY 2014 and the 0.15 

percent estimate of pass-through 

spending for CY 2015, resulting in an 

adjustment for CY 2015 of ¥0.13 

percent. Finally, estimated payments for 

outliers remain at 1.0 percent of total 

OPPS payments for CY 2015. 

As a result of these final policies, the 

OPD fee schedule increase factor for the 

CY 2015 OPPS is 2.2 percent (which is 

2.9 percent, the estimate of the hospital 

inpatient market basket percentage 

increase, less the 0.5 percentage point 

MFP adjustment, and less the 0.2 

percentage point additional adjustment). 

For CY 2015, we are using a conversion 

factor of $74.144 in the calculation of 

the national unadjusted payment rates 

for those items and services for which 

payment rates are calculated using 

geometric mean costs, that is the OPD 

fee schedule increase factor of 2.2 

percent for CY 2015, the required wage 

index budget neutrality adjustment of 


tkelley on DSK3SPTVN1PROD with RULES2
66826 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

approximately 0.9996, the cancer 

hospital payment adjustment of 1.0000, 

and the adjustment of ¥0.13 percent of 

projected OPPS spending for the 

difference in the pass-through spending 

result in a conversion factor for CY 2015 

of $74.144. 

C. Wage Index Changes 

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

requires the Secretary to ‘‘determine a 

wage adjustment factor to adjust the 

portion of payment and coinsurance 

attributable to labor-related costs for 

relative differences in labor and 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). Therefore, in the 

CY 2015 OPPS/ASC proposed rule (79 

FR 40964), we proposed to continue this 

policy for the CY 2015 OPPS. We refer 

readers to section II.H. of this final rule 

with comment period for a description 

and example of how the wage index for 

a particular hospital is used to 

determine payment for the hospital. 

As discussed in section II.A.2.c. of 

this final rule with comment period, for 

estimating APC costs, we standardize 60 

percent of estimated claims costs for 

geographic area wage variation using the 

same FY 2015 pre-reclassified wage 

index that the IPPS uses to standardize 

costs. This standardization process 

removes the effects of differences in area 

wage levels from the determination of a 

national unadjusted OPPS payment rate 

and copayment amount. 

Under 42 CFR 419.41(c)(1) and 

419.43(c) (published in the original 

OPPS April 7, 2000 final rule with 

comment period (65 FR 18495 and 

18545)), the OPPS adopted the final 

fiscal year IPPS wage index as the 

calendar year wage index for adjusting 

the OPPS standard payment amounts for 

labor market differences. Therefore, the 

wage index that applies to a particular 

acute care short-stay hospital under the 

IPPS also applies to that hospital under 

the OPPS. As initially explained in the 

September 8, 1998 OPPS proposed rule 

(63 FR 47576), we believe that using the 

IPPS wage index as the source of an 

adjustment factor for the OPPS is 

reasonable and logical, given the 

inseparable, subordinate status of the 

HOPD within the hospital overall. In 

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

the Act, the IPPS wage index is updated 

annually. 

The Affordable Care Act contained 

several provisions affecting the wage 

index. These provisions were discussed 

in the CY 2012 OPPS/ASC final rule 

with comment period (76 FR 74191). As 

discussed in that final rule with 

comment period, section 10324 of the 

Affordable Care Act added section 

1886(d)(3)(E)(iii)(II) to the Act, which 

defines a ‘‘frontier State,’’ and amended 

section 1833(t) of the Act to add new 

paragraph (19), which requires a 

‘‘frontier State’’ wage index floor of 1.00 

in certain cases, and states that the 

frontier State floor shall not be applied 

in a budget neutral manner. We codified 

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

(c)(3) of our regulations. In the CY 2015 

OPPS/ASC proposed rule (79 FR 40964), 

we proposed to implement this 

provision in the same manner as we 

have since CY 2011. That is, frontier 

State hospitals would receive a wage 

index of 1.00 if the otherwise applicable 

wage index (including reclassification, 

rural and imputed floor, and rural floor 

budget neutrality) is less than 1.00. 

Similar to our current policy for HOPDs 

that are affiliated with multicampus 

hospital systems, we proposed that the 

HOPD would receive a wage index 

based on the geographic location of the 

specific inpatient hospital with which it 

is associated. Therefore, if the 

associated hospital is located in a 

frontier State, the wage index 

adjustment applicable for the hospital 

also will apply for the affiliated HOPD. 

We refer readers to the following 

sections in the FY 2011 through FY 

2015 IPPS/LTCH PPS final rules for 

discussions regarding this provision, 

including our methodology for 

identifying which areas meet the 

definition of ‘‘frontier States’’ as 

provided for in section 

1886(d)(3)(E)(iii)(II) of the Act: For FY 

2011, 75 FR 50160 through 50161; for 

FY 2012, 76 FR 51793, 51795, and 

51825; for FY 2013, 77 FR 53369 

through 53370; for FY 2014, 78 FR 

50590 through 50591; and for FY 2015, 

79 FR 49971. 

In addition to the changes required by 

the Affordable Care Act, we note that 

the FY 2015 IPPS wage indexes 

continue to reflect a number of 

adjustments implemented over the past 

few years, including, but not limited to, 

reclassification of hospitals to different 

geographic areas, the rural and imputed 

floor provisions, an adjustment for 

occupational mix, and an adjustment to 

the wage index based on commuting 

patterns of employees (the out-migration 

adjustment). We refer readers to the FY 

2015 IPPS/LTCH PPS proposed rule and 

final rule (79 FR 28054 through 28084 

and 79 FR 49950 through 49991, 

respectively) for a detailed discussion of 

all changes to the FY 2015 IPPS wage 

indexes. In addition, we refer readers to 

the CY 2005 OPPS final rule with 

comment period (69 FR 65842 through 

65844) and subsequent OPPS rules for a 

detailed discussion of the history of 

these wage index adjustments as 

applied under the OPPS. 

As discussed in the FY 2015 IPPS/

LTCH PPS proposed rule and final rule 

(79 FR 28054 through 28055 and 79 FR 

49951 through 49957, respectively), the 

Office of Management and Budget 

(OMB) issued revisions to the current 

labor market area delineations on 

February 28, 2013, that included a 

number of significant changes such as 

new Core Based Statistical Areas 

(CBSAs), urban counties that become 

rural, rural counties that become urban, 

and existing CBSAs that are split apart 

(OMB Bulletin 13–01). This bulletin can 

be found at: http://

www.whitehouse.gov/sites/default/files/

omb/bulletins/2013/b13-01.pdf. As we 

stated in the FY 2014 IPPS/LTCH PPS 

final rule (78 FR 50586), in order to 

allow for sufficient time to assess the 

new revisions and their ramifications, 

we intended to propose changes to the 

IPPS wage index based on the newest 

CBSA delineations in the FY 2015 IPPS/ 

LTCH PPS proposed rule. Similarly, in 

the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 74951), we 

stated that we intended to propose 

changes in the OPPS, which uses the 

IPPS wage index, based on the new 

OMB delineations in the CY 2015 

OPPS/ASC proposed rule, consistent 

with any proposals in the FY 2015 IPPS/ 

LTCH PPS proposed rule. We refer 

readers to proposed changes based on 

the new OMB delineations in the FY 

2015 IPPS/LTCH proposed rule at 79 FR 

28054 through 28084 and the final 

changes based on the new OMB 

delineations in the FY 2015 IPPS/LTCH 

PPS final rule at 79 FR 49950 through 

49966. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40964), we proposed to use 

the FY 2015 hospital IPPS wage index 

for urban and rural areas as the wage 

index for the OPPS hospital to 

determine the wage adjustments for the 

OPPS payment rate and the copayment 

standardized amount for CY 2015. (We 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66827 

refer readers to the FY 2015 IPPS/LTCH 

PPS final rule (79 FR 49850) and the 

final FY 2015 hospital wage index files 

posted on the CMS Web site.) We note 

that the final FY 2015 IPPS wage 

indexes reflect a number of changes as 

a result of the new OMB delineations as 

well as a 1-year extension of the 

imputed rural floor. We proposed that 

the CY 2015 OPPS wage index (for 

hospitals paid under the IPPS and 

OPPS) would be the final FY 2015 IPPS 

wage index. Thus, any adjustments, 

including the adjustments related to the 

new OMB delineations, that were 

finalized for the IPPS wage index would 

be reflected in the OPPS wage index. As 

stated earlier in this section, we 

continue to believe that using the IPPS 

wage index as the source of an 

adjustment factor for the OPPS is 

reasonable and logical, given the 

inseparable, subordinate status of the 

HOPD within the hospital overall. 

Therefore, we did not propose to change 

our existing regulations, which require 

that we use the FY 2015 IPPS wage 

indexes for calculating OPPS payments 

in CY 2015. 

Hospitals that are paid under the 

OPPS but not under the IPPS do not 

have a hospital wage index under the 

IPPS. Therefore, for non-IPPS hospitals 

paid under the OPPS, we assign the 

wage index that would be applicable if 

the hospital were paid under the IPPS, 

based on its geographic location and any 

applicable wage index adjustments. We 

proposed to adopt the final wage index 

changes from the FY 2015 IPPS/LTCH 

PPS final rule for these hospitals. The 

following is a brief summary of the 

major changes in the FY 2015 IPPS wage 

indexes and any adjustments that we 

proposed to apply to these hospitals 

under the OPPS for CY 2015. We refer 

the reader to the FY 2015 IPPS/LTCH 

PPS final rule (79 FR 49950 through 

49991) for a detailed discussion of the 

changes to the wage indexes. 

For CY 2015, we proposed to continue 

our policy of allowing non-IPPS 

hospitals paid under the OPPS to 

qualify for the out-migration adjustment 

if they are located in a section 505 outmigration county (section 505 of the 

Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 (MMA) (Pub. L. 108–173)). We 

stated in the proposed rule that 

applying this adjustment is consistent 

with our proposed policy of adopting 

IPPS wage index policies for hospitals 

paid under the OPPS. We note that, 

because non-IPPS hospitals cannot 

reclassify, they would be eligible for the 

out-migration wage adjustment if they 

are located in a section 505 outmigration county. This is the same outmigration adjustment policy that would 

apply if the hospital were paid under 

the IPPS. Table 4J from the FY 2015 

IPPS/LTCH PPS final rule (available via 

the Internet on the CMS Web site at: 

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

Medicare-Fee-for-Service-Payment/

AcuteInpatientPPS/index.html) 

identifies counties eligible for the outmigration adjustment and IPPS 

hospitals that will receive the 

adjustment for FY 2015. 

As we have done in prior years, we 

are including Table 4J from the FY 2015 

IPPS/LTCH PPS final rule as Addendum 

L to this final rule with comment period 

with the addition of non-IPPS hospitals 

that would receive the section 505 outmigration adjustment under the CY 

2015 OPPS. Addendum L is available 

via the Internet on the CMS Web site. 

In the FY 2015 IPPS/LTCH PPS 

proposed rule, we proposed to adopt the 

new OMB labor market area 

delineations issued by OMB in OMB 

Bulletin No. 13–01 on February 28, 

2013, based on standards published on 

June 28, 2010 (75 FR 37246 through 

37252) and the 2010 Census data to 

delineate labor market areas for 

purposes of the IPPS wage index. In the 

FY 2015 IPPS/LTCH PPS final rule, we 

finalized the adoption of the new OMB 

delineations. For IPPS wage index 

purposes, for hospitals that are 

designated as rural under the new OMB 

labor market area delineations that 

currently are located in urban CBSAs, 

we generally assigned them the urban 

wage index value of the CBSA in which 

they are physically located for FY 2014 

for a period of 3 fiscal years (79 FR 

28060 through 28061 and 79 FR 49957 

through 49960). To be consistent, we 

proposed to apply the same policy to 

hospitals paid under the OPPS but not 

under the IPPS so that such hospitals 

will maintain the wage index of the 

CBSA in which they are physically 

located for FY 2014 for the next 3 

calendar years. As stated in the CY 2015 

OPPS/ASC proposed rule (79 FR 40965), 

this proposed policy would impact six 

hospitals for purposes of OPPS 

payment. 

We believe that adopting the new 

OMB labor market area delineations 

creates a more accurate wage index 

system, but we also recognize that 

implementing the new OMB 

delineations may cause some short-term 

instability in hospital payments. 

Therefore, similar to the policy we 

adopted in the FY 2005 IPPS final rule 

(69 FR 49033), in the FY 2015 IPPS/

LTCH PPS final rule (79 FR 49960 

through 49962), we finalized a 1-year 

blended wage index for all hospitals 

that experience any decrease in their 

actual payment wage index exclusively 

due to the implementation of the new 

OMB delineations. Under this final IPPS 

policy, a post-reclassified wage index 

with the rural and imputed floors 

applied is computed based on the 

hospital’s FY 2014 CBSA (that is, using 

all of its FY 2014 constituent county/

ies), and another post-reclassified wage 

index with the rural and imputed floors 

applied is computed based on the 

hospital’s new FY 2015 CBSA (that is, 

the FY 2015 constituent county/ies). We 

then compare these two wage indexes. 

If the FY 2015 wage index with FY 2015 

CBSAs is lower than the FY 2015 wage 

index with FY 2014 CBSAs, we 

compute a blended wage index 

consisting of 50 percent of each of the 

two wage indexes added together. This 

blended wage index will be the IPPS 

hospital’s wage index for FY 2015. In 

the CY 2015 OPPS/ASC proposed rule, 

for purposes of the OPPS, we proposed 

to apply this 50-percent transition blend 

to hospitals paid under the OPPS but 

not under the IPPS. We stated that we 

believe a 1-year, 50/50 blended wage 

index would mitigate the short-term 

instability and negative payment 

impacts due to the implementation of 

the new OMB delineations, providing 

hospitals with a transition period during 

which they may adjust to their new 

geographic CBSA. We believe that a 

longer transition period would reduce 

the accuracy of the overall labor market 

area wage index system, and generally 

would not be warranted for hospitals 

moving from one urban geographic labor 

market area to another. 

In addition, for the FY 2015 IPPS, we 

are continuing the extension of the 

imputed floor policy (both the original 

methodology and alternative 

methodology) for another year, through 

September 30, 2015 (79 FR 49969 

through 49971). For purposes of the CY 

2015 OPPS, we also proposed to apply 

the imputed floor policy to hospitals 

paid under the OPPS but not under the 

IPPS. 

For CMHCs, we proposed to continue 

to calculate the wage index by using the 

post-reclassification IPPS wage index 

based on the CBSA where the CMHC is 

located. As with OPPS hospitals and for 

the same reasons, we proposed to apply 

a 1-year, 50/50 blended wage index to 

CMHCs that would receive a lower wage 

index due to the new CBSA 

delineations. In addition, as with OPPS 

hospitals and for the same reasons, for 

CMHCs currently located in urban 

CBSAs that are designated as rural 

under the new OMB labor market area 

delineations, we proposed to maintain 

the urban wage index value of the CBSA 

in which they are physically located for 


tkelley on DSK3SPTVN1PROD with RULES2
66828 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

CY 2014 for the next 3 calendar years. 

Consistent with our current policy, the 

wage index that applies to CMHCs 

includes both the imputed floor 

adjustment and the rural floor 

adjustment, but does not include the 

out-migration adjustment because that 

adjustment only applies to hospitals. 

With the exception of the outmigration wage adjustment table 

(Addendum L to this final rule with 

comment period, which is available via 

the Internet on the CMS Web site), 

which includes non-IPPS hospitals paid 

under the OPPS, we are not reprinting 

the FY 2015 IPPS wage indexes 

referenced in this discussion of the 

wage index. We refer readers to the CMS 

Web site for the OPPS at: http://

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

HospitalOutpatientPPS/index.html. At 

this link, readers will find a link to the 

final FY 2015 IPPS wage index tables. 

Comment: One commenter suggested 

that the IPPS rural floor should utilize 

State-specific budget neutrality rather 

than national budget neutrality to 

prevent it from being susceptible to 

gaming by hospitals. The commenter 

suggested that, under the current policy, 

an urban hospital can reclassify to rural 

status to improve the rural wage index 

in the State, which in some cases is 

used as a floor for urban hospitals. 

Response: As we stated in the FY 

2015 IPPS/LTCH PPS final rule (79 FR 

50370), section 3141 of Public Law 111– 

148 requires that a national budget 

neutrality adjustment be applied in 

implementing the rural floor policy 

under the IPPS. Therefore, absent a 

legislative change enacted by Congress, 

we are unable to change the rural floor 

budget neutrality adjustment from a 

national adjustment to a State-specific 

adjustment. In this final rule with 

comment period, we are adopting the 

final fiscal year IPPS wage index as the 

calendar year wage index for adjusting 

the OPPS standard payment amounts for 

labor market differences. We refer 

readers to the FY 2015 IPPS/LTCH PPS 

final rule (79 FR 50370 through 50372) 

for further discussion and a detailed 

response to a similar comment. 

After considering the public comment 

we received, we are finalizing our 

proposals to use the FY 2015 IPPS final 

wage index as the CY 2015 wage index 

for OPPS hospitals and CMHCs, as 

discussed above and as set forth in the 

CY 2015 OPPS/ASC proposed rule (79 

FR 40963 through 40965), without 

modification. 

D. Statewide Average Default CCRs 

In addition to using CCRs to estimate 

costs from charges on claims for 

ratesetting, CMS uses overall 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 

above until a hospital’s MAC is able to 

calculate the hospital’s actual CCR from 

its most recently submitted Medicare 

cost report. These hospitals include, but 

are not limited to, hospitals that are 

new, have not accepted assignment of 

an existing hospital’s provider 

agreement, and have not yet submitted 

a cost report. CMS also uses the 

statewide average default CCRs to 

determine payments for hospitals that 

appear to have a biased CCR (that is, the 

CCR falls outside the predetermined 

ceiling threshold for a valid CCR) or for 

hospitals in which the most recent cost 

report reflects an all-inclusive rate 

status (Medicare Claims Processing 

Manual (Pub. 100–04), Chapter 4, 

Section 10.11). In the CY 2015 OPPS/

ASC proposed rule (79 FR 40966), we 

proposed to update the default ratios for 

CY 2015 using the most recent cost 

report data. We discuss our policy for 

using default CCRs, including setting 

the ceiling threshold for a valid CCR, in 

the CY 2009 OPPS/ASC final rule with 

comment period (73 FR 68594 through 

68599) in the context of our adoption of 

an outlier reconciliation policy for cost 

reports beginning on or after January 1, 

2009. 

For CY 2015, we proposed to continue 

to use our standard methodology of 

calculating the statewide average default 

CCRs using the same hospital overall 

CCRs that we use to adjust charges to 

costs on claims data for setting the CY 

2015 OPPS relative payment weights. 

Table 12 published in the proposed rule 

(79 FR 40966 through 40968) listed the 

proposed CY 2015 default urban and 

rural CCRs by State and compared them 

to the CY 2014 default CCRs. These 

proposed CCRs represented the ratio of 

total costs to total charges for those cost 

centers relevant to outpatient services 

from each hospital’s most recently 

submitted cost report, weighted by 

Medicare Part B charges. We also 

proposed to adjust ratios from submitted 

cost reports to reflect the final settled 

status by applying the differential 

between settled to submitted overall 

CCRs for the cost centers relevant to 

outpatient services from the most recent 

pair of final settled and submitted cost 

reports. We then proposed to weight 

each hospital’s CCR by the volume of 

separately paid line-items on hospital 

claims corresponding to the year of the 

majority of cost reports used to calculate 

the overall CCRs. We refer readers to the 

CY 2008 OPPS/ASC final rule with 

comment period (72 FR 66680 through 

66682) and prior OPPS rules for a more 

detailed discussion of our established 

methodology for calculating the 

statewide average default CCRs, 

including the hospitals used in our 

calculations and our trimming criteria. 

We did not receive any public 

comments on our CY 2015 proposal. 

Therefore, we are finalizing our 

proposal, without modification, to apply 

our standard methodology of calculating 

the statewide average default CCRs 

using the same hospital overall CCRs 

that we used to adjust charges to costs 

on claims data for setting the CY 2015 

OPPS relative payment weights. We 

used this methodology to calculate the 

statewide average default CCRs listed in 

Table 13 below. 

For Maryland, we used an overall 

weighted average CCR for all hospitals 

in the Nation as a substitute for 

Maryland CCRs. Few hospitals in 

Maryland are eligible to receive 

payment under the OPPS, which limits 

the data available to calculate an 

accurate and representative CCR. The 

weighted CCR is used for Maryland 

because it takes into account each 

hospital’s volume, rather than treating 

each hospital equally. We refer readers 

to the CY 2005 OPPS final rule with 

comment period (69 FR 65822) for 

further discussion and the rationale for 

our longstanding policy of using the 

national average CCR for Maryland. In 

general, observed changes in the 

statewide average default CCRs between 

CY 2014 and CY 2015 are modest and 

the few significant changes are 

associated with areas that have a small 

number of hospitals. 

Table 13 below lists the statewide 

average default CCRs for OPPS services 

furnished on or after January 1, 2015. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66829 

TABLE 13—CY 2015 STATEWIDE AVERAGE CCRS

State Urban/rural CY 2015 

default CCR 

Previous 

default CCR 

(CY 2014 

OPPS final 

rule) 

ALABAMA ..................................................................... RURAL .......................................................................... 0.235 0.229 

ALABAMA ..................................................................... URBAN ......................................................................... 0.186 0.188 

ALASKA ........................................................................ RURAL .......................................................................... 0.439 0.473 

ALASKA ........................................................................ URBAN ......................................................................... 0.294 0.302 

ARIZONA ...................................................................... RURAL .......................................................................... 0.228 0.254 

ARIZONA ...................................................................... URBAN ......................................................................... 0.181 0.182 

ARKANSAS .................................................................. RURAL .......................................................................... 0.262 0.244 

ARKANSAS .................................................................. URBAN ......................................................................... 0.239 0.220 

CALIFORNIA ................................................................ RURAL .......................................................................... 0.178 0.190 

CALIFORNIA ................................................................ URBAN ......................................................................... 0.196 0.206 

COLORADO ................................................................. RURAL .......................................................................... 0.410 0.393 

COLORADO ................................................................. URBAN ......................................................................... 0.219 0.221 

CONNECTICUT ............................................................ RURAL .......................................................................... 0.339 0.343 

CONNECTICUT ............................................................ URBAN ......................................................................... 0.273 0.276 

DELAWARE .................................................................. URBAN ......................................................................... 0.314 0.356 

DISTRICT OF COLUMBIA ........................................... URBAN ......................................................................... 0.299 0.279 

FLORIDA ...................................................................... RURAL .......................................................................... 0.180 0.160 

FLORIDA ...................................................................... URBAN ......................................................................... 0.156 0.160 

GEORGIA ..................................................................... RURAL .......................................................................... 0.256 0.260 

GEORGIA ..................................................................... URBAN ......................................................................... 0.211 0.205 

HAWAII ......................................................................... RURAL .......................................................................... 0.337 0.345 

HAWAII ......................................................................... URBAN ......................................................................... 0.307 0.298 

IDAHO .......................................................................... RURAL .......................................................................... 0.353 0.359 

IDAHO .......................................................................... URBAN ......................................................................... 0.463 0.478 

ILLINOIS ....................................................................... RURAL .......................................................................... 0.252 0.252 

ILLINOIS ....................................................................... URBAN ......................................................................... 0.217 0.222 

INDIANA ....................................................................... RURAL .......................................................................... 0.334 0.326 

INDIANA ....................................................................... URBAN ......................................................................... 0.262 0.288 

IOWA ............................................................................ RURAL .......................................................................... 0.321 0.308 

IOWA ............................................................................ URBAN ......................................................................... 0.269 0.266 

KANSAS ....................................................................... RURAL .......................................................................... 0.300 0.313 

KANSAS ....................................................................... URBAN ......................................................................... 0.231 0.239 

KENTUCKY .................................................................. RURAL .......................................................................... 0.231 0.221 

KENTUCKY .................................................................. URBAN ......................................................................... 0.212 0.225 

LOUISIANA ................................................................... RURAL .......................................................................... 0.272 0.257 

LOUISIANA ................................................................... URBAN ......................................................................... 0.209 0.222 

MAINE .......................................................................... RURAL .......................................................................... 0.430 0.452 

MAINE .......................................................................... URBAN ......................................................................... 0.432 0.438 

MARYLAND .................................................................. RURAL .......................................................................... 0.296 0.283 

MARYLAND .................................................................. URBAN ......................................................................... 0.244 0.248 

MASSACHUSETTS ...................................................... RURAL .......................................................................... 0.326 0.395 

MASSACHUSETTS ...................................................... URBAN ......................................................................... 0.333 0.336 

MICHIGAN .................................................................... RURAL .......................................................................... 0.371 0.341 

MICHIGAN .................................................................... URBAN ......................................................................... 0.320 0.322 

MINNESOTA ................................................................ RURAL .......................................................................... 0.485 0.462 

MINNESOTA ................................................................ URBAN ......................................................................... 0.347 0.349 

MISSISSIPPI ................................................................ RURAL .......................................................................... 0.247 0.233 

MISSISSIPPI ................................................................ URBAN ......................................................................... 0.181 0.200 

MISSOURI .................................................................... RURAL .......................................................................... 0.267 0.263 

MISSOURI .................................................................... URBAN ......................................................................... 0.274 0.280 

MONTANA .................................................................... RURAL .......................................................................... 0.501 0.481 

MONTANA .................................................................... URBAN ......................................................................... 0.386 0.384 

NEBRASKA .................................................................. RURAL .......................................................................... 0.290 0.323 

NEBRASKA .................................................................. URBAN ......................................................................... 0.255 0.243 

NEVADA ....................................................................... RURAL .......................................................................... 0.241 0.220 

NEVADA ....................................................................... URBAN ......................................................................... 0.149 0.154 

NEW HAMPSHIRE ....................................................... RURAL .......................................................................... 0.362 0.326 

NEW HAMPSHIRE ....................................................... URBAN ......................................................................... 0.280 0.287 

NEW JERSEY .............................................................. URBAN ......................................................................... 0.202 0.213 

NEW MEXICO .............................................................. RURAL .......................................................................... 0.296 0.291 

NEW MEXICO .............................................................. URBAN ......................................................................... 0.294 0.304 

NEW YORK .................................................................. RURAL .......................................................................... 0.333 0.345 

NEW YORK .................................................................. URBAN ......................................................................... 0.340 0.351 

NORTH CAROLINA ..................................................... RURAL .......................................................................... 0.280 0.258 

NORTH CAROLINA ..................................................... URBAN ......................................................................... 0.246 0.256 

NORTH DAKOTA ......................................................... RURAL .......................................................................... 0.660 0.661 

NORTH DAKOTA ......................................................... URBAN ......................................................................... 0.395 0.400 

OHIO ............................................................................. RURAL .......................................................................... 0.317 0.327 


tkelley on DSK3SPTVN1PROD with RULES2
66830 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

TABLE 13—CY 2015 STATEWIDE AVERAGE CCRS—Continued 

State Urban/rural CY 2015 

default CCR 

Previous 

default CCR 

(CY 2014 

OPPS final 

rule) 

OHIO ............................................................................. URBAN ......................................................................... 0.222 0.232 

OKLAHOMA ................................................................. RURAL .......................................................................... 0.282 0.258 

OKLAHOMA ................................................................. URBAN ......................................................................... 0.203 0.205 

OREGON ...................................................................... RURAL .......................................................................... 0.287 0.311 

OREGON ...................................................................... URBAN ......................................................................... 0.352 0.357 

PENNSYLVANIA .......................................................... RURAL .......................................................................... 0.283 0.257 

PENNSYLVANIA .......................................................... URBAN ......................................................................... 0.197 0.198 

PUERTO RICO ............................................................. URBAN ......................................................................... 0.577 0.614 

RHODE ISLAND ........................................................... URBAN ......................................................................... 0.297 0.295 

SOUTH CAROLINA ...................................................... RURAL .......................................................................... 0.191 0.190 

SOUTH CAROLINA ...................................................... URBAN ......................................................................... 0.207 0.203 

SOUTH DAKOTA ......................................................... RURAL .......................................................................... 0.286 0.287 

SOUTH DAKOTA ......................................................... URBAN ......................................................................... 0.214 0.219 

TENNESSEE ................................................................ RURAL .......................................................................... 0.203 0.207 

TENNESSEE ................................................................ URBAN ......................................................................... 0.188 0.190 

TEXAS .......................................................................... RURAL .......................................................................... 0.251 0.235 

TEXAS .......................................................................... URBAN ......................................................................... 0.203 0.197 

UTAH ............................................................................ RURAL .......................................................................... 0.481 0.474 

UTAH ............................................................................ URBAN ......................................................................... 0.335 0.334 

VERMONT .................................................................... RURAL .......................................................................... 0.439 0.456 

VERMONT .................................................................... URBAN ......................................................................... 0.353 0.397 

VIRGINIA ...................................................................... RURAL .......................................................................... 0.219 0.226 

VIRGINIA ...................................................................... URBAN ......................................................................... 0.241 0.238 

WASHINGTON ............................................................. RURAL .......................................................................... 0.300 0.330 

WASHINGTON ............................................................. URBAN ......................................................................... 0.330 0.360 

WEST VIRGINIA .......................................................... RURAL .......................................................................... 0.312 0.283 

WEST VIRGINIA .......................................................... URBAN ......................................................................... 0.300 0.319 

WISCONSIN ................................................................. RURAL .......................................................................... 0.328 0.344 

WISCONSIN ................................................................. URBAN ......................................................................... 0.294 0.291 

WYOMING .................................................................... RURAL .......................................................................... 0.429 0.400 

WYOMING .................................................................... URBAN ......................................................................... 0.262 0.269 

E. Adjustment for Rural SCHs and 

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

the Act 

In the CY 2006 OPPS final rule with 

comment period (70 FR 68556), we 

finalized a payment increase for rural 

SCHs of 7.1 percent for all services and 

procedures paid under the OPPS, 

excluding drugs, biologicals, 

brachytherapy sources, and devices paid 

under the pass-through payment policy 

in accordance with section 

1833(t)(13)(B) of the Act, as added by 

section 411 of the Medicare Prescription 

Drug, Improvement, and Modernization 

Act of 2003 (MMA) (Pub. L. 108–173). 

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

the Secretary the authority to make an 

adjustment to OPPS payments for rural 

hospitals, effective January 1, 2006, if 

justified by a study of the difference in 

costs by APC between hospitals in rural 

areas and hospitals in urban areas. Our 

analysis showed a difference in costs for 

rural SCHs. Therefore, for the CY 2006 

OPPS, we finalized a payment 

adjustment for rural SCHs of 7.1 percent 

for all services and procedures paid 

under the OPPS, excluding separately 

payable drugs and biologicals, 

brachytherapy sources, and devices paid 

under the pass-through payment policy, 

in accordance with section 

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

In the CY 2007 OPPS/ASC final rule 

with comment period (71 FR 68010 and 

68227), for purposes of receiving this 

rural adjustment, we revised § 419.43(g) 

of the regulations to clarify that EACHs 

also are eligible to receive the rural SCH 

adjustment, assuming these entities 

otherwise meet the rural adjustment 

criteria. Currently, two hospitals are 

classified as EACHs, and as of CY 1998, 

under section 4201(c) of Public Law 

105–33, a hospital can no longer become 

newly classified as an EACH. 

This adjustment for rural SCHs is 

budget neutral and applied before 

calculating outlier payments and 

copayments. We stated in the CY 2006 

OPPS final rule with comment period 

(70 FR 68560) that we would not 

reestablish the adjustment amount on an 

annual basis, but we may review the 

adjustment in the future and, if 

appropriate, would revise the 

adjustment. We provided the same 7.1 

percent adjustment to rural SCHs, 

including EACHs, again in CYs 2008 

through 2014. Further, in the CY 2009 

OPPS/ASC final rule with comment 

period (73 FR 68590), we updated the 

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

in general terms, that items paid at 

charges adjusted to costs by application 

of a hospital-specific CCR are excluded 

from the 7.1 percent payment 

adjustment. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40968), for the CY 2015 

OPPS, we proposed to continue our 

policy of a 7.1 percent payment 

adjustment that is done in a budget 

neutral manner for rural SCHs, 

including EACHs, for all services and 

procedures paid under the OPPS, 

excluding separately payable drugs and 

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

at charges reduced to costs. 

Comment: Several commenters 

supported the proposed continuation of 

the 7.1 percent rural SCH adjustment. 

Several commenters, including 

MedPAC, also recommended that CMS 

update the analysis in the near future to 

assess if the 7.1 percent payment 

adjustment remains a valid figure. 

Response: We appreciate the 

commenters’ support. We agree that it is 

appropriate to continue the 7.1 percent 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66831 

adjustment for rural SCHs (including 

EACHs) as we proposed for CY 2015. As 

we indicated in the proposed rule (79 

FR 40968), we may reassess the 7.1 

percent rural adjustment in the near 

future by examining differences 

between urban hospitals’ costs and rural 

hospitals’ costs using updated claims, 

cost reports, and provider information. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2015 proposal to 

continue our policy of a 7.1 percent 

payment adjustment that is done in a 

budget neutral manner for rural SCHs, 

including EACHs, for all services and 

procedures paid under the OPPS, 

excluding separately payable drugs and 

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

at charges reduced to costs. 

F. OPPS Payment to Certain Cancer 

Hospitals Described by Section 

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

1. Background 

Since the inception of the OPPS, 

which was authorized by the Balanced 

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

33), Medicare has paid the 11 hospitals 

that meet the criteria for cancer 

hospitals identified in section 

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

OPPS for covered outpatient hospital 

services. These cancer hospitals are 

exempted from payment under the IPPS. 

With the Medicare, Medicaid and 

SCHIP Balanced Budget Refinement Act 

of 1999 (Pub. L. 106–113), Congress 

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

‘‘Transitional Adjustment to Limit 

Decline in Payment,’’ to determine 

OPPS payments to cancer and children’s 

hospitals based on their pre-BBA 

payment amount (often referred to as 

‘‘held harmless’’). 

As required under section 

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

hospital receives the full amount of the 

difference between payments for 

covered outpatient services under the 

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

cancer hospitals are permanently held 

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

and they receive transitional outpatient 

payments (TOPs) or hold harmless 

payments to ensure that they do not 

receive a payment that is lower under 

the OPPS than the payment they would 

have received before implementation of 

the OPPS, as set forth in section 

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

amount’’ is the product of the hospital’s 

reasonable costs for covered outpatient 

services occurring in the current year 

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

for the hospital defined in section 

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

determination of the base PCR, are 

defined at 42 CFR 419.70(f). TOPs are 

calculated on Worksheet E, Part B, of 

the Hospital Cost Report or the Hospital 

Health Care Complex Cost Report (Form 

CMS–2552–96 and Form CMS–2552–10, 

respectively) as applicable each year. 

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

TOPs from budget neutrality 

calculations. 

Section 3138 of the Affordable Care 

Act amended section 1833(t) of the Act 

by adding a new paragraph (18), which 

instructs the Secretary to conduct a 

study to determine if, under the OPPS, 

outpatient costs incurred by cancer 

hospitals described in section 

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

to APC groups exceed outpatient costs 

incurred by other hospitals furnishing 

services under section 1833(t) of the 

Act, as determined appropriate by the 

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

Act requires the Secretary to take into 

consideration the cost of drugs and 

biologicals incurred by cancer and other 

hospitals. Section 1833(t)(18)(B) of the 

Act provides that if the Secretary 

determines that cancer hospitals’ costs 

are greater than other hospitals’ costs, 

the Secretary shall provide an 

appropriate adjustment under section 

1833(t)(2)(E) of the Act to reflect these 

higher costs. In 2011, after conducting 

the study required by section 

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

that outpatient costs incurred by the 11 

specified cancer hospitals were greater 

than the costs incurred by other OPPS 

hospitals. For a complete discussion 

regarding the cancer hospital cost study, 

we refer readers to the CY 2012 OPPS/ 

ASC final rule with comment period (76 

FR 74200 through 74201). 

Based on these findings, we finalized 

a policy to provide a payment 

adjustment to the 11 specified cancer 

hospitals that reflects their higher 

outpatient costs as discussed in the CY 

2012 OPPS/ASC final rule with 

comment period (76 FR 74202 through 

74206). Specifically, we adopted a 

policy to provide additional payments 

to the cancer hospitals so that each 

cancer hospital’s final PCR for services 

provided in a given calendar year is 

equal to the weighted average PCR 

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

for other hospitals paid under the OPPS. 

The target PCR is set in advance of the 

calendar year and is calculated using 

the most recent submitted or settled cost 

report data that are available at the time 

of final rulemaking for the calendar 

year. The amount of the payment 

adjustment is made on an aggregate 

basis at cost report settlement. We note 

that the changes made by section 

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

existing statutory provisions that 

provide for TOPs for cancer hospitals. 

The TOPs are assessed as usual after all 

payments, including the cancer hospital 

payment adjustment, have been made 

for a cost reporting period. For CYs 2012 

and 2013, the target PCR for purposes of 

the cancer hospital payment adjustment 

was 0.91. For CY 2014, the target PCR 

for purposes of the cancer hospital 

payment adjustment was 0.89. 

2. Payment Adjustment for Certain 

Cancer Hospitals for CY 2015 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40968), for CY 2015, we 

proposed to continue our policy to 

provide additional payments to cancer 

hospitals so that each cancer hospital’s 

final PCR is equal to the weighted 

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

other OPPS hospitals using the most 

recent submitted or settled cost report 

data that were available at the time of 

the development of the proposed rule. 

To calculate the proposed CY 2015 

target PCR, we used the same extract of 

cost report data from HCRIS, as 

discussed in section II.A. of the 

proposed rule, used to estimate costs for 

the CY 2015 OPPS. Using these cost 

report data, we included data from 

Worksheet E, Part B, for each hospital, 

using data from each hospital’s most 

recent cost report, whether as submitted 

or settled. 

We then limited the dataset to the 

hospitals with CY 2013 claims data that 

we used to model the impact of the 

proposed CY 2015 APC relative 

payment weights (3,881 hospitals) 

because it is appropriate to use the same 

set of hospitals that we used to calibrate 

the modeled CY 2015 OPPS. The cost 

report data for the hospitals in this 

dataset were from cost report periods 

with fiscal year ends ranging from 2012 

to 2013. We then removed the cost 

report data of the 47 hospitals located in 

Puerto Rico from our dataset because we 

do not believe that their cost structure 

reflects the costs of most hospitals paid 

under the OPPS and, therefore, their 

inclusion may bias the calculation of 

hospital-weighted statistics. We also 

removed the cost report data of 27 

hospitals because these hospitals had 

cost report data that were not complete 

(missing aggregate OPPS payments, 

missing aggregate cost data, or missing 

both), so that all cost reports in the 

study would have both the payment and 

cost data necessary to calculate a PCR 

for each hospital, leading to a proposed 

analytic file of 3,807 hospitals with cost 

report data. 

Using this smaller dataset of cost 

report data, we estimated that, on 


tkelley on DSK3SPTVN1PROD with RULES2
66832 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

average, the OPPS payments to other 

hospitals furnishing services under the 

OPPS were approximately 89 percent of 

reasonable cost (weighted average PCR 

of 0.89). Therefore, we proposed that the 

payment amount associated with the 

cancer hospital payment adjustment to 

be determined at cost report settlement 

would be the additional payment 

needed to result in a proposed target 

PCR equal to 0.89 for each cancer 

hospital. Table 13 of the proposed rule 

(79 FR 40969) indicated the estimated 

percentage increase in OPPS payments 

to each cancer hospital for CY 2015 due 

to the cancer hospital payment 

adjustment policy. 

Comment: Several commenters noted 

that cancer hospitals have significantly 

higher costs than other OPPS hospitals 

and agreed with CMS’ proposal to 

provide the proposed payment 

adjustment. 

Response: We appreciate the 

commenters’ support of our proposal. 

As described in detail below, we 

performed the same analysis as in 

previous years comparing the PCR for 

these cancer hospitals relative to other 

OPPS hospitals. That study indicates 

that there is a difference in PCRs 

between these hospital types. 

Accordingly, we are finalizing a cancer 

hospital adjustment with a target PCR of 

0.89 based on that analysis. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to establish the 

target PCR equal to 0.89 for each cancer 

hospital. For this final rule with 

comment period, we have rerun our 

calculations to determine the target PCR 

using the latest available cost data and 

have determined that 0.89 is still the 

correct target PCR. We limited the 

dataset to the hospitals with CY 2013 

claims data that we used to model the 

impact of the final CY 2015 APC relative 

payment weights (3,808 hospitals). The 

cost report data for the hospitals in this 

dataset were from cost report periods 

with fiscal year ends ranging from 2011 

to 2013. We removed the cost report 

data of the 47 hospitals located in 

Puerto Rico from our dataset and also 

removed the cost report data of 14 

hospitals that had cost report data that 

were not complete, leading to a final 

analytic file of 3,747 hospitals with cost 

report data. 

Using this smaller dataset of cost 

report data, we estimated that, on 

average, the OPPS payments to other 

hospitals furnishing services under the 

OPPS are approximately 89 percent of 

reasonable cost (weighted average PCR 

of 0.89). Therefore, we are finalizing 

that the payment amount associated 

with the cancer hospital payment 

adjustment to be determined at cost 

report settlement would be the 

additional payment needed to result in 

a target PCR equal to 0.89 for each 

cancer hospital. 

Table 14 below indicates the 

estimated percentage increase in OPPS 

payments to each cancer hospital for CY 

2015 due to the cancer hospital payment 

adjustment policy. The actual amount of 

the CY 2015 cancer hospital payment 

adjustment for each cancer hospital will 

be determined at cost report settlement 

and will depend on each hospital’s CY 

2015 payments and costs. We note that 

the changes made by section 1833(t)(18) 

of the Act do not affect the existing 

statutory provisions that provide for 

TOPs for cancer hospitals. The TOPs 

will be assessed as usual after all 

payments, including the cancer hospital 

payment adjustment, have been made 

for a cost reporting period. 

TABLE 14—ESTIMATED CY 2015 HOSPITAL-SPECIFIC PAYMENT ADJUSTMENT FOR CANCER HOSPITALS TO BE PROVIDED

AT COST REPORT SETTLEMENT

Provider No. Hospital name 

Estimated percentage increase in 

OPPS payments for CY 

2015 

050146 ........................... City of Hope Comprehensive Cancer Center ......................................................................................... 15.5 

050660 ........................... USC Norris Cancer Hospital ................................................................................................................... 22.0 

100079 ........................... Sylvester Comprehensive Cancer Center .............................................................................................. 15.8 

100271 ........................... H. Lee Moffitt Cancer Center & Research Institute ................................................................................ 19.9 

220162 ........................... Dana-Farber Cancer Institute ................................................................................................................. 47.6 

330154 ........................... Memorial Sloan-Kettering Cancer Center ............................................................................................... 46.7 

330354 ........................... Roswell Park Cancer Institute ................................................................................................................. 16.6 

360242 ........................... James Cancer Hospital & Solove Research Institute ............................................................................. 35.1 

390196 ........................... Fox Chase Cancer Center ...................................................................................................................... 18.5 

450076 ........................... M.D. Anderson Cancer Center ............................................................................................................... 60.1 

500138 ........................... Seattle Cancer Care Alliance .................................................................................................................. 53.9 

G. Hospital Outpatient Outlier 

Payments 

1. Background 

The OPPS provides outlier payments 

to hospitals to help mitigate the 

financial risk associated with high-cost 

and complex procedures, where a very 

costly service could present a hospital 

with significant financial loss. As 

explained in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

74958 through 74960), we set our 

projected target for aggregate outlier 

payments at 1.0 percent of the estimated 

aggregate total payments under the 

OPPS for the prospective year. Outlier 

payments are provided on a service-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 2014, the outlier 

threshold was met when the hospital’s 

cost of furnishing a service exceeded 

1.75 times (the multiplier threshold) the 

APC payment amount and exceeded the 

APC payment amount plus $2,900 (the 

fixed-dollar amount threshold). If the 

cost of a service exceeds both the 

multiplier threshold and the fixeddollar 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). 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66833 

It has been our policy to report the 

actual amount of outlier payments as a 

percent of total spending in the claims 

being used to model the OPPS. Our 

current estimate of total outlier 

payments as a percent of total CY 2013 

OPPS payment, using available CY 2013 

claims and the revised OPPS 

expenditure estimate for the FY 2015 

President’s Budget Mid-Session Review, 

is approximately 1.4 percent of the total 

aggregated OPPS payments. Therefore, 

for CY 2013, we estimate that we paid 

0.4 percent above the CY 2013 outlier 

target of 1.0 percent of total aggregated 

OPPS payments. 

Using CY 2013 claims data and CY 

2014 payment rates, we currently 

estimate that the aggregate outlier 

payments for CY 2014 will be 

approximately 0.8 percent of the total 

CY 2014 OPPS payments. The 

difference between 0.8 percent and the 

1.0 percent target is reflected in the 

regulatory impact analysis in section 

XXII. of this final rule with comment 

period. We provide estimated CY 2015 

outlier payments for hospitals and 

CMHCs with claims included in the 

claims data that we used to model 

impacts in the Hospital-Specific 

Impacts—Provider-Specific Data file on 

the CMS Web site at: http://

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

HospitalOutpatientPPS/index.html. 

2. Outlier Calculation 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40970), for CY 2015, we 

proposed to continue our policy of 

estimating outlier payments to be 1.0 

percent of the estimated aggregate total 

payments under the OPPS. We proposed 

that a portion of that 1.0 percent, an 

amount equal to 0.47 percent of outlier 

payments (or 0.0047 percent of total 

OPPS payments) would be allocated to 

CMHCs for PHP outlier payments. This 

is the amount of estimated outlier 

payments that would result from the 

proposed CMHC outlier threshold as a 

proportion of total estimated OPPS 

outlier payments. As discussed in 

section VIII.D. of the proposed rule, for 

CMHCs, we proposed to continue our 

longstanding policy that if a CMHC’s 

cost for partial hospitalization services, 

paid under either APC 0172 (Level I 

Partial Hospitalization (3 services) for 

CMHCs) or APC 0173 (Level II Partial 

Hospitalization (4 or more services) for 

CMHCs), exceeds 3.40 times the 

payment rate for APC 0173, the outlier 

payment would be calculated as 50 

percent of the amount by which the cost 

exceeds 3.40 times the APC 0173 

payment rate. For further discussion of 

CMHC outlier payments, we refer 

readers to section VIII.D. of the 

proposed rule and this final rule with 

comment period. 

To ensure that the estimated CY 2015 

aggregate outlier payments would equal 

1.0 percent of estimated aggregate total 

payments under the OPPS, we proposed 

that the hospital outlier threshold be set 

so that outlier payments would be 

triggered when a hospital’s cost of 

furnishing a service exceeds 1.75 times 

the APC payment amount and exceeds 

the APC payment amount plus $3,100. 

We calculated the proposed fixeddollar threshold of $3,100 using the 

standard methodology most recently 

used for CY 2014 (78 FR 74959 through 

74960). For purposes of estimating 

outlier payments for the proposed rule, 

we used the hospital-specific overall 

ancillary CCRs available in the April 

2014 update to the Outpatient 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 2015 

hospital outlier payments for the 

proposed rule, we inflated the charges 

on the CY 2013 claims using the same 

inflation factor of 1.1146 that we used 

to estimate the IPPS fixed-dollar outlier 

threshold for the FY 2015 IPPS/LTCH 

PPS proposed rule (79 FR 28321). We 

used an inflation factor of 1.0557 to 

estimate CY 2014 charges from the CY 

2013 charges reported on CY 2013 

claims. The methodology for 

determining this charge inflation factor 

is discussed in the FY 2015 IPPS/LTCH 

PPS proposed rule (79 FR 28321) and 

final rule (79 FR 50374). As we stated 

in the CY 2005 OPPS final rule with 

comment period (69 FR 65845), we 

believe that the use of these charge 

inflation factors are appropriate for the 

OPPS because, with the exception of the 

inpatient routine service cost centers, 

hospitals use the same ancillary and 

outpatient cost centers to capture costs 

and charges for inpatient and outpatient 

services. 

As noted in the CY 2007 OPPS/ASC 

final rule with comment period (71 FR 

68011), we are concerned that we could 

systematically overestimate the OPPS 

hospital outlier threshold if we did not 

apply a CCR inflation adjustment factor. 

Therefore, we proposed to apply the 

same CCR inflation adjustment factor 

that we proposed to apply for the FY 

2015 IPPS outlier calculation to the 

CCRs used to simulate the proposed CY 

2015 OPPS outlier payments to 

determine the fixed-dollar threshold. 

Specifically, for CY 2015, we proposed 

to apply an adjustment factor of 0.9813 

to the CCRs that were in the April 2014 

OPSF to trend them forward from CY 

2014 to CY 2015. The methodology for 

calculating this proposed adjustment 

was discussed in the FY 2015 IPPS/

LTCH PPS proposed rule (79 FR 28321) 

and finalized in the FY 2015 IPPS/LTCH 

PS final rule (79 FR 50374). 

To model hospital outlier payments 

for the proposed rule, we applied the 

overall CCRs from the April 2014 OPSF 

file after adjustment (using the proposed 

CCR inflation adjustment factor of 

0.9813 to approximate CY 2015 CCRs) to 

charges on CY 2013 claims that were 

adjusted (using the proposed charge 

inflation factor of 1.1146 to approximate 

CY 2015 charges). We simulated 

aggregated CY 2015 hospital outlier 

payments using these costs for several 

different fixed-dollar thresholds, 

holding the 1.75 multiple threshold 

constant and assuming that outlier 

payments would continue to be made at 

50 percent of the amount by which the 

cost of furnishing the service would 

exceed 1.75 times the APC payment 

amount, until the total outlier payments 

equaled 1.0 percent of aggregated 

estimated total CY 2015 OPPS 

payments. We estimated that a proposed 

fixed-dollar threshold of $3,100, 

combined with the proposed multiple 

threshold of 1.75 times the APC 

payment rate, would allocate 1.0 

percent of aggregated total OPPS 

payments to outlier payments. For 

CMHCs, we proposed that, if a CMHC’s 

cost for partial hospitalization services, 

paid under either APC 0172 or APC 

0173, exceeds 3.40 times the payment 

rate for APC 0173, the outlier payment 

would be calculated as 50 percent of the 

amount by which the cost exceeds 3.40 

times the APC 0173 payment rate. 

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

which applies to hospitals as defined 

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

requires that hospitals that fail to report 

data required for the quality measures 

selected by the Secretary, in the form 

and manner required by the Secretary 

under 1833(t)(17)(B) of the Act, incur a 

2.0 percentage point reduction to their 

OPD fee schedule increase factor, that 

is, the annual payment update factor. 

The application of a reduced OPD fee 

schedule increase factor results in 

reduced national unadjusted payment 

rates that will apply to certain 

outpatient items and services furnished 

by hospitals that are required to report 

outpatient quality data and that fail to 

meet the Hospital OQR Program 

requirements. For hospitals that fail to 

meet the Hospital OQR Program 

requirements, we proposed to continue 

the policy that we implemented in CY 


tkelley on DSK3SPTVN1PROD with RULES2
66834 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

2010 that the hospitals’ costs will be 

compared to the reduced payments for 

purposes of outlier eligibility and 

payment calculation. For more 

information on the Hospital OQR 

Program, we refer readers to section 

XIII. of this final rule with comment 

period. 

Comment: A few commenters 

suggested that CMS not increase the 

outlier payment fixed dollar threshold 

from $2,900 to $3,100. One commenter 

suggested that CMS maintain the CY 

2014 fixed-dollar threshold of $2,900, 

while another commenter suggested that 

CMS lower the CY 2014 fixed-dollar 

threshold because CMS’ projection of 

CY 2014 outlier payments in the 

proposed rule estimated that outlier 

payments would be below the target of 

1.0 percent of OPPS payments. 

Response: We set the proposed CY 

2015 outlier payment fixed-dollar 

threshold at $3,100 so that projected 

outlier payments would equal 1.0 

percent of total OPPS payments. We 

projected that CY 2014 outlier payments 

would fall below the 1.0 percent target 

with the $2,900 threshold. However, we 

estimated that changes to recalibrate 

APCs and other payment policy changes 

would result in outlier payments greater 

than the 1.0 percent target in CY 2015 

if we did not increase the fixed-dollar 

threshold. As discussed below, based on 

the more recent data available for this 

final rule with comment period, the CY 

2015 outlier payment fixed-dollar 

threshold will be $2,775. When 

combined with the multiple threshold 

of 1.75 times the APC payment rate, this 

fixed-dollar threshold will allocate an 

estimated 1.0 percent of projected total 

OPPS payments to outlier payments for 

CY 2015. 

3. Final Outlier Calculation 

Consistent with historical practice, we 

used updated data for this final rule 

with comment period. For CY 2015, we 

are applying the overall CCRs from the 

July 2014 OPSF file after adjustment 

(using the CCR inflation adjustment 

factor of 0.9821 to approximate CY 2015 

CCRs) to charges on CY 2013 claims that 

were adjusted (using the charge 

inflation factor of 1.1044 to approximate 

CY 2015 charges). These are the same 

CCR adjustment and charge inflation 

factors that were used to set the IPPS 

fixed-dollar threshold for the FY 2015 

IPPS/LTCH PPS final rule (79 FR 50379 

through 50380). We simulated 

aggregated CY 2015 hospital outlier 

payments using these costs for several 

different fixed-dollar thresholds, 

holding the 1.75 multiple threshold 

constant and assuming that outlier 

payments will continue to be made at 50 

percent of the amount by which the cost 

of furnishing the service would exceed 

1.75 times the APC payment amount, 

until the total outlier payments equaled 

1.0 percent of aggregated estimated total 

CY 2015 OPPS payments. We estimate 

that a fixed-dollar threshold of $2,775, 

combined with the multiple threshold 

of 1.75 times the APC payment rate, will 

allocate 1.0 percent of aggregated total 

OPPS payments to outlier payments. For 

CMHCs, if a CMHC’s cost for partial 

hospitalization services, paid under 

either APC 0172 or APC 0173, exceeds 

3.40 times the payment rate for APC 

0173, the outlier payment will be 

calculated as 50 percent of the amount 

by which the cost exceeds 3.40 times 

the APC 0173 payment rate. 

H. Calculation of an Adjusted Medicare 

Payment From the National Unadjusted 

Medicare Payment 

The basic methodology for 

determining prospective payment rates 

for HOPD services under the OPPS is set 

forth in existing regulations at 42 CFR 

Part 419, Subparts C and D. For this CY 

2015 OPPS/ASC final rule with 

comment period, the payment rate for 

most services and procedures for which 

payment is made under the OPPS is the 

product of the conversion factor 

calculated in accordance with section 

II.B. of this final rule with comment 

period and the relative payment weight 

determined under section II.A. of this 

final rule with comment period. 

Therefore, the national unadjusted 

payment rate for most APCs contained 

in Addendum A to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site) and 

for most HCPCS codes to which separate 

payment under the OPPS has been 

assigned in Addendum B to this final 

rule with comment period (which is 

available via the Internet on the CMS 

Web site) was calculated by multiplying 

the CY 2015 scaled weight for the APC 

by the CY 2015 conversion factor. 

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

Act, which applies to hospitals as 

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

the Act, requires that hospitals that fail 

to submit data required to be submitted 

on quality measures selected by the 

Secretary, in the form and manner and 

at a time specified by the Secretary, 

incur a reduction of 2.0 percentage 

points to their OPD fee schedule 

increase factor, that is, the annual 

payment update factor. The application 

of a reduced OPD fee schedule increase 

factor results in reduced national 

unadjusted payment rates that apply to 

certain outpatient items and services 

provided by hospitals that are required 

to report outpatient quality data and 

that fail to meet the Hospital OQR 

Program (formerly referred to as the 

Hospital Outpatient Quality Data 

Reporting Program (HOP QDRP)) 

requirements. For further discussion of 

the payment reduction for hospitals that 

fail to meet the requirements of the 

Hospital OQR Program, we refer readers 

to section XIII. of this final rule with 

comment period. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40971 through 40972), we 

demonstrated the steps on how to 

determine the APC payments that will 

be made in a calendar year under the 

OPPS to a hospital that fulfills the 

Hospital OQR Program requirements 

and to a hospital that fails to meet the 

Hospital OQR Program requirements for 

a service that has any of the following 

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

‘‘Q1,’’ ‘‘Q2,’’ ‘‘Q3,’’ ‘‘R,’’ ‘‘S,’’ ‘‘T,’’ ‘‘U,’’ 

or ‘‘V’’ (as defined in Addendum D1 to 

the proposed rule), in a circumstance in 

which the multiple procedure discount 

does not apply, the procedure is not 

bilateral, and conditionally packaged 

services (status indicator of ‘‘Q1’’ and 

‘‘Q2’’) qualify for separate payment. We 

are finalizing the methodology as 

proposed and demonstrate below how 

to calculate final CY 2015 OPPS 

payments using the same parameters. 

We note that, although blood and 

blood products with status indicator 

‘‘R’’ and brachytherapy sources with 

status indicator ‘‘U’’ are not subject to 

wage adjustment, they are subject to 

reduced payments when a hospital fails 

to meet the Hospital OQR Program 

requirements. We note that we are 

creating new status indicator ‘‘J1’’ to 

reflect the comprehensive APCs 

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

final rule with comment period. We also 

note that we are deleting status 

indicator ‘‘X’’ as part of the CY 2015 

packaging policy for ancillary services, 

discussed in section II.A.3. of this final 

rule with comment period. 

We did not receive any public 

comments on the proposed calculation 

of an adjusted Medicare payment. 

Therefore, we are finalizing the 

calculation of an adjusted Medicare 

payment, where appropriate, in the 

manner described as follows. Individual 

providers interested in calculating the 

payment amount that they will receive 

for a specific service from the national 

unadjusted payment rates presented in 

Addenda A and B to this final rule with 

comment period (which are available 

via the Internet on the CMS Web site) 

should follow the formulas presented in 

the following steps. For purposes of the 

payment calculations below, we refer to 

the national unadjusted payment rate 

for hospitals that meet the requirements 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66835 

of the Hospital OQR Program as the 

‘‘full’’ national unadjusted payment 

rate. We refer to the national unadjusted 

payment rate for hospitals that fail to 

meet the requirements of the Hospital 

OQR Program as the ‘‘reduced’’ national 

unadjusted payment rate. The reduced 

national unadjusted payment rate is 

calculated by multiplying the reporting 

ratio of 0.980 times the ‘‘full’’ national 

unadjusted payment rate. The national 

unadjusted payment rate used in the 

calculations below is either the full 

national unadjusted payment rate or the 

reduced national unadjusted payment 

rate, depending on whether the hospital 

met its Hospital OQR Program 

requirements in order to receive the full 

CY 2015 OPPS fee schedule increase 

factor of 2.2 percent. 

Step 1. Calculate 60 percent (the 

labor-related portion) of the national 

unadjusted payment rate. Since the 

initial implementation of the OPPS, we 

have used 60 percent to represent our 

estimate of that portion of costs 

attributable, on average, to labor. We 

refer readers to the April 7, 2000 OPPS 

final rule with comment period (65 FR 

18496 through 18497) for a detailed 

discussion of how we derived this 

percentage. During our regression 

analysis for the payment adjustment for 

rural hospitals in the CY 2006 OPPS 

final rule with comment period (70 FR 

68553), we confirmed that this 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 2015 OPPS policy for 

transitioning wage indexes into the new 

OMB labor market area delineations, a 

hold harmless policy for the wage index 

may apply, as discussed in section II.C. 

of this final rule with comment period. 

The wage index values assigned to each 

area reflect the geographic statistical 

areas (which are based upon OMB 

standards) to which hospitals are 

assigned for FY 2015 under the IPPS, 

reclassifications through the MGCRB, 

section 1886(d)(8)(B) ‘‘Lugar’’ hospitals, 

reclassifications under section 

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

§ 412.103 of the regulations, and 

hospitals designated as urban under 

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

further discussion of the changes to the 

FY 2015 IPPS wage indices, as applied 

to the CY 2015 OPPS, we refer readers 

to section II.C. of this final rule with 

comment period.) As we proposed, we 

are continuing to apply a wage index 

floor of 1.00 to frontier States, in 

accordance with section 10324 of the 

Affordable Care Act of 2010. 

Step 3. Adjust the wage index of 

hospitals located in certain qualifying 

counties that have a relatively high 

percentage of hospital employees who 

reside in the county, but who work in 

a different county with a higher wage 

index, in accordance with section 505 of 

Public Law 108–173. Addendum L to 

this final rule with comment period 

(which is available via the Internet on 

the CMS Web site) contains the 

qualifying counties and the associated 

wage index increase developed for the 

FY 2015 IPPS and listed as Table 4J in 

the FY 2015 IPPS/LTCH PPS final rule 

(79 FR 49854) and available via the 

Internet on the CMS Web site at: 

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

Medicare-Fee-for-Service-Payment/

AcuteInpatientPPS/index.html. This 

step is to be followed only if the 

hospital is not reclassified or 

redesignated under section 1886(d)(8) or 

section 1886(d)(10) of the Act. 

Step 4. Multiply the applicable wage 

index determined under Steps 2 and 3 

by the amount determined under Step 1 

that represents the labor-related portion 

of the national unadjusted payment rate. 

The formula below is a mathematical 

representation of Step 4 and adjusts the 

labor-related portion of the national 

unadjusted payment rate for the specific 

service by the wage index. 

Xa is the labor-related portion of the 

national unadjusted payment rate 

(wage adjusted). 

Xa = .60 * (national unadjusted payment 

rate) * applicable wage index. 

Step 5. Calculate 40 percent (the 

nonlabor-related portion) of the national 

unadjusted payment rate and add that 

amount to the resulting product of Step 

4. The result is the wage index adjusted 

payment rate for the relevant wage 

index area. 

The formula below is a mathematical 

representation of Step 5 and calculates 

the remaining portion of the national 

payment rate, the amount not 

attributable to labor, and the adjusted 

payment for the specific service. 

Y is the nonlabor-related portion of the 

national unadjusted payment rate. 

Y = .40 * (national unadjusted payment 

rate). 

Adjusted Medicare Payment = Y + Xa.

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

forth in the regulations at § 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 0019 

(Level I Excision/Biopsy). The CY 2015 

full national unadjusted payment rate 

for APC 0019 is approximately $378.41. 

The reduced national unadjusted 

payment rate for APC 0019 for a 

hospital that fails to meet the Hospital 

OQR Program requirements is 

approximately $370.84. This reduced 

rate is calculated by multiplying the 

reporting ratio of 0.980 by the full 

unadjusted payment rate for APC 0019. 

The FY 2015 wage index for a 

provider located in CBSA 35614 in New 

York is 1.2973. This is based on the 1- 

year 50/50 transition blend between the 

wage index under the old CBSA 35644 

(1.3115) and the wage index under the 

new CBSA 35614 (1.2831). The laborrelated portion of the full national 

unadjusted payment is approximately 

$294.55 (.60 * $378.41 * 1.2973). The 

labor-related portion of the reduced 

national unadjusted payment is 

approximately $288.65 (.60 * $370.84 * 

1.2973). The nonlabor-related portion of 

the full national unadjusted payment is 

approximately $151.36 (.40 * $378.41). 

The nonlabor-related portion of the 

reduced national unadjusted payment is 

approximately $148.34 (40 * $370.84). 

The sum of the labor-related and 

nonlabor-related portions of the full 

national adjusted payment is 

approximately $445.91 ($294.55 + 

$151.36). The sum of the reduced 

national adjusted payment is 

approximately $436.99 ($288.65 + 

$148.34). 


tkelley on DSK3SPTVN1PROD with RULES2
66836 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

I. Beneficiary Copayments 

1. Background 

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

requires the Secretary to set rules for 

determining the unadjusted copayment 

amounts to be paid by beneficiaries for 

covered OPD services. Section 

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

the Secretary must reduce the national 

unadjusted copayment amount for a 

covered OPD service (or group of such 

services) furnished in a year in a 

manner so that the effective copayment 

rate (determined on a national 

unadjusted basis) for that service in the 

year does not exceed a specified 

percentage. As specified in section 

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

effective copayment rate for a covered 

OPD service paid under the OPPS in CY 

2006, and in calendar years thereafter, 

shall not exceed 40 percent of the APC 

payment rate. 

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

provides that, for a covered OPD service 

(or group of such services) furnished in 

a year, the national unadjusted 

copayment amount cannot be less than 

20 percent of the OPD fee schedule 

amount. However, section 

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

amount of beneficiary copayment that 

may be collected for a procedure 

performed in a year to the amount of the 

inpatient hospital deductible for that 

year. 

Section 4104 of the Affordable Care 

Act eliminated the Part B coinsurance 

for preventive services furnished on and 

after January 1, 2011, that meet certain 

requirements, including flexible 

sigmoidoscopies and screening 

colonoscopies, and waived the Part B 

deductible for screening colonoscopies 

that become diagnostic during the 

procedure. Our discussion of the 

changes made by the Affordable Care 

Act with regard to copayments for 

preventive services furnished on and 

after January 1, 2011, may be found in 

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

final rule with comment period (75 FR 

72013). 

2. OPPS Copayment Policy 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40973), for CY 2015, we 

proposed to determine copayment 

amounts for new and revised APCs 

using the same methodology that we 

implemented beginning in CY 2004. 

(We refer readers to the November 7, 

2003 OPPS final rule with comment 

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

proposed to use the same standard 

rounding principles that we have 

historically used in instances where the 

application of our standard copayment 

methodology would result in a 

copayment amount that is less than 20 

percent and cannot be rounded, under 

standard rounding principles, to 20 

percent. (We refer readers to the CY 

2008 OPPS/ASC final rule with 

comment period (72 FR 66687) in which 

we discuss our rationale for applying 

these rounding principles.) The 

proposed national unadjusted 

copayment amounts for services payable 

under the OPPS that would be effective 

January 1, 2015, were shown in 

Addenda A and B to the proposed rule 

(which are available via the Internet on 

the CMS Web site). As discussed in 

section XII.G. of the proposed rule, for 

CY 2015, the Medicare beneficiary’s 

minimum unadjusted copayment and 

national unadjusted copayment for a 

service to which a reduced national 

unadjusted payment rate applies equals 

the product of the reporting ratio and 

the national unadjusted copayment, or 

the product of the reporting ratio and 

the minimum unadjusted copayment, 

respectively, for the service. 

We note that OPPS copayments may 

increase or decrease each year based on 

changes in the calculated APC payment 

rates due to updated cost report and 

claims data, and any changes to the 

OPPS cost modeling process. However, 

as described in the CY 2004 OPPS/ASC 

final rule with comment period, the 

development of the copayment 

methodology generally moves 

beneficiary copayments closer to 20 

percent of OPPS APC payments (68 FR 

63458 through 63459). 

We did not receive any public 

comments regarding the proposed 

methodology for calculating copayments 

for CY 2015. Therefore, for the reasons 

set forth in this final rule with comment 

period, we are finalizing our proposed 

CY 2015 copayment methodology 

without modification. 

3. Calculation of an Adjusted 

Copayment Amount for an APC Group 

Individuals interested in calculating 

the national copayment liability for a 

Medicare beneficiary for a given service 

provided by a hospital that met or failed 

to meet its Hospital OQR Program 

requirements should follow the 

formulas presented in the following 

steps. 

Step 1. Calculate the beneficiary 

payment percentage for the APC by 

dividing the APC’s national unadjusted 

copayment by its payment rate. For 

example, using APC 0019, 

approximately $75.68 is 20 percent of 

the full national unadjusted payment 

rate of approximately $378.41. For APCs 

with only a minimum unadjusted 

copayment in Addenda A and B to this 

final rule with comment period (which 

are available via the Internet on the 

CMS Web site), the beneficiary payment 

percentage is 20 percent. 

The formula below is a mathematical 

representation of Step 1 and calculates 

the national copayment as a percentage 

of national payment for a given service. 

B is the beneficiary payment percentage. 

B = National unadjusted copayment for 

APC/national unadjusted payment 

rate for APC. 

Step 2. Calculate the appropriate 

wage-adjusted payment rate for the APC 

for the provider in question, as 

indicated in Steps 2 through 4 under 

section II.H. of this final rule with 

comment period. Calculate the rural 

adjustment for eligible providers as 

indicated in Step 6 under section II.H. 

of this final rule with comment period. 

Step 3. Multiply the percentage 

calculated in Step 1 by the payment rate 

calculated in Step 2. The result is the 

wage-adjusted copayment amount for 

the APC. 

The formula below is a mathematical 

representation of Step 3 and applies the 

beneficiary payment percentage to the 

adjusted payment rate for a service 

calculated under section II.H. of this 

final rule with comment period, with 

and without the rural adjustment, to 

calculate the adjusted beneficiary 

copayment for a given service. 

Wage-adjusted copayment amount for 

the APC = Adjusted Medicare Payment 

* B. 

Wage-adjusted copayment amount for 

the APC (SCH or EACH) = (Adjusted 

Medicare Payment * 1.071) * B. 

Step 4. For a hospital that failed to 

meet its Hospital OQR Program 

requirements, multiply the copayment 

calculated in Step 3 by the reporting 

ratio of 0.980. 

The unadjusted copayments for 

services payable under the OPPS that 

will be effective January 1, 2015, are 

shown in Addenda A and B to this final 

rule with comment period (which are 

available via the Internet on the CMS 

Web site). We note that the national 

unadjusted payment rates and 

copayment rates shown in Addenda A 

and B to this final rule with comment 

period reflect the full CY 2015 OPD fee 

schedule increase factor discussed in 

section II.B. of this final rule with 

comment period. 

In addition, as noted above, section 

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

amount of beneficiary copayment that 

may be collected for a procedure 

performed in a year to the amount of the 

inpatient hospital deductible for that 

year. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66837 

III. OPPS Ambulatory Payment 

Classification (APC) Group Policies 

A. OPPS Treatment of New CPT and 

Level II HCPCS Codes 

CPT and Level II HCPCS codes are 

used to report procedures, services, 

items, and supplies under the hospital 

OPPS. Specifically, CMS recognizes the 

following codes on OPPS claims: 

• Category I CPT codes, which 

describe surgical procedures and 

medical services; 

• Category III CPT codes, which 

describe new and emerging 

technologies, services, and procedures; 

and 

• Level II HCPCS codes, which are 

used primarily to identify products, 

supplies, temporary procedures, and 

services not described by CPT codes. 

CPT codes are established by the 

American Medical Association (AMA) 

and the Level II HCPCS codes are 

established by the CMS HCPCS 

Workgroup. These codes are updated 

and changed throughout the year. CPT 

and HCPCS code changes that affect the 

OPPS are published both through the 

annual rulemaking cycle and through 

the OPPS quarterly update Change 

Requests (CRs). CMS releases new Level 

II HCPCS codes to the public or 

recognizes the release of new CPT codes 

by the AMA and makes these codes 

effective (that is, the codes can be 

reported on Medicare claims) outside of 

the formal rulemaking process via OPPS 

quarterly update CRs. Based on our 

review, we assign the new CPT and 

Level II HCPCS codes to interim status 

indicator (SI) and APC assignments. 

These interim assignments are finalized 

in the OPPS/ASC final rules. This 

quarterly process offers hospitals access 

to codes that may more accurately 

describe items or services furnished 

and/or provides payment or more 

accurate payment for these items or 

services in a timelier manner than if 

CMS waited for the annual rulemaking 

process. We solicit public comments on 

these new codes and finalize our 

proposals related to these codes through 

our annual rulemaking process. 

We note that, under the OPPS, the 

APC assignment determines the 

payment rate for an item, procedure, or 

service. Items, procedures, or services 

not paid separately under the hospital 

OPPS are assigned to the appropriate 

status indicators. Section XI. of the CY 

2015 OPPS/ASC proposed rule provided 

a discussion of the various status 

indicators used under the OPPS. 

Assigning procedures to certain status 

indicators would generate separate 

payment for the service furnished, while 

assignment to other status indicators 

would not. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40974), in Table 14 (Table 

15 of this final rule with comment 

period), we summarized our process for 

updating codes through our OPPS 

quarterly update CRs, seeking public 

comments, and finalizing their 

treatment under the OPPS. We noted 

that because the payment rates 

associated with codes effective July 1 

were not available to us in time for 

incorporation into the Addenda to the 

proposed rule, the Level II HCPCS codes 

and the Category III CPT codes 

implemented through the July 2014 

OPPS quarterly update CR were not 

included in Addendum B of the 

proposed rule (which is available via 

the Internet on the CMS Web site), 

while those codes based upon the April 

2014 OPPS quarterly update were 

included in Addendum B. Nevertheless, 

we requested public comments on the 

codes included in the July 2014 OPPS 

quarterly update and included these 

codes in the preamble of the proposed 

rule. 

TABLE 15—COMMENT TIMEFRAME FOR NEW OR REVISED HCPCS CODES

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

April l, 2014 ....................... Level II HCPCS Codes ..... April 1, 2014 ...................... CY 2015 OPPS/ASC proposed rule.CY 2015 OPPS/ASC final 

rule with comment period. 

July 1, 2014 ....................... Level II HCPCS Codes ..... July 1, 2014 ...................... CY 2015 OPPS/ASC proposed rule.CY 2015 OPPS/ASC final 

rule with comment period. 

Category I (certain vaccine 

codes) and III CPT 

codes.

July 1, 2014 ...................... CY 2015 OPPS/ASC proposed rule.CY 2015 OPPS/ASC final 

rule with comment period. 

October 1, 2014 ................ Level II HCPCS Codes ..... October 1, 2014 ................ CY 2015 OPPS/ASC final 

rule with comment period.

CY 2016 OPPS/ASC final 

rule with comment period. 

January 1, 2015 ................ Level II HCPCS Codes ..... January 1, 2015 ................ CY 2015 OPPS/ASC final 

rule with comment period.

CY 2016 OPPS/ASC final 

rule with comment period. 

Category I and III CPT 

Codes.

January 1, 2015 ................ CY 2015 OPPS/ASC final 

rule with comment period.

CY 2016 OPPS/ASC final 

rule with comment period. 

This process is discussed in detail 

below. We have separated our 

discussion into two sections based on 

whether we solicited public comments 

in the CY 2015 OPPS/ASC proposed 

rule or whether we will be soliciting 

public comments in this CY 2015 OPPS/ 

ASC final rule with comment period. 

We note that we will be seeking public 

comments in this CY 2015 OPPS/ASC 

final rule with comment period on the 

interim APC and status indicator 

assignments for new CPT and Level II 

HCPCS codes that will be effective 

January 1, 2015. In the CY 2015 OPPS/ 

ASC proposed rule (79 FR 40977), we 

also noted that we sought public 

comments in the CY 2014 OPPS/ASC 

final rule with comment period on the 

interim APC and status assignments for 

new Level II HCPCS codes that became 

effective October 1, 2013, or January 1, 

2014. These new and revised codes, 

with an effective date of October 1, 

2013, or January 1, 2014, were flagged 

with comment indicator ‘‘NI’’ (New 

code, interim APC assignment; 

comments will be accepted on the 

interim APC assignment for the new 

code) in Addendum B to the CY 2014 

OPPS/ASC final rule with comment 

period to indicate that we were 

assigning them an interim payment 

status and an APC and payment rate, if 

applicable, and were subject to public 

comment following publication of the 


tkelley on DSK3SPTVN1PROD with RULES2
66838 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

CY 2014 OPPS/ASC final rule with 

comment period. We are responding to 

public comments and finalizing our 

interim OPPS treatment of these codes 

in this CY 2015 OPPS/ASC final rule 

with comment period. 

We received public comments on 

some new codes that were assigned to 

comment indicator ‘‘NI’’ in Addendum 

B of the CY 2014 OPPS/ASC final rule 

with comment period. We respond to 

those comments in sections III.C. of this 

CY 2015 OPPS/ASC final rule with 

comment period. 

1. Treatment of New CY 2014 Level II 

HCPCS and CPT Codes Effective April 

1, 2014 and July 1, 2014 for Which We 

Solicited Public Comments in the CY 

2015 OPPS/ASC Proposed Rule 

Through the April 2014 OPPS 

quarterly update CR (Transmittal 2903, 

Change Request 8653, dated March 11, 

2014) and the July 2014 OPPS quarterly 

update CR (Transmittal 2971, Change 

Request 8776, dated May 23, 2014), we 

recognized several new HCPCS codes 

for separate payment under the OPPS. 

Effective April 1, 2014, we made 

effective four new Level II HCPCS codes 

and also assigned them to appropriate 

interim OPPS status indicators and 

APCs. Through the April 2014 OPPS 

quarterly update CR, we allowed 

separate payment for three of the four 

new Level II HCPCS codes. Specifically, 

as displayed in Table 15 in the proposed 

rule (79 FR 40975), we provided 

separate payment for HCPCS codes 

C9021, C9739, and C9740. HCPCS code 

Q2052 was assigned to status indicator 

‘‘N’’ to indicate the service described by 

this code is packaged under the OPPS. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40974), we solicited public 

comments on the proposed APC and 

status indicator assignments, where 

applicable, for the Level II HCPCS codes 

listed in Table 15 of that proposed rule 

(HCPCS codes C9021, C9739, C9740, 

and Q2052). We did not receive any 

public comments on the proposed APC 

and status indicator assignments for 

HCPCS codes C9021 and Q2052. 

Because HCPCS code Q2052 will only 

be billed by pharmacy suppliers, we are 

modifying our CY 2015 proposal to 

continue to assign HCPCS code Q2052 

to status indicator ‘‘N.’’ Instead, for CY 

2015, we are reassigning HCPCS code 

Q2052 from OPPS status indicator ‘‘N’’ 

to ‘‘E’’ (Not paid by Medicare when 

submitted on outpatient claims (any 

outpatient bill type)). We are adopting 

as final, without modification, the 

proposed APC and status indicator 

assignments for HCPCS code C9021 for 

CY 2015. We note that we received 

some public comments on HCPCS codes 

C9739 and C9740, which we address in 

section III.C.3.e. of this final rule with 

comment period. 

Effective for CY 2015, the HCPCS 

Workgroup replaced HCPCS code C9021 

with HCPCS code J9301. Table 16 below 

shows the complete long descriptor for 

HCPCS code J9301. Consistent with our 

general policy of using permanent 

HCPCS codes (that is, ‘‘J’’ codes) rather 

than using temporary HCPCS codes 

(that is, ‘‘C’’ codes and ‘‘Q’’ codes) for 

the reporting of drugs under the OPPS 

in order to streamline coding, we are 

showing the replacement HCPCS code 

for C9021, which is effective January 1, 

2015, in Table 16. 

In this final rule with comment 

period, we are assigning the Level II 

HCPCS codes listed in Table 16 below 

to the specified APCs and status 

indicators for CY 2015. The final 

payment rates for these codes, where 

applicable, can be found in Addendum 

B to this final rule with comment period 

(which is available via the Internet on 

the CMS Web site). 

TABLE 16—FINAL CY 2015 STATUS INDICATORS AND APC ASSIGNMENTS FOR THE LEVEL II HCPCS CODES THAT WERE

NEWLY IMPLEMENTED IN APRIL 2014 

CY 2014 

HCPCS 

Code 

CY 2015 

HCPCS 

Code 

CY 2015 long descriptor 

Final CY 

2015 status 

indicator 

Final CY 2015 

APC 

C9021 .......... J9301 .......... Injection, obinutuzumab, 10mg ............................................................................... G ................. 1476 

C9739 .......... C9739 .......... Cystourethroscopy, with insertion of transprostatic implant; 1 to 3 implants ......... T .................. 0162 

C9740 .......... C9740 .......... Cystourethroscopy, with insertion of transprostatic implant; 4 or more implants .. T .................. 1564 

Q2052 .......... Q2052 ......... Services, supplies and accessories used in the home under the Medicare intravenous immune globulin (IVIG) demonstration.E .................. N/A 

Effective July 1, 2014, we made 

effective several new CPT and Level II 

HCPCS codes and also assigned them to 

appropriate interim OPPS status 

indicators and APCs. Through the July 

2014 OPPS quarterly update CR, we 

allowed separate payment under the 

OPPS for four new Level II HCPCS 

codes and 17 new Category III CPT 

codes effective July 1, 2014. 

Specifically, as displayed in Table 16 in 

the proposed rule, we allowed separate 

payment for HCPCS codes C2644, 

C9022, C9134, and Q9970. We note that 

HCPCS code Q9970 replaced HCPCS 

code C9441 (Injection, ferric 

carboxymaltose, 1 mg), beginning July 1, 

2014. HCPCS code C9441 was made 

effective January 1, 2014, but the code 

was deleted June 30, 2014, because it 

was replaced with HCPCS code Q9970. 

HCPCS code C9441 was granted passthrough payment status when the code 

was implemented on January 1, 2014. 

Because HCPCS code Q9970 describes 

the same drug as HCPCS code C9441, in 

the CY 2015 OPPS/ASC proposed rule 

(79 FR 40975), we proposed to continue 

the pass-through payment status for 

HCPCS code Q9970, and assign the 

HCPCS Q-code to the same APC and 

status indicator as its predecessor 

HCPCS C-code, as shown in Table 16 of 

the proposed rule. Specifically, we 

proposed to assign HCPCS code Q9970 

to APC 9441 (Inj, Ferric 

Carboxymaltose) and status indicator 

‘‘G.’’ 

In addition, the HCPCS Workgroup 

established HCPCS code Q9974, 

effective July 1, 2014, to replace HCPCS 

codes J2271 (Injection, morphine 

sulfate, 100mg) and J2275 (Injection, 

morphine sulfate (preservative-free 

sterile solution), per 10 mg). Both of 

these HCPCS J-codes were assigned to 

status indicator ‘‘N’’ (Packaged 

Services). As a result of the 

establishment of new HCPCS code 

Q9974 as a replacement for HCPCS 

codes J2271 and J2275, the payment 

indicator for HCPCS codes J2271 and 

J2275 was changed to ‘‘E’’ (Not Payable 

by Medicare), effective July 1, 2014. 

Also, because HCPCS code Q9974 

describes the same services that were 

described by HCPCS codes J2271 and 

J2275, in the CY 2015 OPPS/ASC 

proposed rule (79 FR 40975), we 

proposed to continue to assign HCPCS 

code Q9974 to the same status indicator 

as its predecessor HCPCS J-codes. 

Specifically, we proposed to assign 

HCPCS code Q9974 to status indicator 

‘‘N,’’ effective July 1, 2014. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66839 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40975), we also proposed to 

assign the Level II HCPCS codes listed 

in Table 16 to the specified proposed 

APCs and status indicators set forth in 

Table 16 of the proposed rule. This table 

included a complete list of the Level II 

HCPCS codes that were made effective 

July 1, 2014. The codes that were made 

effective July 1, 2014, did not appear in 

Addendum B to the proposed rule, and 

as a result, the proposed payment rates 

along with the proposed status 

indicators and proposed APC 

assignments, where applicable, for CY 

2015 were provided in Table 16 of the 

proposed rule. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40975), we solicited public 

comments on the proposed status 

indicators and APC assignments for the 

HCPCS codes that were listed in Table 

16 of the proposed rule. We did not 

receive any public comments on the 

proposed APC and status indicator 

assignments for HCPCS codes C9022, 

C9134, Q9970, and Q9974 for CY 2015. 

Therefore, we are adopting as final, 

without modification, the proposed APC 

and status indicator assignments for 

these four Level II HCPCS codes for CY 

2015. We note that we received a public 

comment on HCPCS code C2644, which 

is addressed in section II.A.2.d.3. of this 

final rule with comment period. 

The HCPCS Workgroup replaced 

HCPCS code C9022 with HCPCS code 

J1322, effective January 1, 2015. Because 

HCPCS code J1322 describes the same 

drug with the same dosage descriptor as 

its predecessor code, HCPCS code 

C9022, this drug will continue to 

receive pass-through payment status in 

CY 2015. Therefore, we are assigning 

HCPCS code J1322 to the same APC and 

status indicator as its predecessor code, 

HCPCS code C9022, as shown in Table 

17 below. 

In addition, the HCPCS Workgroup 

replaced HCPCS code C9134 with 

HCPCS code J7181, effective January 1, 

2015. Because HCPCS code J7181 does 

not describe the same dosage descriptor 

as its predecessor code, HCPCS code 

J7181 has been assigned to a new APC. 

Specifically, HCPCS code C9134 had a 

dosage descriptor of ‘‘10 i.u.,’’ while 

HCPCS code J7181 has a dosage 

descriptor of ‘‘i.u.’’ Therefore, effective 

January 1, 2015, we are assigning 

HCPCS code J7181 to APC 1746, which 

is a different APC assignment than the 

APC assignment for HCPCS code C9134, 

to maintain data consistency for future 

rulemakings. Because the predecessor 

code, HCPCS code C9134, was granted 

pass-through payment status, HCPCS 

code J7181 will continue to be assigned 

to status indicator ‘‘G’’ for CY 2015. 

We also note that the HCPCS 

Workgroup replaced HCPCS code 

Q9970 with HCPCS code J1439, 

effective January 1, 2015. Because 

HCPCS code J1439 describes the same 

drug with the same dosage descriptor as 

its predecessor code, HCPCS code 

Q9970, this drug will continue to 

receive pass-through payment status in 

CY 2015. Therefore, we are assigning 

HCPCS code J1439 to the same APC and 

status indicator as its predecessor code, 

HCPCS code Q9970, as shown in Table 

17 below. 

Further, the HCPCS Workgroup 

replaced HCPCS code Q9974 with 

HCPCS code J2274, effective January 1, 

2015. Because HCPCS code J2274 

describes the same drug with the same 

dosage descriptor as its predecessor 

code, HCPCS code Q9974, this drug will 

continue its packaged status indicator. 

Therefore, we are assigning HCPCS code 

J2274 to the same status indicator as its 

predecessor code, HCPCS code Q9974, 

as also shown in Table 17 below. 

Table 17 below includes a complete 

list of the Level II HCPCS codes that 

were made effective July 1, 2014, with 

their final status indicators and APC 

assignments for CY 2015. The final 

payment rates for these codes, where 

applicable, can be found in Addendum 

B to this final rule with comment period 

(which is available via the Internet on 

the CMS Web site). 

TABLE 17—FINAL CY 2015 STATUS INDICATORS AND APC ASSIGNMENTS FOR THE LEVEL II HCPCS CODES THAT WERE

NEWLY IMPLEMENTED IN JULY 2014 

CY 2014 

HCPCS 

Code 

CY 2015 

HCPCS 

Code 

CY 2015 long descriptor 

Final CY 

2015 status 

indicator 

Final CY 2015 

APC 

C2644 .......... C2644 .......... Brachytherapy source, cesium-131 chloride solution, per millicurie ...................... U ................. 2644 

C9022 .......... J1322 .......... Injection, elosulfase alfa, 1mg ................................................................................ G ................. 1480 

C9134 .......... J7181 .......... Factor XIII A-Subunit (Recombinant), Per IU ......................................................... G ................. 1746 

Q9970 .......... J1439 .......... Injection, ferric carboxymaltose, 1mg ..................................................................... G ................. 9441 

Q9974 .......... J2274 .......... Injection, morphine sulfate, preservative-free for epidural or intrathecal use, 10 

mg.

N ................. N/A 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40975), for CY 2015, we 

proposed to continue our established 

policy of recognizing Category I CPT 

vaccine codes for which FDA approval 

is imminent and Category III CPT codes 

that the AMA releases in January of 

each year for implementation in July 

through the OPPS quarterly update 

process. Under the OPPS, Category I 

CPT vaccine codes and Category III CPT 

codes that are released on the AMA Web 

site in January are made effective in July 

of the same year through the July 

quarterly update CR, consistent with the 

AMA’s implementation date for the 

codes. For the July 2014 update, there 

were no new Category I CPT vaccine 

codes. 

Through the July 2014 OPPS quarterly 

update CR (Transmittal 2971, Change 

Request 8776, dated May 23, 2014), we 

assigned interim OPPS status indicators 

and APCs for 17 of the 27 new Category 

III CPT codes that were made effective 

July 1, 2014. Specifically, as displayed 

in Table 17 in the proposed rule, we 

made interim OPPS status indicators 

and APC assignments for Category III 

CPT codes 0347T, 0348T, 0349T, 0350T, 

0355T, 0356T, 0358T, 0359T, 0360T, 

0362T, 0364T, 0366T, 0368T, 0370T, 

0371T, 0372T, and 0373T. Table 17 of 

the proposed rule listed the Category III 

CPT codes that were implemented on 

July 1, 2014, along with the proposed 

status indicators, proposed APC 

assignments, and proposed payment 

rates, where applicable, for CY 2015. We 

did not receive any public comments on 

the proposed APC and status indicator 

assignments for Category III CPT codes 

0347T, 0348T, 0349T, 0350T, 0356T, 

0358T, 0359T, 0360T, 0362T, 0364T, 

0366T, 0368T, 0370T, 0371T, 0372T, 

and 0373T. Therefore, we are adopting 

as final, without modification, the 

proposed APC and status indicator 

assignments for these 16 CPT codes for 

CY 2015. We received a public comment 

on CPT codes 0335T, which we address 


tkelley on DSK3SPTVN1PROD with RULES2
66840 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

in section III.C.2.6. of this final rule 

with comment period. We also received 

specific public comments on CPT codes 

0351T, 0352T, 0353T, and 0354T, which 

are addressed in section II.C.6.b. of this 

final rule with comment period. Table 

18 below lists the Category III CPT 

codes that were implemented in July 

2014, along with their final status 

indicators and APC assignments for CY 

2015. The final payment rates for these 

codes, where applicable, can be found 

in Addendum B to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site). 

TABLE 18—NEW CATEGORY III CPT CODES IMPLEMENTED IN JULY 2014 

CY 2014 

CPT code 

CY 2015 

CPT code CY 2015 long descriptor 

Final CY 

2015 status 

indicator 

Final CY 2015 

APC 

0347T .......... 0347T .......... Placement of interstitial device(s) in bone for radiostereometric analysis (RSA) .. Q1 0420 

0348T .......... 0348T .......... Radiologic examination, radiostereometric analysis (RSA); spine, (includes, cervical, thoracic and lumbosacral, when performed).Q1 0261 

0349T .......... 0349T .......... Radiologic examination, radiostereometric analysis (RSA); upper extremity(ies), 

(includes shoulder, elbow and wrist, when performed).

Q1 0261 

0350T .......... 0350T .......... Radiologic examination, radiostereometric analysis (RSA); lower extremity(ies), 

(includes hip, proximal femur, knee and ankle, when performed).

Q1 0261 

0351T .......... 0351T .......... Optical coherence tomography of breast or axillary lymph node, excised tissue, 

each specimen; real time intraoperative.

N N/A 

0352T .......... 0352T .......... Optical coherence tomography of breast or axillary lymph node, excised tissue, 

each specimen; interpretation and report, real time or referred.

B N/A 

0353T .......... 0353T .......... Optical coherence tomography of breast, surgical cavity; real time intraoperative N N/A 

0354T .......... 0354T .......... Optical coherence tomography of breast, surgical cavity; interpretation and report, real time or referred.B N/A 

0355T .......... 0355T .......... Gastrointestinal tract imaging, intraluminal (eg, capsule endoscopy), colon, with 

interpretation and report.

T 0142 

0356T .......... 0356T .......... Insertion of drug-eluting implant (including punctal dilation and implant removal 

when performed) into lacrimal canaliculus, each.

Q1 0698 

0358T .......... 0358T .......... Bioelectrical impedance analysis whole body composition assessment, supine 

position, with interpretation and report.

Q1 0340 

0359T .......... 0359T .......... Behavior identification assessment, by the physician or other qualified health 

care professional, face-to-face with patient and caregiver(s), includes administration of standardized and non-standardized tests, detailed behavioral history, patient observation and caregiver interview, interpretation of test results, 

discussion of findings and recommendations with the primary guardian(s)/

caregiver(s), and preparation of report.

V 0632 

0360T .......... 0360T .......... Observational behavioral follow-up assessment, includes physician or other 

qualified health care professional direction with interpretation and report, administered by one technician; first 30 minutes of technician time, face-to-face 

with the patient.

V 0632 

0361T .......... 0361T .......... Observational behavioral follow-up assessment, includes physician or other 

qualified health care professional direction with interpretation and report, administered by one technician; each additional 30 minutes of technician time, 

face-to-face with the patient (List separately in addition to code for primary 

service).

N N/A 

0362T .......... 0362T .......... Exposure behavioral follow-up assessment, includes physician or other qualified 

health care professional direction with interpretation and report, administered 

by physician or other qualified health care professional with the assistance of 

one or more technicians; first 30 minutes of technician(s) time, face-to-face 

with the patient.

V 0632 

0363T .......... 0363T .......... Exposure behavioral follow-up assessment, includes physician or other qualified 

health care professional direction with interpretation and report, administered 

by physician or other qualified health care professional with the assistance of 

one or more technicians; each additional 30 minutes of technician(s) time, 

face-to-face with the patient (List separately in addition to code for primary 

procedure).

N N/A 

0364T .......... 0364T .......... Adaptive behavior treatment by protocol, administered by technician, face-toface with one patient; first 30 minutes of technician time.S 0322 

0365T .......... 0365T .......... Adaptive behavior treatment by protocol, administered by technician, face-toface with one patient; each additional 30 minutes of technician time (List separately in addition to code for primary procedure).N N/A 

0366T .......... 0366T .......... Group adaptive behavior treatment by protocol, administered by technician, 

face-to-face with two or more patients; first 30 minutes of technician time.

S 0325 

0367T .......... 0367T .......... Group adaptive behavior treatment by protocol, administered by technician, 

face-to-face with two or more patients; each additional 30 minutes of technician time (List separately in addition to code for primary procedure).

N N/A 

0368T .......... 0368T .......... Adaptive behavior treatment with protocol modification administered by physician or other qualified health care professional with one patient; first 30 minutes of patient face-to-face time.S 0322 

0369T .......... 0369T .......... Adaptive behavior treatment with protocol modification administered by physician or other qualified health care professional with one patient; each additional 30 minutes of patient face-to-face time (List separately in addition to 

code for primary procedure).

N N/A 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66841 

TABLE 18—NEW CATEGORY III CPT CODES IMPLEMENTED IN JULY 2014—Continued 

CY 2014 

CPT code 

CY 2015 

CPT code CY 2015 long descriptor 

Final CY 

2015 status 

indicator 

Final CY 2015 

APC 

0370T .......... 0370T .......... Family adaptive behavior treatment guidance, administered by physician or 

other qualified health care professional (without the patient present).

S 0324 

0371T .......... 0371T .......... Multiple-family group adaptive behavior treatment guidance, administered by 

physician or other qualified health care professional (without the patient 

present).

S 0324 

0372T .......... 0372T .......... Adaptive behavior treatment social skills group, administered by physician or 

other qualified health care professional face-to-face with multiple patients.

S 0325 

0373T .......... 0373T .......... Exposure adaptive behavior treatment with protocol modification requiring two or 

more technicians for severe maladaptive behavior(s); first 60 minutes of technicians’ time, face-to-face with patient.

S 0323 

0374T .......... 0374T .......... Exposure adaptive behavior treatment with protocol modification requiring two or 

more technicians for severe maladaptive behavior(s); each additional 30 minutes of technicians’ time face-to-face with patient (List separately in addition 

to code for primary procedure).

N N/A 

Further, in the CY 2015 OPPS/ASC 

proposed rule, we solicited public 

comments on the proposed CY 2015 

status indicators, APC assignments, and 

payment rates for the Level II HCPCS 

codes and the Category III CPT codes 

that were made effective April 1, 2014, 

and July 1, 2014. These codes were 

listed in Tables 15, 16, and 17 of the 

proposed rule. We also proposed to 

finalize the status indicator and APC 

assignments and payment rates for these 

codes, if applicable, in this CY 2015 

OPPS/ASC final rule with comment 

period. Because the new Category III 

CPT and Level II HCPCS codes that 

became effective for July were not 

available to us in time for incorporation 

into the Addenda to the proposed rule, 

our policy is to include the codes, the 

proposed status indicators, proposed 

APCs (where applicable), and proposed 

payment rates (where applicable) in the 

preamble of the proposed rule, but not 

in the Addenda to the proposed rule. 

These codes were listed in Tables 16 

and 17, respectively, of the proposed 

rule. We also proposed to incorporate 

these codes into Addendum B to this CY 

2015 OPPS/ASC final rule with 

comment period, which is consistent 

with our annual OPPS update policy. 

The Level II HCPCS codes implemented 

or modified through the April 2014 

OPPS update CR and displayed in Table 

15 were included in Addendum B to the 

proposed rule (which is available via 

the Internet on the CMS Web site), 

where the proposed CY 2015 payment 

rates for these codes were also shown. 

We did not receive any additional 

public comments on this process. The 

final APC and status indicator 

assignments and payment rates, if 

applicable, for the Level II HCPCS codes 

and the Category III CPT codes that were 

implemented or modified through the 

April 2014 or July 2014 OPPS update 

CR can be found in Tables 16, 17, and 

18, or in Addendum B to this final rule 

with comment period (which is 

available via the Internet on the CMS 

Web site). 

2. Process for New Level II HCPCS 

Codes That Became Effective October 1, 

2014 and New CPT and Level II HCPCS 

Codes That Will Become Effective 

January 1, 2015 for Which We Are 

Soliciting Public Comments in This CY 

2015 OPPS/ASC Final Rule with 

Comment Period 

As has been our practice in the past, 

we incorporate those new Category I 

and III CPT codes and new Level II 

HCPCS codes that are effective January 

1 in the final rule with comment period 

updating the OPPS for the following 

calendar year. These codes are released 

to the public via the CMS HCPCS (for 

Level II HCPCS codes) and AMA Web 

sites (for CPT codes), and also through 

the January OPPS quarterly update CRs. 

In the past, we also have released new 

Level II HCPCS codes that are effective 

October 1 through the October OPPS 

quarterly update CRs and incorporated 

these new codes in the final rule with 

comment period updating the OPPS for 

the following calendar year. For CY 

2015, these codes are flagged with 

comment indicator ‘‘NI’’ in Addendum 

B to this OPPS/ASC final rule with 

comment period to indicate that we are 

assigning them an interim payment 

status which is subject to public 

comment. In addition, the CPT and 

Level II HCPCS codes that will become 

effective January 1, 2015, are flagged 

with comment indicator ‘‘NI’’ in 

Addendum B to this CY 2015 OPPS/

ASC final rule with comment period. 

Specifically, the status indicator and the 

APC assignment and payment rate, if 

applicable, for all such codes flagged 

with comment indicator ‘‘NI’’ are open 

to public comment in this final rule 

with comment period, and we will 

respond to these public comments in 

the OPPS/ASC final rule with comment 

period for the next year’s OPPS/ASC 

update. In the CY 2015 OPPS/ASC 

proposed rule (79 FR 40977), we 

proposed to continue this process for 

CY 2015. Specifically, for CY 2015, we 

proposed to include in Addendum B to 

the CY 2015 OPPS/ASC final rule with 

comment period the following new 

HCPCS codes: 

• New Level II HCPCS codes effective 

October 1, 2014, that would be 

incorporated in the October 2014 OPPS 

quarterly update CR; 

• New Category I and III CPT codes 

effective January 1, 2015, that would be 

incorporated in the January 2015 OPPS 

quarterly update CR; and 

• New Level II HCPCS codes effective 

January 1, 2015, that would be 

incorporated in the January 2015 OPPS 

quarterly update CR. 

As stated above, the October 1, 2014 

and January 1, 2015 codes are flagged 

with comment indicator ‘‘NI’’ in 

Addendum B to this CY 2015 OPPS/

ASC final rule with comment period to 

indicate that we have assigned the codes 

an interim OPPS payment status for CY 

2015. We are inviting public comments 

on the interim status indicator and APC 

assignments and payment rates for these 

codes, if applicable, that will be 

finalized in the CY 2016 OPPS/ASC 

final rule with comment period. 

3. Process for Soliciting Public 

Comments for New and Revised CPT 

Codes Released by the AMA 

We generally incorporate the new 

CPT codes that are effective January 1 in 

the OPPS/ASC final rule with comment 

period. We establish interim APC and 

status indicator assignments for these 

new codes for the coming year, and 


tkelley on DSK3SPTVN1PROD with RULES2
66842 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

request comments on the interim 

assignments in the OPPS/ASC final rule 

with comment period. Similarly, we 

establish interim APC and status 

indicator assignments for existing CPT 

codes that have substantial revision to 

their code descriptors that necessitate a 

change in the current APC assignments, 

and request comments on the interim 

assignments in the OPPS/ASC final rule 

with comment period. In both cases, we 

assign these new and revised codes to 

OPPS comment indicator ‘‘NI’’ (New 

code for the next calendar year or 

existing code with substantial revision 

to its code descriptor in the next 

calendar year as compared to current 

calendar year, interim APC assignment; 

comments will be accepted on the 

interim APC assignment for the new 

code.) in the OPPS/ASC final rule with 

comment period. We respond to 

comments and finalize the APC and 

status indicator assignments for these 

CPT codes in the following year’s OPPS/ 

ASC final rule with comment period. 

a. Current Process for Accepting 

Comments on New and Revised CPT 

Codes for a Year 

As described above, under the 

hospital OPPS, our current process for 

both new CPT codes and existing CPT 

codes with substantial revisions to the 

code descriptors that are released by the 

AMA for use beginning January 1 is to 

flag these codes with comment indicator 

‘‘NI’’ in Addendum B to the OPPS/ASC 

final rule with comment period to 

indicate that the codes are new for the 

calendar year and have been assigned 

interim APCs and status indicators, and 

that we are accepting public comments 

on the interim APC and status indicator 

assignments. We address public 

comments received and finalize the APC 

and status indicator assignments for the 

codes in the next year’s OPPS/ASC final 

rule with comment period. For example, 

the new CPT codes that were effective 

January 1, 2014, were assigned to 

comment indicator ‘‘NI’’ in Addendum 

B to the CY 2014 OPPS/ASC final rule 

with comment period. We respond to 

public comments received on the CY 

2014 OPPS/ASC final rule with 

comment period and finalize the APC 

and status indicator assignments for 

these codes in this CY 2015 OPPS/ASC 

final rule with comment period. We 

include the final APC and status 

indicator assignments for these codes in 

Addendum B to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site). 

Many stakeholders have expressed 

concern with the process we use to 

recognize new and revised CPT codes. 

They believe that CMS should publish 

proposed APC and status indicator 

assignments for the new and revised 

CPT codes that will be effective January 

1 in the OPPS/ASC proposed rule for 

that calendar year, and request public 

comments prior to finalizing the 

assignments. Further, the stakeholders 

believe that seeking public input on the 

APC and status indicator assignments 

for these new and revised codes would 

assist CMS in assigning the CPT codes 

to appropriate APCs. Similar concerns 

have been expressed regarding our 

process for assigning interim payment 

values for revalued, and new and 

revised codes, under the Medicare 

Physician Fee Schedule (MPFS). We 

refer readers to the CY 2015 MPFS 

proposed rule for a detailed discussion 

of this issue as it relates to the MPFS (79 

FR 40359 through 40364). 

Like the MPFS, the OPPS and the 

ASC payment system rely principally 

upon the Current Procedural 

Terminology (CPT®) coding system 

maintained by the AMA to identify 

specific services for billing and payment 

purposes. CPT is the standard code set 

adopted under the Health Insurance 

Portability and Accountability Act of 

1996 (HIPAA) for outpatient services. 

The AMA CPT Editorial Panel’s coding 

cycle occurs concurrently with our 

calendar year rulemaking cycle for the 

OPPS and the ASC payment system. 

However, the OPPS/ASC proposed rules 

are published prior to the publication of 

the CPT codes that are made public in 

the Fall with a January 1 effective date, 

and we are currently unable to include 

these codes in the OPPS/ASC proposed 

rules. Consequently, we establish in the 

final rule with comment period interim 

APC and status indicator assignments 

for new and revised CPT codes that 

have an effective date of January 1, and 

we make payment based on those 

interim designations for one year, while 

accepting public comments on the final 

rule with comment period. We then 

respond to those public comments 

received and make final APC and status 

indicator assignments in the next year’s 

final rule with comment period. 

b. Modification of Process for New and 

Revised CPT Codes That Are Effective 

January 1 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40977 through 40979), we 

proposed to make changes in the 

process we use to establish APC 

assignments and status indicators for 

new and revised codes. We proposed 

that, for new and revised CPT codes that 

we receive from the AMA’s CPT 

Editorial Panel too late for inclusion in 

the proposed rule for a year, we would 

delay adoption of the new and revised 

codes for that year, and instead, adopt 

coding policies and payment rates that 

conform, to the extent possible, to the 

policies and payment rates in place for 

the previous year. We proposed to adopt 

these conforming coding and payment 

policies on an interim basis pending the 

result of our specific proposals for status 

indicator and APC assignments for these 

new and revised codes through notice 

and comment rulemaking in the OPPS/ 

ASC proposed rule for the following 

year. Because the changes in CPT codes 

are effective on January 1 of each year, 

and CMS would not have established 

status indicator or APC assignments for 

these new or revised codes, it would not 

be practicable for Medicare to use those 

CPT codes. In this circumstance, we 

proposed to create HCPCS G-codes to 

describe the predecessor codes for any 

codes that were revised or deleted as 

part of the annual CPT coding changes, 

but that we did not receive in time to 

include proposed APC and status 

indicator assignments in the proposed 

rule. However, if certain CPT codes are 

revised in a manner that would not 

affect the cost of inputs (for example, a 

minor change to CPT code descriptors), 

we would use these revised codes and 

continue to assign those codes to their 

current APC. For example, under this 

proposed process, if a single CPT code 

was separated into two codes and we 

did not receive those codes until May 

2015, we would assign each of those 

CPT codes to status indicator ‘‘B’’ in the 

final rule with comment period, to 

indicate that an alternate code is 

recognized under the OPPS. Hospitals 

could not use those two new CPT codes 

to bill Medicare for outpatient services 

the first year after the CPT effective date 

of the codes. Instead, we would create 

a HCPCS G-code with the same 

description as the single predecessor 

CPT code, and continue to use the same 

APC and status indicator assignment for 

the new G-code during the year. We 

would propose APC and status indicator 

assignments for the two new CPT codes 

during rulemaking in CY 2016, accept 

and respond to public comments on the 

proposed assignments, and establish 

final APC and status indicator 

assignments for the codes in the final 

rule for payment beginning in CY 2017. 

For new codes that describe wholly 

new services, as opposed to new or 

revised codes that describe services for 

which APC and status indicator 

assignments are already established, we 

would make every effort to work with 

the AMA’s CPT Editorial Panel to 

ensure that we received the codes in 

time to propose payment rates in the 

proposed rule. However, if we do not 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66843 

receive the code for a wholly new 

service in time to include proposed APC 

and status indicator assignments in the 

proposed rule for a year, we would need 

to establish interim APC and status 

indicator assignments for the initial year 

because there would be no predecessor 

code we could use as a reference to 

establish a G-code in order to continue 

current payment policies for such a 

service. We proposed to continue to 

establish the initial APC and status 

indicator assignments for these wholly 

new services as interim final 

assignments, and to follow our current 

process to solicit and respond to public 

comments and finalize the APC and 

status indicator assignments in the 

subsequent year. 

We recognize that the use of HCPCS 

G-codes may place an administrative 

burden on those providers that bill for 

services under the OPPS and the ASC 

payment system. However, the proposed 

use of G-codes would permit us to 

propose and accept public comment on 

the APC and status indicator 

assignments for the vast majority of new 

and revised codes before they take 

effect. We are hopeful that the AMA’s 

CPT Editorial Panel ultimately will be 

able to adjust its timelines and 

processes so that most, if not all, of the 

annual coding changes can be addressed 

in the proposed rule before the new and 

revised CPT codes take effect on January 

1. If the AMA’s CPT Editorial 

Committee can make adjustments to its 

schedule, we would not need to use Gcodes as described above for the 

purpose of maintaining outdated coding 

and APC and status indicator 

assignments for a year until we can 

include proposed APC and status 

indicator assignments for the new and 

revised codes in a proposed rule. We 

proposed to implement the revised CMS 

process for establishing APC and status 

indicator assignments for new and 

revised codes for CY 2016. However, we 

indicated in the proposed rule that we 

would consider alternative 

implementation dates if that would 

allow time for the AMA’s CPT Editorial 

Panel to adjust its schedule in order to 

avoid the necessity to use numerous 

HCPCS G-codes. 

In summary, in conjunction with the 

proposals presented in the CY 2015 

MPFS proposed rule to revise the 

process used to address new, revised, 

and potentially misvalued codes under 

the MPFS, in the CY 2015 OPPS/ASC 

proposed rule (79 FR 40977 through 

40979), we proposed to include in the 

OPPS/ASC proposed rule the proposed 

APC and status indicator assignments 

for the vast majority of new and revised 

CPT codes before they are used for 

payment purposes under the OPPS and 

ASC payment system. We would 

address new and revised CPT codes for 

the upcoming year that are available in 

time for the proposed rule by proposing 

APC and status indicator assignments 

for the codes. Otherwise, we will delay 

adoption of the new and revised codes 

for a year while using methods 

(including creating G-codes that 

describe the predecessor codes) to 

maintain the existing APC and status 

indicator assignments until the 

following year when we would include 

proposed assignments for the new and 

revised codes in the proposed rule. We 

proposed to follow this revised process 

except in the case of a new CPT code 

that describes a wholly new service 

(such as a new technology or new 

surgical procedure) that has not 

previously been addressed under the 

OPPS. For codes that describe wholly 

new services for which we do not 

receive timely information from the 

AMA, we proposed to establish interim 

APC and status indicator assignments in 

the OPPS/ASC final rules with comment 

period, as is our current process. The 

proposed revised process would 

eliminate our current practice of 

assigning interim APC and status 

indicators for the vast majority of new 

and revised CPT codes that take effect 

on January 1 each year. We invited 

public comments on this proposal. We 

indicated in the proposed rule that we 

were specifically interested in receiving 

public comments on the following 

topics: 

• Is this proposal preferable to the 

present process? Are there other 

alternatives? 

• If we were to implement this 

proposal, is it better to move forward 

with the changes or is more time needed 

to make the transition and, therefore, 

implementation should be delayed 

beyond CY 2016? 

• Are there alternatives other than the 

use of HCPCS G-codes that would allow 

us to address the annual CPT code 

changes through notice and comment 

rather than interim final rulemaking? 

• Is the process we have proposed for 

wholly new services appropriate? How 

should we define new services? 

• Are there any classes of services, 

other than new services, that should 

remain on an interim final schedule? 

Comment: The majority of the 

commenters supported the proposal to 

modify the current process of 

recognizing new and revised CPT codes 

because it would provide an 

opportunity for the public to comment 

on specific APC and status indicator 

assignments prior to those assignments 

being finalized. However, several 

commenters disagreed with our 

proposed implementation date of CY 

2016 and requested that CMS work with 

the AMA to determine an appropriate 

implementation date. Other commenters 

suggested that CMS finalize the 

proposal but urged CMS to work with 

the AMA on an appropriate timeline 

that considers the AMA’s CPT and RUC 

(Specialty Society Relative Value 

Update Committee) meeting dates as 

well as CMS’ OPPS and MPFS 

regulation schedule. The AMA 

supported the proposal but requested 

that CMS finalize the proposal for CY 

2017 rather than CY 2016 because the 

CPT codes for the CY 2016 update are 

almost complete. 

Response: We appreciate the 

commenters’ support for our proposal. 

We believe that publishing our 

proposed status indicator and APC 

assignments for the new and revised 

CPT codes in the proposed rule would 

alleviate some concerns expressed by 

stakeholders in the past that some of our 

interim APC assignments were not 

appropriate, and that the APC 

assignment process could be improved 

if we had the benefit of public 

comments before adopting final APC 

and status indicator assignments for 

new and revised codes. This new 

process of proposing and requesting 

public comments before finalizing the 

APC and status indicator assignments 

for new and revised codes allows both 

CMS and stakeholders the benefit of 

public notice and comment prior to the 

use of the new and revised codes for 

payment purposes. When we receive 

information on the new and revised 

codes from the AMA in time to include 

proposals for new and revised codes in 

the proposed rule before the codes are 

effective the following January 1, the 

revised process allows public notice and 

comment before finalizing APC and 

status indicator assignments for the 

codes during the calendar year before 

the CPT codes become effective. In 

addition, this new process eliminates 

the need to make interim APC and 

status indicator assignments for new 

and revised CPT codes, which has been 

unpopular among some providers 

because the interim assignments are 

used for payment for a year before we 

address public comments and make any 

appropriate changes to an APC or status 

indicator assignment in the subsequent 

year’s final rule. 

Although the AMA and several 

commenters requested that we modify 

our proposal by finalizing this new 

process for the CY 2017 OPPS update, 

we disagree with this recommendation. 

We believe the new process that permits 

an opportunity for public comment on 


tkelley on DSK3SPTVN1PROD with RULES2
66844 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

proposed APC and status indicator 

assignments for the vast majority of new 

and revised codes before they are 

finalized and used for payment 

purposes will be beneficial to CMS and 

to hospitals and other stakeholders, and 

we see no reason to delay 

implementation of this policy change. 

Therefore, beginning with the CY 2016 

OPPS update, we will publish proposed 

APC and status indicator assignments 

for any new and revised CPT codes for 

January 1, 2016 that are publicly 

released by the AMA in time for us to 

consider them for inclusion in the 

OPPS/ASC proposed rule. After review 

of the public comments received on the 

proposed rule, we will finalize the 

status indicator and APC assignments 

for those new and revised CPT codes in 

the CY 2016 OPPS/ASC final rule. 

Because the APC assignments would be 

final, we would no longer request 

comments in the OPPS/ASC final rules 

for these new and revised CPT codes 

that are included in the proposed rule. 

For any new and revised codes released 

too late for us to consider them for 

inclusion in the CY 2016 OPPS/ASC 

proposed rule, we will create HCPCS Gcodes that reflect the same 

description(s), and APC and status 

indicator assignments, as their 

predecessor codes. These HCPCS Gcodes will be used during CY 2016, and 

then we will include proposals for the 

corresponding new and revised codes 

and APC and status indicator 

assignments in the CY 2017 OPPS/ASC 

proposed rule. 

Comment: Most commenters opposed 

the use of temporary HCPCS G-codes 

and requested that CMS not implement 

the HCPCS G-code process if it finalizes 

the proposal to change to process for 

new and revised CPT codes. The 

commenters recommended not 

establishing temporary HCPCS G-codes 

because these codes would be extremely 

burdensome for providers to use. The 

commenters stated that establishing 

HCPCS G-codes for services or 

procedures that are already described by 

existing CPT codes would be too 

confusing for hospitals, physicians, and 

other third party insurers to accurately 

claim costs for these procedures, and 

that using two different sets of codes for 

the same procedure or service could 

result in erroneous claims. 

Response: As described above, we 

plan to publish the new and revised 

CPT codes that are publicly available 

and provided to us in time for 

evaluation in the CY 2016 OPPS/ASC 

proposed rule. Specifically, in the CY 

2016 OPPS/ASC proposed rule, we 

expect to publish new and revised CPT 

codes that would be effective January 1, 

2016, with the proposed status indicator 

and APC assignments, and request 

public comments on these proposed 

assignments as long as we receive them 

in time for inclusion in the proposed 

rule. We would finalize the status 

indicator and APC assignments for these 

new and revised CPT codes in the CY 

2016 OPPS/ASC final rule. 

However, for those new and revised 

CPT codes that are not publicly 

available in time for the OPPS/ASC 

proposed rule, we will create HCPCS Gcodes that mirror the predecessor CPT 

codes and retain the current APC and 

status indicator assignments for a year 

until we can include proposed status 

indicator and APC assignments in the 

following year’s proposed rule. These 

HCPCS G-codes will be assigned to 

comment indicator ‘‘NI’’ to indicate that 

the codes are new and open for 

comment for 60 days after display of the 

OPPS/ASC final rule with comment 

period. This is consistent with our 

current policy of seeking public 

comments on new CPT and Level II 

HCPCS codes with interim APC and 

status indicator assignments that were 

not previously published in the 

proposed rule. For new and revised 

codes, we recognize that there is a tradeoff between the benefit of considering 

public comments on the proposed APC 

and status indicator assignments before 

they take effect and the potential 

confusion caused by the use of HCPCS 

G-codes. We anticipate that the use of 

HCPCS G-codes will be largely a 

temporary solution or may not be 

necessary in the OPPS, and we expect 

to work closely with the AMA to 

minimize the need for them. We note 

that, under the MPFS, we generally do 

not develop values for new and revised 

CPT codes until we receive 

recommendations provided by the 

AMA’s RUC. In contrast, under the 

OPPS, we use only the publicly 

available new and revised CPT codes 

and their descriptors to develop APC 

and status indicator assignments. As 

such, we anticipate that the need to use 

HCPCS G-codes under the OPPS will be 

less frequent than under the MPFS. 

After consideration of the public 

comments we received, we are 

finalizing our proposal. For the new and 

revised CPT codes that we receive 

timely from the AMA’s CPT Editorial 

Panel, we are finalizing our proposal to 

include these codes that would be 

effective January 1 in the OPPS/ASC 

proposed rules, along with proposed 

APC and status indicator assignments 

for them, and to finalize the APC and 

status indicator assignments in the 

OPPS/ASC final rules beginning with 

the CY 2016 OPPS update. For those 

new and revised CPT codes that we 

receive too late for inclusion in the 

OPPS/ASC proposed rule, we are 

finalizing our proposal to create and use 

HCPCS G-codes that mirror the 

predecessor CPT codes and retain the 

current APC and status indicator 

assignments for a year until we can 

propose APC and status indicator 

assignments in the following year’s 

rulemaking cycle. We note that even if 

we find that we need to create HCPCS 

G-codes in place of certain CPT codes 

for the MPFS proposed rule, we do not 

anticipate that these HCPCS G-codes 

will always be necessary for OPPS 

purposes. We will make every effort to 

include proposed APC and status 

indicator assignments for all new and 

revised CPT codes that the AMA makes 

publicly available in time for us to 

include them in the proposed rule, and 

to avoid the resort to HCPCS G-codes 

and the resulting delay in utilization of 

the most current CPT codes. We also are 

finalizing our proposal to make interim 

APC and status indicator assignments 

for CPT codes that are not available in 

time for the proposed rule and that 

describe wholly new services (such as 

new technologies or new surgical 

procedures), solicit public comments, 

and finalize the specific APC and status 

indicator assignments for those codes in 

the following year’s final rule. 

B. OPPS Changes—Variations Within 

APCs 

1. Background 

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

requires the Secretary to develop a 

classification system for covered 

hospital outpatient department services. 

Section 1833(t)(2)(B) of the Act provides 

that the Secretary may establish groups 

of covered OPD services within this 

classification system, so that services 

classified within each group are 

comparable clinically and with respect 

to the use of resources. In accordance 

with these provisions, we developed a 

grouping classification system, referred 

to as Ambulatory Payment 

Classifications (APCs), as set forth in 

§ 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 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66845 

packaged into the payment for the 

procedure. 

We have packaged into the payment 

for each procedure or service within an 

APC group the costs associated with 

those items and services that are 

typically ancillary and supportive to a 

primary diagnostic or therapeutic 

modality and, in those cases, are an 

integral part of the primary service they 

support. Therefore, we do not make 

separate payment for these packaged 

items or services. In general, packaged 

items and services include, but are not 

limited to the items and services listed 

in § 419.2(b) of the regulations. A 

further discussion of packaged services 

is included in section II.A.3. of this final 

rule with comment period. 

In CY 2008, we implemented 

composite APCs to provide a single 

payment for groups of services that are 

typically performed together during a 

single clinical encounter and that result 

in the provision of a complete service 

(72 FR 66650 through 66652). For CY 

2014, we provided composite APC 

payments for nine categories of services: 

• Mental Health Services Composite 

(APC 0034) 

• Cardiac Electrophysiologic Evaluation 

and Ablation Composite (APC 8000) 

• Low Dose Rate (LDR) Prostate 

Brachytherapy Composite (APC 8001) 

• Ultrasound Composite (APC 8004) 

• CT and CTA without Contrast 

Composite (APC 8005) 

• CT and CTA with Contrast Composite 

(APC 8006) 

• MRI and MRA without Contrast 

Composite (APC 8007) 

• MRI and MRA with Contrast 

Composite (APC 8008) 

• Extended Assessment & Management 

Composite (APC 8009) 

A further discussion of composite 

APCs is included in section II.A.2.f. of 

this final rule with comment period. We 

note that, as a consequence of the new 

comprehensive APC policy, APC 8000 

(Cardiac Electrophysiologic Evaluation 

and Ablation Composite) is being 

deleted. 

Under the OPPS, we generally pay for 

hospital outpatient services on a rateper-service basis, where the service may 

be reported with one or more HCPCS 

codes. Payment varies according to the 

APC group to which the independent 

service or combination of services is 

assigned. Each APC relative payment 

weight represents the hospital cost of 

the services included in that APC, 

relative to the hospital cost of the 

services included in APC 0634 (Hospital 

Clinic Visits). The APC relative payment 

weights are scaled to APC 0634 because 

it is the hospital clinic visit APC and 

clinic visits are among the most 

frequently furnished services in the 

hospital outpatient setting. 

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

requires the Secretary to review, no less 

than annually, and revise the APC 

groups, the relative payment weights, 

and the wage and other adjustments to 

take into account changes in medical 

practice, changes in technology, the 

addition of new services, new cost data, 

and other relevant information and 

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

also requires the Secretary to consult 

with an expert outside advisory panel 

composed of an appropriate selection of 

representatives of providers to review 

(and advise the Secretary concerning) 

the clinical integrity of the APC groups 

and the relative payment weights (the 

Panel recommendations for specific 

services for the CY 2015 OPPS and our 

responses to them are discussed in the 

relevant specific sections throughout 

this final rule with comment period). 

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

provides that, subject to certain 

exceptions, the items and services 

within an APC group cannot be 

considered comparable with respect to 

the use of resources if the highest cost 

for an item or service in the group is 

more than 2 times greater than the 

lowest cost for an item or service within 

the same group (referred to as the ‘‘2 

times rule’’). The statute authorizes the 

Secretary to make exceptions to the 2 

times rule in unusual cases, such as 

low-volume items and services (but the 

Secretary may not make such an 

exception in the case of a drug or 

biological that has been designated as an 

orphan drug under section 526 of the 

Federal Food, Drug, and Cosmetic Act). 

2. Application of the 2 Times Rule 

In accordance with section 1833(t)(2) 

of the Act and § 419.31 of the 

regulations, we annually review the 

items and services within an APC group 

to determine, with respect to 

comparability of the use of resources, if 

the cost of the highest cost item or 

service within an APC group is more 

than 2 times greater than the cost of the 

lowest cost item or service within that 

same group. In making this 

determination, we consider only those 

HCPCS codes that are significant based 

on the number of claims. We note that, 

for purposes of identifying significant 

procedure codes for examination under 

the 2 times rule, we consider procedure 

codes that have more than 1,000 single 

major claims or procedure codes that 

have both greater than 99 single major 

claims and contribute at least 2 percent 

of the single major claims used to 

establish the APC cost to be significant 

(75 FR 71832). This longstanding 

definition of when a procedure code is 

significant for purposes of the 2 times 

rule was selected because we believe 

that a subset of 1,000 claims (or less 

than 1,000 claims) is negligible within 

the set of approximately 100 million 

single procedure or single session 

claims we use for establishing costs. 

Similarly, a procedure code for which 

there are fewer than 99 single bills and 

which comprises less than 2 percent of 

the single major claims within an APC 

will have a negligible impact on the 

APC cost. In the CY 2015 OPPS/ASC 

proposed rule (79 FR 40981), for CY 

2015, we proposed to make exceptions 

to this limit on the variation of costs 

within each APC group in unusual 

cases, such as low-volume items and 

services. 

In the CY 2015 OPPS/ASC proposed 

rule, we identified the APCs with 

violations of the 2 times rule for CY 

2015 (79 FR 40980). Therefore, we 

proposed changes to the procedure 

codes assigned to these APCs in 

Addendum B to the CY 2015 OPPS/ASC 

proposed rule. We noted that 

Addendum B did not appear in the 

printed version of the Federal Register 

as part of the CY 2015 OPPS/ASC 

proposed rule. Rather, it was published 

and made available via the Internet on 

the CMS Web site at: http://

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

HospitalOutpatientPPS/index.html. In 

these cases, to eliminate a violation of 

the 2 times rule or to improve clinical 

and resource homogeneity, we proposed 

to reassign these procedure codes to 

new APCs that contain services that are 

similar with regard to both their clinical 

and resource characteristics. In many 

cases, the proposed procedure code 

reassignments and associated APC 

reconfigurations for CY 2015 included 

in the proposed rule are related to 

changes in costs of services that were 

observed in the CY 2013 claims data 

newly available for CY 2015 ratesetting. 

We also proposed changes to the status 

indicators for some procedure codes 

that were not specifically and separately 

discussed in the proposed rule. In these 

cases, we proposed to change the status 

indicators for these procedure codes 

because we believe that another status 

indicator would more accurately 

describe their payment status from an 

OPPS perspective based on the policies 

that we proposed for CY 2015. In 

addition, we proposed to rename 

existing APCs or create new clinical 

APCs to complement the proposed 

procedure code reassignments. 

Addendum B to the CY 2015 OPPS/ASC 


tkelley on DSK3SPTVN1PROD with RULES2
66846 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

proposed rule identified with a 

comment indicator ‘‘CH’’ those 

procedure codes for which we proposed 

a change to the APC assignment or 

status indicator, or both, that were 

initially assigned in the April 2014 

Addendum B Update (available via the 

Internet on the CMS Web site at: http:// 

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

HospitalOutpatientPPS/index.html). In 

contrast, Addendum B to this final rule 

with comment period (available via the 

Internet on the CMS Web site) identifies 

with the ‘‘CH’’ comment indicator the 

final CY 2015 changes compared to the 

HCPCS codes’ status as reflected in the 

October 2014 Addendum B update. 

3. Exceptions to the 2 Times Rule 

As discussed earlier, we may make 

exceptions to the 2 times rule limit on 

the variation of costs within each APC 

group in unusual cases such as lowvolume items and services. Taking into 

account the APC changes that we 

proposed for CY 2015, we reviewed all 

of the APCs to determine which APCs 

would not meet the requirements of the 

2 times rule. We used the following 

criteria to evaluate whether to propose 

exceptions to the 2 times rule for 

affected APCs: 

• Resource homogeneity; 

• Clinical homogeneity; 

• Hospital outpatient setting 

utilization; 

• Frequency of service (volume); and 

• Opportunity for upcoding and code 

fragments. 

Based on the CY 2013 claims data 

available for the CY 2015 OPPS/ASC 

proposed rule, we found 9 APCs with 

violations of the 2 times rule. We 

applied the criteria as described above 

to identify the APCs that we proposed 

to make exceptions for under the 2 

times rule for CY 2015, and identified 

9 APCs that met the criteria for an 

exception to the 2 times rule based on 

the CY 2013 claims data available for 

the proposed rule. We did not include 

in that determination those APCs where 

a 2 times rule violation was not a 

relevant concept, such as APC 0375 

(Ancillary Outpatient Services when 

Patient Expires), which has an APC cost 

set based on multiple procedure claims. 

Therefore, we only identified those 

APCs, including those with criteriabased costs, such as device-dependent 

APCs, with violations of the 2 times 

rule. For a detailed discussion of these 

criteria, we refer readers to the April 7, 

2000 OPPS final rule with comment 

period (65 FR 18457 and 18458). 

We note that, for cases in which a 

recommendation by the Panel appears 

to result in or allow a violation of the 

2 times rule, we generally accept the 

Panel’s recommendation because those 

recommendations are based on explicit 

consideration (that is, a review of the 

latest OPPS claims data and group 

discussion of the issue) of resource use, 

clinical homogeneity, site of service, 

and the quality of the claims data used 

to determine the APC payment rates. 

Table 18 of the proposed rule (79 FR 

40981) listed the 9 APCs that we 

proposed to make exceptions for under 

the 2 times rule for CY 2015 based on 

the criteria cited above and claims data 

submitted between January 1, 2013, and 

December 31, 2013, and processed on or 

before December 31, 2013. For the final 

rule with comment period, we stated 

that we intend to use claims data for 

dates of service between January 1, 

2013, and December 31, 2013, that were 

processed on or before June 30, 2014, 

and updated CCRs, if available. 

Therefore, after considering the public 

comments we received on the CY 2015 

OPPS/ASC proposed rule and making 

changes to APC assignments based on 

those comments, we analyzed the CY 

2013 claims data used for this final rule 

with comment period to identify the 

APCs with violations of the 2 times rule. 

Based on the final CY 2013 claims data, 

we found 12 APCs with violations of the 

2 times rule for this final rule with 

comment period, which is 3 more APCs 

that violated the 2 times rule compared 

to those indicated in the proposed rule. 

We applied the criteria as described 

earlier to identify the APCs that are 

exceptions to the 2 times rule for CY 

2015, and identified three new APCs 

that meet the criteria for exception to 

the 2 times rule for this final rule with 

comment period, but that did not meet 

the criteria using proposed rule claims 

data. Specifically, we found that the 

following three new APCs violated the 

2 times rule: 

• APC 0095 (Cardiac Rehabilitation); 

• APC 0388 (Discography); and 

• APC 0420 (Level III Minor 

Procedures). 

After consideration of the public 

comments we received and our review 

of the CY 2013 costs from hospital 

claims and cost report data available for 

this final rule with comment period, we 

are finalizing our proposals with some 

modifications. Specifically, we are 

finalizing our proposal to except 7 of the 

9 proposed APCs from the 2 times rule 

for CY 2015: APCs 0057, 0066, 0330, 

0433, 0450, 0634, and 0661. In contrast, 

we are not finalizing our proposal to 

except 2 of the 9 proposed APCs from 

the 2 times rule: APC 0012 (Level I 

Debridement & Destruction) and APC 

0015 (Level II Debridement & 

Destruction). Our data analysis for this 

final rule with comment period revealed 

that these two APCs no longer violate 

the 2 times rule. Table 19 below lists 10 

APCs that we are excepting from the 2 

times rule for CY 2015 based on the 

criteria above and a review of updated 

claims data. We note that, for cases in 

which a recommendation by the HOP 

Panel appears to result in or allow a 

violation of the 2 times rule, we 

generally accept the Panel’s 

recommendation because those 

recommendations are based on explicit 

consideration of resource use, clinical 

homogeneity, site of service, and the 

quality of the claims data used to 

determine the APC payment rates. The 

geometric mean costs for hospital 

outpatient services for these and all 

other APCs that were used in the 

development of this final rule with 

comment period can be found on the 

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

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

Hospital-Outpatient-Regulations-andNotices.html. 

TABLE 19—FINAL APC EXCEPTIONS

TO THE 2 TIMES RULE FOR CY 2015 

CY 2015 

APC CY 2015 APC Title 

0057 ....... Bunion Procedures. 

0066 ....... Level V Radiation Therapy. 

0095 ....... Cardiac Rehabilitation. 

0330 ....... Dental Procedures. 

0388 ....... Discography. 

0420 ....... Level III Minor Procedures. 

0433 ....... Level II Pathology. 

0450 ....... Level I Minor Procedures. 

0634 ....... Hospital Clinic Visits. 

0661 ....... Level III Pathology. 

The final costs for hospital outpatient 

services for these and all other APCs 

that were used in the development of 

this final rule with comment period can 

be found on the CMS Web site at: 

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

Medicare-Fee-for-Service-Payment/

HospitalOutpatientPPS/index.html. 

C. OPPS APC-Specific Policies 

1. Cardiovascular and Vascular Services: 

Cardiac Telemetry (APC 0213) 

For CY 2015, we proposed to reassign 

CPT code 93229 (External mobile 

cardiovascular telemetry with 

electrocardiographic recording, 

concurrent computerized real time data 

analysis and greater than 24 hours of 

accessible ECG data storage (retrievable 

with query) with ECG triggered and 

patient selected events transmitted to a 

remote attended surveillance center for 

up to 30 days; technical support for 

connection and patient instructions for 

use, attended surveillance, analysis and 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66847 

transmission of daily and emergent data 

reports as prescribed by a physician or 

other qualified health care professional) 

from APC 0209 (Level II Extended EEG, 

Sleep, and Cardiovascular Studies), 

with a proposed rule payment rate of 

approximately $239 to APC 0213 (Level 

I Extended EEG, Sleep, and 

Cardiovascular Studies), with a 

proposed payment rate of approximately 

$175. 

Comment: One commenter opposed 

CMS’ proposal to reassign CPT code 

93229 to APC 0213 and stated that the 

hospital costs used to set the CY 2015 

proposed payment rate is based on 

faulty claims data, which include 

miscoded claims reporting the service 

submitted by hospitals. The commenter 

indicated that based on its internal 

analysis of the CY 2013 hospital claims 

data, which were used as the basis for 

the CY 2015 proposed APC 

reassignment, several hospitals reported 

costs of under $100 for the procedure 

described by CPT code 93229. The 

commenter stated that the service 

described by CPT code 93229 involves 

the use of sophisticated technology 

requiring attended surveillance on a 24- 

hour, 7 days a week basis by a 

technician for up to 30 days. According 

to the commenter, this particular service 

requires resources that are greater than 

$100. The commenter further explained 

that the service described by CPT code 

93229 requires up to 30 days of 

electrocardiogram (ECG) monitoring 

through an external device worn by the 

patient at home that captures, stores, 

and transmits ECG data in real-time 

through wireless technology to a 

receiving or monitoring center (the 

hospital outpatient facility). These data 

are then reviewed by certified cardiac 

technicians and the ordering physician 

is provided with daily reports. The 

commenter added that this procedure is 

performed primarily (approximately 90 

percent of the time) by independent 

diagnostic testing facilities (IDTFs) and 

infrequently performed by hospitals, 

typically under arrangements with 

IDTFs. The commenter believed that the 

CY 2015 proposed payment rate of 

approximately $175 for APC 0213 is 

significantly lower than the CY 2014 

MPFS payment rate of $669. The 

commenter stated that the actual cost of 

providing the service is approximately 

$795. Therefore, the commenter 

recommended that CMS either reassign 

CPT code 93229 to APC 0435 (Level III 

Extended EEG, Sleep, and 

Cardiovascular Studies), which has a 

proposed payment rate of approximately 

$853, or establish a new APC for 

outpatient cardiac telemetry services 

that accurately reflects the costs 

associated with providing this service. 

Response: CPT code 93229 became 

effective January 1, 2009. We believe 

that 5 years is sufficient time to 

understand what procedure CPT code 

93229 describes and how to 

appropriately report this service on 

hospital claims. Based on our analysis 

of the CY 2013 hospital outpatient 

claims data used for this final rule with 

comment period, we are unable to 

determine whether hospitals are 

miscoding the claims reporting this 

service. For all APCs whose payment 

rates are based upon relative payment 

weights, we note that the quality and 

accuracy of reported units and charges 

influence the geometric mean costs that 

are the basis for our payment rates, 

especially the geometric mean costs for 

low volume items and services. Beyond 

our standard OPPS trimming 

methodology (described in section 

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

period) that we apply to those claims 

that have passed various types of claims 

processing edits, it is not our general 

policy to determine the accuracy of 

hospital coding and charging practices 

for the purposes of ratesetting (75 FR 

71838). We rely on hospitals to 

accurately report all of the services 

provided to beneficiaries using the 

established HCPCS and CPT codes that 

appropriately describe the procedures 

performed in accordance with their 

code descriptors and the CPT Editorial 

Panel’s and CMS’ instructions, as 

applicable, and to include these charges 

and costs on their Medicare hospital 

cost report appropriately. In addition, 

we do not specify the methodologies 

that hospitals must use to set charges for 

this or any other service. 

We recognize that the MPFS pays 

separately for CPT code 93229. 

However, the MPFS and the OPPS are 

very different payment systems. Each 

system is established under a different 

set of statutory and regulatory 

principles, and the policies established 

under the MPFS do not necessarily 

affect the payment policies under the 

OPPS. Moreover, we do not agree with 

the commenter that CPT code 93229 

should be reassigned to APC 0435. 

Based on the claims data available for 

this final rule with comment period, we 

believe that APC 0213 is the most 

appropriate APC to reassign CPT code 

93229 based on the clinical 

homogeneity and resource costs in 

relation to the other procedures 

assigned to this APC. Our analysis of the 

latest hospital outpatient CY 2013 

claims data shows a final geometric 

mean cost of approximately $105 for 

CPT code 93229 based on 3,505 single 

claims (out of 3,579 total claims), which 

is not inconsistent with the geometric 

mean cost of approximately $183 for 

APC 0213, which is the lowest cost APC 

in the extended EEG, sleep, and 

cardiovascular studies series of APCs. 

In response to the commenter’s 

concern regarding miscoding of hospital 

claims reporting the service described 

by CPT code 93229, we remind 

hospitals that CPT code 93229 is not the 

appropriate procedure code to use to 

report Holter monitoring (CPT codes 

93224 through 93227), or event 

monitoring (CPT codes 93268 through 

93278) procedures. CPT code 93229 

should be used to report continuous 

outpatient cardiovascular monitoring 

that includes up to 30 consecutive days 

of real-time cardiac monitoring. In 

particular, the 2014 CPT Code Book 

describes the procedure described by 

CPT code 93229 as a mobile 

cardiovascular telemetry service and 

defines it as: 

‘‘Mobile cardiovascular telemetry 

(MCT): Continuously records the 

electrocardiographic rhythm from 

external electrodes placed on the 

patient’s body. Segments of the ECG 

data are automatically (without patient 

intervention) transmitted to a remote 

surveillance location by cellular or 

landline telephone signal. The segments 

of the rhythm, selected for transmission, 

are triggered automatically (MCT device 

algorithm) by rapid and slow heart rates 

or by the patient during a symptomatic 

episode. There is continuous real time 

data analysis by preprogrammed 

algorithms in the device and attended 

surveillance of the transmitted rhythm 

segments by a surveillance center 

technician to evaluate any arrhythmias 

and to determine signal quality. The 

surveillance center technician reviews 

the data and notifies the physician or 

other qualified health care professional 

depending on the prescribed criteria’’ 

(2014 CPT Professional Edition; page 

549). 

We expect that hospitals would only 

report CPT code 93229 on hospital 

claims for providing the mobile 

telemetry service that is described 

above. 

In summary, after consideration of the 

public comment we received, we are 

finalizing our CY 2015 proposal, 

without modification, to reassign CPT 

code 93229 to APC 0213 for CY 2015. 

Consistent with our policy of reviewing 

APC assignments annually, we will 

reevaluate the cost of CPT code 93229 

and its APC assignment for the CY 2016 

rulemaking. 


tkelley on DSK3SPTVN1PROD with RULES2
66848 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

2. Gastrointestinal (GI) Services: Upper 

GI Procedures (APCs 0142, 0361, 0419, 

and 0422) 

In the CY 2014 OPPS/ASC final rule 

with comment period, we assigned CPT 

codes 43211 (Esophagoscopy, flexible 

transoral; with endoscopic mucosal 

resection), and 43254 

(Esophagogastroduodenoscopy, flexible, 

transoral; with endoscopic mucosal 

resection) to APC 0141 (Level I Upper 

GI Procedures) on an interim basis. In 

addition, we assigned CPT code 43240 

(Upper gastrointestinal endoscopy 

including esophagus, stomach, and 

either the duodenum and/or jejunum as 

appropriate; with transmural drainage of 

pseudocyst) to APC 0419 (Level II 

Upper GI Procedures), CPT code 91035 

(Esophagus, gastroesophageal reflux 

test; with mucosal attached telemetry ph 

electrode placement, recording, analysis 

and interpretation) to APC 0361 (Level 

II Alimentary Tests), and CPT code 

0355T (Gastrointestinal tract imaging, 

intraluminal (eg, capsule endoscopy), 

colon, with interpretation and report) to 

APC 0142 (Level I Small Intestine 

Endoscopy). 

For CY 2015, we proposed to reassign 

CPT codes 43211 and 43254 from APC 

0141 to APC 0419. We also proposed to 

continue to assign CPT code 43240 to 

APC 0419; CPT code 91035 to APC 

0361; and CPT code 0355T to APC 0142. 

Comment: Several commenters 

requested that CMS reassign CPT codes 

43211 and 43254 from APC 0141 to APC 

0419 in response to the CY 2014 OPPS/ 

ASC final rule with comment period. 

The commenters believed that the 

reassignment would be consistent with 

the resource and clinical homogeneity 

principles used to assign services to 

appropriate classification groupings. In 

response to the CY 2015 OPPS/ASC 

proposed rule, the same commenters 

supported CMS’ proposal to reassign 

CPT codes 43211 and 43254 to APC 

0419 for the CY 2015 OPPS update, and 

applauded CMS for considering the 

suggestions made in response to the 

commenters’ concerns. One commenter 

requested that CMS consider reassigning 

CPT codes 43211 and 43254 from APC 

0141 to APC 0422 (Level III Upper GI 

Procedures) instead of from APC 0141 to 

APC 0419 as proposed. Based on an 

analysis of the CY 2013 OPPS claims 

data performed by the commenter, the 

commenter believed that the geometric 

mean costs associated with endoscopic 

mucosal resection (EMR) procedures are 

more closely aligned with the geometric 

mean cost of APC 0422 than APC 0419. 

Response: EMR CPT codes 43211 and 

43254 became effective January 1, 2014. 

As with all new codes, our policy has 

been to assign the service to an APC 

based on input from a variety of sources, 

including but not limited to, a review of 

the clinical similarity of the service in 

comparison to existing procedures; 

input from CMS medical advisors; 

information from interested specialty 

societies; and a review of all other 

information available to us. Based on 

the complexity of these procedures and 

input from our medical advisors, we 

believe that APC 0419 appropriately 

reflects the clinical homogeneity and 

resource costs associated with 

performing EMR procedures. Therefore, 

after consideration of the public 

comments we received, we are 

finalizing our CY 2015 proposal, 

without modification, to reassign CPT 

codes 43211 and 43254 from APC 0141 

to APC 0419 for the CY 2015 OPPS 

update. As we do every year, we will 

review our claims data for these services 

for the CY 2016 OPPS rulemaking. 

Comment: Several commenters 

expressed concern with CMS’ proposal 

to continue to assign CPT code 43240 to 

APC 0419, and requested that CMS 

reassign the CPT code to APC 0384 (GI 

Procedures with Stents) based on the 

clinical similarity of the service to other 

procedures assigned to this APC. 

Response: Based on our analysis of 

the latest hospital outpatient claims data 

used for this final rule with comment 

period, we agree with the commenters 

that a more appropriate APC 

reassignment is necessary for CPT code 

43240. However, we believe that the 

most appropriate APC reassignment is 

APC 0422 (Level III Upper GI 

Procedures) rather than APC 0384. Our 

claims data show a geometric mean cost 

of approximately $1,574 for CPT code 

43240 based on 44 single claims (out of 

142 total claims), which is more 

comparable to the geometric mean cost 

of approximately $1,987 for APC 0422 

than to the geometric mean cost of 

approximately $3,294 for APC 0384. 

Therefore, after consideration of the 

public comments we received, we are 

modifying our proposal regarding the 

APC reassignment of CPT code 43240. 

Specifically, we are reassigning CPT 

code 43240 from APC 0419 to APC 0422 

for CY 2015. 

Comment: Several commenters 

expressed concern regarding the 

inadequate payment rate for CPT code 

91035 under Medicare’s ASC payment 

system, and requested that CMS 

reassign CPT code 91035 from APC 

0361 to APC 0142 as a means to increase 

the payment rate in the ASC setting. The 

commenters noted that APC 0142 

includes other capsule-based 

procedures that are clinically similar to 

the procedure described by CPT code 

91035, such as the procedure described 

by CPT code 91112 (Gastrointestinal 

transit and pressure measurement, 

stomach through colon, wireless 

capsule, with interpretation and report). 

The commenters further explained that 

the procedures described by CPT codes 

91035 and 91112 both involve the use 

of a capsule to collect pH and other data 

from the patient’s gastrointestinal tract 

over a period of several days. 

Response: Based on our analysis of 

the latest hospital outpatient claims data 

used for this final rule with comment 

period, we believe that CPT code 91035 

is appropriately assigned to APC 0361 to 

ensure adequate payment for the service 

in any hospital outpatient setting. Our 

claims data show a geometric mean cost 

of approximately $466 for CPT code 

91035 based on 1,272 single claims (out 

of 5,099 total claims), while claims data 

for CPT code 91112 show a geometric 

mean cost of approximately $774 based 

on 353 single claims (out of 412 total 

claims). The geometric mean cost of 

APC 0361 is approximately $341 and 

the geometric mean cost of APC 0142 is 

approximately $884, which is almost 

twice the geometric cost of CPT code 

91035. In addition, assigning CPT code 

91035 to APC 0142 would create a 

violation of the 2 times rule within APC 

0142 because the geometric mean cost of 

the highest cost significant procedure 

assigned to APC 0142 (CPT code 44361, 

with a geometric mean cost of 

approximately $1,019) is 2.2 times the 

geometric mean cost of CPT code 91035. 

Therefore, APC 0142 would not be an 

appropriate assignment for CPT code 

91035. We are finalizing our CY 2015 

proposal to continue to assign CPT code 

91035 to APC 0361. 

Comment: In response to the CY 2014 

OPPS/ASC final rule with comment 

period, several commenters requested 

that CMS assign CPT code 0355T, which 

became effective July 1, 2014, to APC 

0142 for the CY 2015 OPPS update. The 

commenters believed that the procedure 

described by CPT code 0355T is similar 

to the procedures described by existing 

GI capsule endoscopy CPT codes 91110 

(Gastrointestinal tract imaging, 

intraluminal (eg, capsule endoscopy), 

esophagus through ileum, with 

interpretation and report), 91111 

(Gastrointestinal tract imaging, 

intraluminal (eg, capsule endoscopy), 

esophagus with interpretation and 

report), and 91112 (Gastrointestinal 

transit and pressure measurement, 

stomach through colon, wireless 

capsule, with interpretation and report), 

which are all assigned to APC 0142. 

Response: As published in Table 17 of 

the CY 2015 OPPS/ASC proposed rule 

(79 FR 40976), we proposed to continue 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66849 

to assign this new code to APC 0142. 

We agree with the commenters that GI 

endoscopy CPT codes 0355T, 91110, 

91111, and 91112 are clinically similar. 

Therefore, we are finalizing our CY 2015 

proposal, without modification, to 

continue to assign CPT code 0355T to 

APC 0142, As a result, all four GI 

endoscopy procedures described by CPT 

codes 0355T, 91110, 91111, and 91112 

will be assigned to APC 0142 for the CY 

2015 OPPS update. 

We remind hospitals that because the 

payment rates associated with new 

codes that become effective July 1 are 

not available to us in time for 

incorporation into the Addenda to the 

proposed rule, the Level II HCPCS codes 

and the Category III CPT codes 

implemented through the July 2014 

OPPS quarterly update CR were not 

included in Addendum B to the 

proposed rule (which is available via 

the Internet on the CMS Web site). 

However, we listed the codes and their 

proposed APC assignments in the 

preamble of the proposed rule. 

The final CY 2015 payment rate for all 

of the CPT codes discussed can be 

found in Addendum B to this CY 2015 

OPPS/ASC final rule with comment 

period (which is available via the 

Internet on the CMS Web site). 

3. Genitourinary Services 

a. Gynecologic Procedures (APCs 0188, 

0189, 0192, 0193, and 0202) 

For the CY 2014 OPPS update, we 

made several changes to specific APC 

assignments, which included the female 

reproductive APCs; APC 0192, APC 

0193, and APC 0195. These proposed 

changes were listed in Addendum B to 

the CY 2014 OPPS/ASC proposed rule 

(which is available via the Internet on 

the CMS Web site). With respect to 

these three APCs, based on claims data 

available for the CY 2014 OPPS/ASC 

proposed rule, only APC 0193 showed 

a violation of the 2 times rule. We note 

that, under the OPPS, we may make 

exceptions to the 2 times rule based on 

the variation of costs within each APC 

group in unusual cases such as lowvolume items and services. In the case 

of APC 0193, we believed that it was 

necessary to make an exception to the 

2 times rule for the CY 2014 OPPS 

update because this APC sufficiently 

reflected the clinical and resource 

coherence of the Level V female 

reproductive procedures. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40982), we discussed our 

proposal to make further changes to the 

existing female reproductive APCs; APC 

0188, APC 0189, APC 0191, APC 0192, 

APC 0193, APC 0195, and APC 0202 

based on a presentation made at the 

March 10, 2014 Panel meeting. 

Specifically, one presenter expressed 

concern regarding the reassignment of 

the female reproductive procedures 

within existing APCs 0192 (Level IV 

Female Reproductive Procedures), 0193 

(Level V Female Reproductive 

Procedures), and 0195 (Level VI Female 

Reproductive Procedures) that became 

effective with the CY 2014 OPPS 

update. The presenter stated that the 

proposed changes would compromise 

beneficiary access to pelvic floor repair 

procedures, and urged the Panel to 

request that CMS reconsider its 

packaging policy for the procedures 

assigned to APCs 0193 and 0195 and 

allow stakeholders the opportunity to 

work with CMS to appropriately 

reassign these procedures to accurately 

account for the clinical complexity 

associated with providing these 

services. In addition, the presenter 

requested that CMS delay the 

conversion of existing APC 0202 (Level 

VII Female Reproductive Procedures) to 

a C–APC to allow for further study of 

the complexity of pelvic floor repair 

procedures. After review of the 

information provided by the presenter 

and examination of the hospital 

outpatient claims data available for the 

CY 2015 OPPS/ASC proposed rule, the 

Panel did not make any 

recommendations regarding any of the 

female reproductive APCs. 

For the CY 2015 OPPS update, based 

on our review of the latest hospital 

outpatient claims data available for the 

CY 2015 OPPS/ASC proposed rule, 

there were no violations of the 2 times 

rule within any of the female 

reproductive APCs (79 FR 40982). 

However, we proposed to restructure 

the female reproductive APCs to more 

appropriately reflect the resource and 

clinical characteristics of the procedures 

assigned to each APC. The proposed 

restructuring resulted in the use of five 

APCs for the CY 2015 OPPS update, as 

compared to the seven APCs used for 

the CY 2014 OPPS update. We believe 

that the proposed five-level APC 

structure will provide more accurate 

payments for the female reproductive 

procedures furnished to Medicare 

beneficiaries. 

Tables 21 and 22 of the proposed rule 

(79 FR 40983) showed the current CY 

2014 and proposed CY 2015 female 

reproductive APCs. Specifically, Table 

21 showed the female reproductive 

APCs, APC titles, and their status 

indicator assignments for CY 2014, 

while Table 22 showed the proposed 

female reproductive APCs, APC titles, 

and their status indicator assignments 

for CY 2015. In the proposed rule, we 

noted that one of the five levels of the 

female reproductive APCs, APC 0202, is 

proposed to be converted to a C–APC. 

We refer readers to section II.A.2.e. of 

this final rule with comment period for 

further discussion of our comprehensive 

APC policy. 

In addition, for CY 2015, we proposed 

to consolidate the two existing 

hysteroscopy APCs; APC 0190 (Level I 

Hysteroscopy) and APC 0387 (Level II 

Hysteroscopy). Specifically, we 

proposed to delete APC 0387 and to 

reassign the procedures currently 

assigned to this APC to APC 0190. In 

conjunction with this proposed 

reassignment, we proposed to rename 

APC 0190 from ‘‘Level II Hysteroscopy’’ 

to ‘‘Hysteroscopy.’’ Based on the 

hospital outpatient claims data available 

for the CY 2015 OPPS/ASC proposed 

rule, we believe that the two-leveled 

structure of the hysteroscopy APCs is no 

longer necessary because the singleleveled hysteroscopy APC sufficiently 

reflects the resources and clinical 

similarities of all the hysteroscopic 

procedures. We note that, for CY 2014, 

the payment rates for APCs 0190 and 

0387 are $1,763 and $2,818, 

respectively. For CY 2015, the proposed 

payment rate for APC 0190 was 

approximately $2,014. 

Comment: Many commenters 

supported CMS’ proposal to reassign 

several of the female reproductive 

procedures to APC 0202 and stated that 

the proposed restructuring of these 

APCs more appropriately reflects 

clinical and resource homogeneity 

among similar procedures. 

Response: We appreciate the 

commenters’ support. 

Comment: Some commenters opposed 

CMS’ proposal to reassign CPT code 

57155 (Insertion of uterine tandem and/ 

or vaginal ovoids for clinical 

brachytherapy) from APC 0193 (Level IV 

Female Reproductive Procedures) to 

APC 0192 (Level III Female 

Reproductive Procedures) for the CY 

2015 OPPS update. According to the 

commenters, the proposed CY 2015 

OPPS payment rate of approximately 

$501 for CPT code 57155 is significantly 

lower than the CY 2014 OPPS payment 

rate of approximately $1,375, which 

represents a 63-percent reduction in the 

payment for this service. The 

commenters noted that the APC 

assignment for this procedure has varied 

between APC 0192 and APC 0193 since 

the inception of the code, and 

recommended that CMS reexamine the 

procedures assigned to APCs 0192, 

0193, and 0202 to ensure that the 

proposed structure of these APCs 

provides the most appropriate payment 

for the services assigned to each APC. 


tkelley on DSK3SPTVN1PROD with RULES2
66850 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

Some commenters requested that CMS 

continue to assign CPT code 57155 to 

APC 0193 for the CY 2015 update. The 

commenters also recommended that 

CMS closely monitor medical practice 

patterns to ensure beneficiary access to 

this treatment if CMS finalizes the 

proposal to reassign CPT code 57155 to 

APC 0192. 

Response: CPT code 57155 became 

effective January 1, 2002. Since that 

time, CPT code 57155 has been assigned 

to either APC 0192 or APC 0193. For 

CYs 2002, 2003, and 2006 through 2013, 

CPT code 57155 was assigned to APC 

0192. For CYs 2004, 2005, and 2014, 

CPT code 57155 was assigned to APC 

0193. Consistent with CMS’ statutory 

requirement under section 1833(t)(9) of 

the Act to review and revise APC 

assignments annually and to construct 

the most appropriate APC groupings as 

well as, to the extent desirable, correct 

any 2 times rule violations, we 

evaluated the resource consumption and 

clinical coherence associated with the 

female reproductive APCs for the CY 

2015 OPPS update. Based on an analysis 

of the latest hospital outpatient claims 

data for this final rule with comment 

period, CPT code 57155 has a geometric 

mean cost of approximately $731 based 

on 858 single claims (out of 2,461 total 

claims). The geometric mean costs for 

the significant procedures assigned to 

APC 0192 range between approximately 

$398 (for CPT code 56605) and $731 (for 

CPT code 57155). Therefore, we believe 

that CPT code 57155 is appropriately 

assigned to APC 0192 based on the 

comparable resource costs associated 

with the other procedures assigned to 

this APC and are not making any 

changes to our proposal for this final 

rule with comment period. We note that 

APC 0192 had a proposed payment rate 

of approximately $501, which was 

based on hospital outpatient claims data 

submitted between January 1, 2013, and 

December 31, 2013, and processed on or 

before December 31, 2013. For this final 

rule with comment period, the final 

payment rate for APC 0192 is 

approximately $487, which is based on 

hospital outpatient claims data 

submitted between January 1, 2013, and 

December 31, 2013, and processed on or 

before June 30, 2014. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to reassign CPT code 

57155 from APC 0193 to APC 0192 for 

CY 2015. 

Comment: Several commenters 

requested that CMS not finalize the 

proposal to consolidate the two existing 

hysteroscopy APCs. Instead, the 

commenters suggested that CMS 

maintain the two-leveled structure of 

the hysteroscopy APCs to differentiate 

the less costly diagnostic hysteroscopic 

services from the more resourceintensive hysteroscopic procedures. One 

commenter stated that the 

reconfiguration of these APCs for CY 

2015 is premature and warrants more 

discussion prior to finalizing a proposal 

regarding this issue. Another 

commenter believed that it is not 

clinically coherent to combine the 

diagnostic hysteroscopy procedure 

described by CPT code 58555 with a 

significant therapeutic procedure, such 

as a hysteroscopic myomectomy 

described by CPT code 58561. The 

commenter explained that all of the 

gynecology specialty societies 

recommend minimally invasive 

alternatives to hysterectomy when 

available. In addition, the commenter 

believed that the proposal to consolidate 

the hysteroscopy APCs would provide 

incentives for hospitals to encourage 

treatment that is not the standard of 

care. 

Response: Based on a review of the 

latest hospital outpatient claims data for 

the CY 2015 OPPS update, we believe 

that restructuring and consolidating the 

gynecology APCs is prudent in order to 

improve the comparability of resource 

and clinical similarity of all the 

hysteroscopy procedures assigned to a 

specific APC. In addition, we disagree 

with the commenter’s assertion 

regarding hospitals’ incentives to 

deliver substandard care for the 

purposes of financial gain. We believe 

that hospitals and physicians will offer 

their patients the appropriate care and 

treatment, which may or may not 

employ an expensive medical device. 

Comment: Several commenters 

suggested that modifications to the 

proposed APC assignments for certain 

related procedures be considered if CMS 

finalizes the proposal to restructure and 

consolidate the female reproductive 

APCs. One commenter suggested that 

CMS reassign CPT codes 58561 and 

58563 to APC 0202 instead of APC 0190 

based on the clinical similarities in 

relation to the other procedures 

assigned to APC 0202. 

Response: Based on input from our 

medical advisors, we agree with the 

commenter that APC 0202 is the most 

appropriate APC assignment for CPT 

codes 58561 and 58563 based on their 

clinical similarity in relation to the 

other procedures assigned to this APC. 

We note that APC 0202 is designated as 

a C–APC for the CY 2015 OPPS update. 

Further information on C–APCs can be 

found in section II.A.2.e. of this final 

rule with comment period. 

Comment: One commenter suggested 

that CMS reconsider the proposal to 

consolidate the hysteroscopy APCs and 

establish two separate APCs for female 

reproductive procedures; one for the 

more resource-intensive hysteroscopic 

procedures and another for the lowercost and less complex hysteroscopic 

procedures. Specifically, the commenter 

recommended assigning the following 

seven resource-intensive female 

reproductive procedures to a higherpaying APC, with a geometric mean cost 

ranging between approximately $3,010 

and $4,350: CPT codes 58353, 58356, 

58561, 58563, 58565, 58559, and 58560. 

The commenter also suggested assigning 

the following four less complex female 

reproductive procedures to a lowerpaying APC, with a geometric mean cost 

ranging between approximately $1,758 

and $2,099: CPT codes 58555, 58558, 

58562, and 58579. Another commenter 

believed that the necessary resources 

required to provide the service 

described by CPT code 58555 are 

significantly less than the resources 

required to provide the service 

described by CPT code 58561. The 

commenter stated that the resource costs 

for providing the services described by 

CPT codes 58353, 58561, 58563, and 

58565 are similar and recommended 

that these procedures be assigned to the 

same APC. 

Response: We reviewed our latest 

hospital outpatient claims data used for 

this final rule with comment period for 

all of the hysteroscopic procedures. 

Based on our review and after 

consideration of the public comments 

we received, we are modifying our 

proposal regarding the proposed APC 

assignments for several of the 

hysteroscopic procedures for the CY 

2015 OPPS update. Specifically, we are 

deleting APC 0190 and reassigning the 

eight procedures that were proposed to 

be assigned to this APC to APC 0188, 

APC 0193, or APC 0202. 

In summary, after consideration of the 

public comments received, we are 

finalizing our proposals with some 

modifications. For the hysteroscopy 

procedure APCs, we proposed to 

reassign all of the procedures assigned 

to APC 0387 to APC 0190, which 

resulted in a one-leveled APC 

containing all of the hysteroscopy 

procedures. Specifically, we proposed 

to delete APC 0387 (Level II 

Hysteroscopy), and to rename APC 0190 

‘‘Hysteroscopy.’’ However, based on our 

analysis of the hospital outpatient 

claims data available for this final rule 

with comment period, we are modifying 

our proposal. Instead, we are 

reassigning all of the hysteroscopy 

procedures that we proposed to assign 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66851 

to APC 0190 to one of the female 

reproductive APCs. That is, we are 

reassigning all of the procedures 

proposed for reassignment to APC 0190 

to APC 0188, APC 0193, or APC 0202. 

Consequently, with no procedures 

remaining in APC 0190, we deleted this 

APC for CY 2015. In addition, we are 

finalizing our proposal to restructure the 

female reproductive APCs to more 

appropriately reflect the resource and 

clinical characteristics of the procedures 

assigned to each APC. Specifically, we 

are finalizing our proposal to assign all 

of the female reproductive procedures to 

APCs 0188, 0189, 0192, 0193, or 0202. 

In addition, because of our revision to 

the hysteroscopy procedures APCs, we 

are revising the APC titles for the five 

female reproductive APCs; APC 0188, 

APC 0189, APC 0192, APC 0193, and 

APC 0202, from ‘‘Female Reproductive 

Procedures’’ to ‘‘Gynecologic 

Procedures’’ to more appropriately 

describe the procedures assigned to 

these APCs. Table 20 below lists the 

hysteroscopic procedures CPT codes, 

along with their long descriptors, 

proposed CY 2015 OPPS status 

indicators and APC assignments, as well 

as their final CY 2015 OPPS status 

indicators and APC assignments. Table 

21 below lists the final APC titles and 

status indicators for the gynecologic 

procedure APCs. The final CY 2015 

payment rates for the gynecologic 

procedures APCs, as well as the 

hysteroscopic procedures CPT codes 

listed in Table 21 can be found in 

Addendum B to this CY 2015 OPPS/

ASC final rule with comment period 

(which is available via the Internet on 

the CMS Web site). 

TABLE 20—FINAL CY 2015 APC ASSIGNMENTS FOR THE HYSTEROSCOPIC PROCEDURES

CPT Code Long descriptor 

Proposed 

CY 2015 

OPPS SI 

Proposed 

CY 2015 

OPPS APC 

Final 

CY 2015 

OPPS SI 

Final 

CY 2015 

OPPS APC 

58353 ........... Endometrial ablation, thermal, without hysteroscopic guidance ........... J1 0202 J1 0202 

58356 ........... Endometrial cryoablation with ultrasonic guidance, including 

endometrial curettage, when performed.

J1 0202 J1 0202 

58555 ........... Hysteroscopy, diagnostic (separate procedure) .................................... T 0190 T 0193 

58558 ........... Hysteroscopy, surgical; with sampling (biopsy) of endometrium and/or 

polypectomy, with or without d & c.

T 0190 T 0193 

58559 ........... Hysteroscopy, surgical; with lysis of intrauterine adhesions (any 

method).

T 0190 J1 0202 

58560 ........... Hysteroscopy, surgical; with division or resection of intrauterine septum (any method).T 0190 J1 0202 

58561 ........... Hysteroscopy, surgical; with removal of leiomyomata .......................... T 0190 J1 0202 

58562 ........... Hysteroscopy, surgical; with removal of impacted foreign body ........... T 0190 T 0193 

58563 ........... Hysteroscopy, surgical; with endometrial ablation (eg, endometrial resection, electrosurgical ablation, thermoablation).T 0190 J1 0202 

58565 ........... Hysteroscopy, surgical; with bilateral fallopian tube cannulation to induce occlusion by placement of permanent implants.J1 0202 J1 0202 

58579 ........... Unlisted hysteroscopy procedure, uterus .............................................. T 0190 T 0188 

TABLE 21—FINAL CY 2015 APC TITLES FOR GYNECOLOGIC PROCEDURES

CY 2015 APC Proposed CY 2015 APC title Final CY 2015 APC title 

Final CY 

2015 status 

indicator 

0188 ............. Level I Female Reproductive Procedures ...................... Level I Gynecologic Procedures ..................................... T 

0189 ............. Level II Female Reproductive Procedures ..................... Level II Gynecologic Procedures .................................... T 

0192 ............. Level III Female Reproductive Procedures .................... Level III Gynecologic Procedures ................................... T 

0193 ............. Level IV Female Reproductive Procedures .................... Level IV Gynecologic Procedures ................................... T 

0202 ............. Level V Female Reproductive Procedures ..................... Level V Gynecologic Procedures .................................... J1 

b. Cystourethroscopy, Transprostatic 

Implant Procedures, and Other 

Genitourinary Procedures (APCs 0160, 

0161, 0162, 0163, and 1564) 

For the CY 2015 OPPS update, based 

on our review of the latest hospital 

outpatient claims data available for the 

CY 2015 OPPS/ASC proposed rule, we 

proposed to restructure the APCs 

containing cystourethroscopy and other 

genitourinary procedures to more 

appropriately reflect the resource costs 

and clinical characteristics of the 

procedures assigned within each APC 

(79 FR 40987). We note that, for the CY 

2014 OPPS update, there are five levels 

of APCs that contain cystourethroscopy 

and genitourinary procedures. These 

APCs were listed in Table 26 of the CY 

2015 OPPS/ASC proposed rule (79 FR 

40986), along with their status indicator 

assignments for CY 2014. The proposed 

restructuring resulted in the use of four 

APCs for the CY 2015 OPPS update, as 

compared to the five APCs used for the 

CY 2014 OPPS update. Specifically, 

based on our review and evaluation of 

the procedures assigned to these APCs 

and the latest hospital outpatient claims 

data available, in the CY 2015 OPPS/

ASC proposed rule, we proposed to 

delete APC 0429 (Level V 

Cystourethroscopy and Other 

Genitourinary Procedures) and reassign 

the procedures that were previously 

assigned to this APC to either APC 0161 

(Level I Cystourethroscopy and Other 

Genitourinary Procedures) or APC 0163 

(Level IV Cystourethroscopy and Other 

Genitourinary Procedures). We believe 

that the procedures currently assigned 

to APC 0429 would be more 

appropriately assigned to either APC 

0161 or APC 0163 based on their 

geometric mean costs for the CY 2015 

OPPS update. Further, we believe that 

this proposed restructuring 

appropriately categorizes all of the 

cystourethroscopy and other 

genitourinary procedures that are 

comparable clinically and with respect 

to resource use within an APC group. 

We also proposed to delete APC 0169 

(Lithotripsy) because the one procedure, 


tkelley on DSK3SPTVN1PROD with RULES2
66852 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

specifically the procedure described by 

CPT code 50590 (Lithotripsy, 

extracorporeal shock wave), that was 

assigned to this APC was proposed for 

reassignment to APC 0163 (79 FR 

40987). Table 27 of the CY 2015 OPPS/ 

ASC proposed rule (79 FR 40987) listed 

the proposed APCs that contain 

cystourethroscopy and other 

genitourinary procedures, the APC 

titles, and the proposed status indicator 

assignments for CY 2015. The proposed 

payment rates for the specific APCs 

listed in Table 27 were listed in 

Addendum A to the proposed rule. The 

proposed payment rates for the specific 

cystourethroscopy and other 

genitourinary procedure codes were 

listed in Addendum B to the proposed 

rule. (Addenda A and B to the proposed 

rule are available via the Internet on the 

CMS Web site.) 

Comment: Several commenters 

opposed CMS’ proposal to delete APC 

0169 and reassign the extracorporeal 

shock wave lithotripsy (ESWL) CPT 

code 50590 to APC 0163. The 

commenters noted that the procedure 

described by CPT code 50590 is 

classified as a noninvasive therapy and 

is not similar, clinically or with respect 

to resource costs, to the other more 

invasive surgical urological procedures 

that are proposed for assignment to APC 

0163. One commenter stated that the 

ESWL procedure does not involve the 

use of an endoscope and, therefore, 

should not be assigned to APC 0163. 

This commenter believed that the 

payment rate for APC 0163 would be 

influenced by dominating the claims 

data for CPT code 50590 because ESWL 

is a commonly performed procedure 

resulting in a significant high volume of 

single frequency claims. The commenter 

requested that CMS delay finalizing this 

proposal or, alternatively, reassign CPT 

code 50590 to APC 0162 (Level III 

Cystourethroscopy and Other 

Genitourinary Procedures) because this 

APC encompasses a broader and more 

diverse grouping of procedures than 

APC 0163. 

Response: As part of our standard 

annual OPPS update process, we review 

each APC assignment for the clinical 

similarity and resource homogeneity of 

the procedures assigned to each APC. 

An analysis of our latest hospital 

outpatient claims data available for this 

final rule with comment period revealed 

a geometric mean cost of approximately 

$3,094 based on 32,370 single claims 

(out of 44,816 total claims) for CPT code 

50590, which is comparable to the 

geometric mean cost of approximately 

$3,230 for APC 0163. The significant 

procedures assigned to APC 0163 have 

geometric mean costs ranging between 

$2,946 and $4,088. We do not agree 

with the commenters that APC 0162 is 

the more appropriate APC assignment 

because the geometric mean cost for this 

APC, approximately $2,163, is 

significantly lower than the geometric 

mean cost of approximately $3,094 for 

CPT code 50590. In addition, the 

geometric mean cost of APC 0163 (using 

proposed rule data) and without CPT 

code 50590 assigned to this APC was 

approximately $3,058, which is close to 

the final rule geometric mean cost of 

CPT code 50590 of $3,094. Although the 

ESWL procedure does not involve the 

use of an endoscope, we note that not 

every procedure proposed for 

reassignment, or ultimately reassigned, 

to APC 0163 uses an endoscope. In 

addition, we do not agree with the 

commenters that the ESWL procedure is 

not clinically similar to the other 

procedures assigned to APC 0163. There 

are no general rules for clinical 

similarity that apply to all APCs. 

Instead, the evaluation of clinical 

similarity depends upon the particular 

characteristics of the services being 

evaluated for a particular APC 

assignment. The use of single procedure 

APCs, like APC 0169, the APC to which 

CPT code 50590 is assigned for CY 

2014, generally is not considered 

appropriate under the OPPS because 

payment rates based on a single 

procedure code’s geometric mean cost is 

more consistent with a fee schedule 

than a prospective payment system. 

However, there are limited 

circumstances in which we assign a 

single procedure code to an APC; for 

example, the intraocular procedures 

assigned to an APC series. Specifically, 

APC 0673 (Level III Intraocular 

Procedures) has a geometric mean cost 

of approximately $3,239. APC 0293 

(Level IV Intraocular Procedures) is the 

next higher level APC in the intraocular 

procedures APC series, and it has a 

single procedure (CPT code 65770 

(Keratoprosthesis)) assigned to it, which 

has a geometric mean cost of 

approximately $8,766. The highest cost 

procedure assigned to APC 0673 is CPT 

code 67113 (Repair of complex retinal 

detachment), which has a geometric 

mean cost of approximately $4,065. The 

geometric mean cost of CPT code 65770 

is significantly higher, 2.2 times the 

geometric mean cost of CPT code 67113. 

Therefore, we assigned CPT code 65770 

to a different APC because the resource 

costs are not similar. Because the 

procedure described by CPT code 65770 

is an intraocular surgery and there are 

no other APCs that contain clinically 

similar procedures, we assigned CPT 

code 65770 to APC 0293 without any 

other procedures. Continuing in this 

series, we assigned CPT code 0308T 

(Insertion of intraocular telescope 

prosthesis including removal of 

crystalline lens) to APC 0351 (Level V 

Intraocular Procedures) without any 

other procedures. CPT code 0308T has 

a geometric mean cost of approximately 

$23,947, which is 2.73 times the 

geometric mean cost of the procedure 

described by CPT code 65770, which is 

assigned to APC 0293, which is one 

level lower than APC 0351 in the 

intraocular procedures APC series. CPT 

code 0308T is the only procedure code 

assigned to APC 0351 because there are 

no other procedures that are similar in 

terms of resource costs. We do not 

believe that similar APC series 

assignment is applicable to CPT code 

50590. Therefore, we proposed to 

reassign CPT code 50590 to APC 0163 

and delete APC 0169 (79 FR 40986 

through 40987). In summary, based on 

our review of the latest hospital 

outpatient claims data for this final rule 

with comment period, we believe that 

CPT code 50590 would be appropriately 

assigned to APC 0163 based on its 

clinical and resource similarity to the 

other procedures assigned to APC 0163, 

several of which are dedicated to kidney 

stone removal. Therefore, we are 

finalizing our proposal, without 

modification, to assign CPT code 50590 

to APC 0163 for CY 2015. 

Comment: One commenter requested 

that CMS not finalize the proposal to 

delete APC 0429, and suggested that 

CMS maintain this APC until data 

become available for CPT code 52356 

(Cystourethroscopy, with ureteroscopy 

and/or pyeloscopy; with lithotripsy 

including insertion of indwelling 

ureteral stent (eg., Gibbons or double-J 

type)), which became effective January 

1, 2014. 

Response: We believe that CPT code 

52356 is appropriately categorized by 

APC 0163 based on its similarity to the 

other procedures assigned to this APC. 

Because CPT code 52356 became 

effective January 1, 2014, we expect to 

have claims data for the procedure 

described by this code available for the 

CY 2016 OPPS rulemaking cycle. We 

note that, consistent with CMS’ policy 

of reviewing APC assignments annually 

in accordance with the statutory 

requirement, we will reevaluate the APC 

assignment for CPT code 52356 for the 

CY 2016 OPPS update. Therefore, after 

consideration of the public comment we 

received, we are finalizing our 

proposals, without modification, to 

delete APC 0429 and to assign CPT code 

52356 to APC 0163 for CY 2015. 

Comment: Some commenters 

disagreed with CMS’ proposal to 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66853 

reassign CPT code 55875 (Transperineal 

placement of needles or catheters into 

prostate for interstitial radioelement 

application, with or without cystoscopy) 

from APC 0163 to APC 0162. The 

commenters stated that the proposal 

would result in a 28-percent reduction 

in the payment for this service when the 

CY 2014 payment rate of approximately 

$2,905 for APC 0163 is compared to the 

CY 2015 proposed payment rate of 

approximately $2,091 for APC 0162. 

The commenters noted that CPT code 

55875 has been assigned to APC 0163 

since the code’s inception in CY 2007, 

and believed that the proposed payment 

rate for APC 0163 more accurately 

reflects the resources necessary to 

provide this service. The commenters 

urged CMS to maintain the APC 

assignment of CPT code 55875 to APC 

0163. 

Response: Analysis of our latest 

hospital claims data used for this final 

rule with comment period revealed a 

geometric mean cost of approximately 

$2,501 for CPT code 55875 based on 703 

single claims (out of 4,681 total claims), 

which is comparable to the geometric 

mean cost of approximately $2,163 for 

APC 0162. We do not agree with the 

commenters that APC 0163 is the more 

appropriate APC because its geometric 

mean cost of approximately $3,230 is 

significantly higher than the geometric 

mean cost of approximately $2,501 for 

CPT code 55875. We believe that CPT 

code 55875 is appropriately assigned to 

APC 0162 based on its clinical 

homogeneity and resource costs to the 

procedures currently assigned to this 

APC. Therefore, after consideration of 

the public comments we received, we 

are finalizing our proposal, without 

modification, to reassign CPT code 

55875 to APC 0162 for CY 2015. 

Comment: One commenter opposed 

CMS’ proposal to reassign CPT code 

53850 (Transurethral destruction of 

prostate tissue; by microwave 

thermotherapy) from APC 0429 to APC 

0161. The commenter stated that the CY 

2015 proposed payment rate for APC 

0161 is approximately $1,235, which is 

significantly lower than the CY 2014 

payment rate of approximately $3,304 

for APC 0429. The commenter suggested 

that CMS reassign CPT code 53850 to 

APC 0163, the APC to which CPT code 

53852 (Transurethral destruction of 

prostate tissue; by radiofrequency 

thermotherapy) is proposed to be 

reassigned. The commenter explained 

that both procedures are similar in 

clinical technique because both 

procedures use a thermal approach as 

an alternative to open prostatectomy or 

transurethral resection of the prostate 

for the treatment of benign prostatic 

hyperplasia (BPH). 

Response: As has been our practice 

since the implementation of the OPPS 

in 2000, we review, on an annual basis, 

the APC assignments for the procedures 

and services paid under the OPPS. 

Based on the latest hospital outpatient 

claims data used for this final rule with 

comment period, our analysis does not 

support the reassignment of CPT code 

53850 to APC 0163. Our analysis of the 

claims data shows a geometric mean 

cost of approximately $1,542 for CPT 

code 53850 based on 107 single claims 

(out of 142 total claims), which is 

relatively similar to the geometric mean 

cost of approximately $1,273 for APC 

0161. While we acknowledge that both 

procedures are similar, our analysis of 

the claims data shows that the resource 

costs of providing the procedure 

described by CPT code 53852 is 

significantly higher than the resource 

cost of providing the procedure 

described by CPT code 53850. 

Specifically, the geometric mean cost for 

CPT code 53852 is approximately 

$3,339 based on 98 single claims (out of 

156 total claims), which is comparable 

to the geometric mean cost of APC 0163 

of approximately $3,230. We do not 

agree with the commenters that APC 

0163 is the more appropriate APC 

assignment because its geometric mean 

cost is significantly higher than the 

geometric mean cost of CPT code 53850 

of approximately $1,542. We believe 

that CPT code 53850 would be 

appropriately assigned to APC 0161 

based on its clinical homogeneity and 

resource costs to the procedures 

currently assigned to this APC. 

Therefore, after consideration of the 

public comment we received, we are 

finalizing our proposal, without 

modification, to reassign CPT code 

53850 from APC 0429 to APC 0161 for 

CY 2015. 

In addition, effective April 1, 2014, 

we created HCPCS codes C9739 

(Cystourethroscopy, with insertion of 

transprostatic implant; 1 to 3 implants) 

and C9740 (Cystourethroscopy, with 

insertion of transprostatic implant; 4 or 

more implants) as a result of an 

application to assign the transprostatic 

implant procedures (TIPs) to a New 

Technology APC. We assigned HCPCS 

codes C9739 and C9740 to APCs 0162 

(Level III Cystourethroscopy and other 

Genitourinary Procedures) and 1564 

(New Technology—Level XXVII), 

respectively, based on the estimated 

costs of the procedures, which include 

1 to 3 implants in the case of procedures 

described by HCPCS code C9739, and 4 

or more implants in the case of 

procedures described by HCPCS code 

C9740. We based the number of 

implants for HCPCS codes C9739 and 

C9740 on the number of implant 

utilization data per patient that the New 

Technology applicant provided within 

its approved application. The CY 2014 

payment rates for APCs 0162 and 1564 

are $2,007.32 and $4,750.00, 

respectively. 

The AMA’s CPT Editorial Panel 

recently created two new codes for this 

technology, which become effective on 

January 1, 2015: CPT codes 52441 

(Cystourethroscopy, with insertion of 

permanent adjustable transprostatic 

implant; single implant) and 52442 

(Cystourethroscopy, with insertion of 

permanent adjustable transprostatic 

implant; each additional permanent 

adjustable transprostatic implant (List 

separately in addition to code for 

primary procedure)). 

Comment: One commenter stated that 

the TIPs described by HCPCS codes 

C9739 and C9740 do not receive 

adequate payment under the OPPS 

because of the code descriptors for these 

procedure codes as they relate to the 

number of implants allowed in each 

respective code (1 to 3 implants for 

HCPCS code C9739 and 4 or more 

implants for HCPCS code C9740), when 

categorized by the APCs in which these 

services are assigned. The commenter 

also believed that the TIPs are unable to 

be performed in the ASC setting because 

of the inadequate payment rate for the 

specific APCs. The commenter believed 

that the procedures described by HCPCS 

codes C9739 and C9740 are device 

dependent because a majority of the 

procedures’ costs are associated with 

the costs of the implants, with a mean 

of 4.9 implants per procedure. The 

commenter also believed that there is 

considerable variation in the number of 

implants used for each procedure. The 

commenter believed that the ASC 

payment is extremely low because the 

procedures are not designated as 

‘‘device intensive’’ in the ASC setting 

(that is, the procedures are not assigned 

to ASC payment indicator ‘‘J8’’), nor are 

the procedures assigned to a C–APC 

under the OPPS, which would most 

likely allow for the performance of the 

device-intensive treatment in the ASC 

setting, similar to most of the proposed 

C–APCs that are defined as deviceintensive APCs. The commenter stated 

that the proposed OPPS payments for 

HCPCS codes C9739 and C9740 are 

inadequate to cover both the costs of the 

number of implants required and the 

cost of the procedure. The commenter 

recommended several possible APC 

assignments to improve the payments 

for TIPs. The commenter recommended 

using new CPT codes 52441 and 52442 


tkelley on DSK3SPTVN1PROD with RULES2
66854 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

to report the TIPs under the OPPS, and 

assigning the procedures to C–APC 0385 

(Level I Urogenital Procedures) because 

the proposed payment rate for C–APC 

0385 of approximately $7,659 is 

comparable to the estimated cost of 

performing TIPs using 5 implants, 

which is approximately $7,519. The 

commenter’s second recommendation 

was to continue to report the 

performance of the TIPs using HCPCS 

codes C9739 and C9740, and to assign 

HCPCS code C9740 to APC 0385, as 

described previously, and HCPCS code 

C9739 to APC 0202 (Level V Female 

Reproductive Procedures) and remove 

‘‘Female’’ from the title of APC 0202. 

According to the commenter, the 

proposed payment for APC 0202 of 

approximately $4,366 is equivalent to 

the cost of a TIP using 2 or 3 implants. 

The commenter believed that because 

APC 0202 is designated as a C–APC, the 

ASC payment for the procedure would 

also prove to be adequate. The 

commenter’s third recommendation was 

to use new CPT codes 52441 and 52442 

to report TIPs and to assign the 

procedure codes to APC 0168 (Level II 

Urethral Procedures) on an interim basis 

until OPPS claims data are available for 

these codes. The commenter believed 

that the proposed payment rate for APC 

0168 of approximately $2,533 more 

appropriately equates to the cost of a 

single implant procedure described by 

CPT code 52441, while additional 

implant procedures described by CPT 

code 52442 would be paid at 50 percent, 

or approximately $1,267, because APC 

0168 is subject to the multiple 

procedure discount (that is, the APC is 

assigned to status indicator ‘‘T’’), which, 

the commenter claimed, more 

appropriately equates to the estimated 

cost of providing the procedure 

described by CPT code 52442 of 

approximately $1,248. However, the 

commenter noted that, because APC 

0168 is not a C–APC, payment for the 

procedure may not be designated as 

‘‘device intensive’’ to ensure adequate 

ASC payment. The commenter 

recommended that CMS consider any 

procedure that has device costs that are 

greater than 40 percent as device 

intensive. 

Response: We agree with the 

commenter that the cost of the implants 

associated with the procedures 

described by HCPCS codes C9739 and 

C9740 represents the majority of the 

costs of the procedures. We considered 

those costs and the variation in the 

number of implants per procedure when 

we created HCPCS codes C9739 and 

C9740 and assigned the procedure codes 

to APCs 0162 and 1564, respectively. 

We believe that HCPCS codes C9739 

and C9740 are preferable to the new 

CPT codes 52441 and 52442 with 

respect to OPPS and ASC payments 

because the new codes describe 

complete procedures instead of the 

insertion of individual implants, which 

are almost always incomplete 

procedures because patients usually 

receive multiple implants. We do not 

believe that any of the APCs 

recommended by the commenter are 

appropriate for assignment of HCPCS 

codes C9739 and C9740 at this time 

because our usual policy with new 

codes is to wait until we have OPPS 

claims data available before making an 

APC reassignment. In regard to the ASC 

payment for the procedures, neither 

APC 0162 nor APC 1564 is designated 

as device intensive. Therefore, the 

multiple procedure payment reduction 

under OPPS applies to the entire 

payment amount under the ASC 

payment as well. Currently, there is no 

policy regarding designating services 

that are assigned to a New Technology 

APC as device intensive for the ASC 

setting. We may consider such a policy 

in future rulemakings. 

We will maintain payment for the 

cystourethroscopy with insertion of 

TIPs using HCPCS codes C9739 and 

C9740 because we believe that the code 

descriptors more appropriately reflect 

complete procedures and the 

distribution of implant utilization per 

patient. For CY 2015, we are 

maintaining our APC assignments for 

HCPCS codes C9739 and C9740 to APCs 

0162 and 1564, respectively. The APC 

assignments for HCPCS codes C9739 

and C9740 are initial APC assignments 

until we obtain claims data for these 

two codes for the CY 2016 OPPS update. 

The final CY 2015 geometric mean costs 

for APC 0162 is approximately $2,163, 

and the final CY 2015 payment rate 

(there are no geometric mean costs for 

New Technology APCs, only payment 

bands) for APC 1564 is approximately 

$4,750. CPT codes 52441 and 52442 will 

not be payable under the OPPS for CY 

2015; we are assigning these two CPT 

codes to status indicator ‘‘B’’ (Codes that 

are not recognized by OPPS when 

submitted on an outpatient hospital Part 

B bill type (12x and 13x)). 

After consideration of the public 

comments we received, we also are 

finalizing our proposal to restructure the 

APCs containing cystourethroscopy, 

transprostatic implant procedures, and 

other genitourinary procedures, and to 

use a four-level APC grouping to classify 

the procedures based on our analysis of 

the latest hospital outpatient claims data 

available for this final rule with 

comment period. The final payment 

rates for the cystourethroscopy, 

transprostatic implant procedures, and 

other genitourinary procedure codes, as 

well as the specific CPT codes on which 

we received public comments and that 

are discussed in this section, can be 

found in Addendum B to this final rule 

with comment period, which is 

available via the Internet on the CMS 

Web site. The final payment rates for 

APCs 0160, 0161, 0162, and 0163, 

which are the final CY 2015 

cystourethroscopy, transprostatic 

implant procedures, and other 

genitourinary APCs, can be found in 

Addendum A to this final rule with 

comment period, which is also available 

via the Internet on the CMS Web site. 

We remind commenters that every 

year we revise, if necessary, the APC 

assignments for procedure codes based 

on our analysis of the latest hospital 

outpatient claims data. We anticipate 

that there will be further significant 

revisions to the urology-related APCs in 

futures years because the current overall 

APC structure is suboptimal and can be 

improved with respect to the clinical 

similarity and resource similarity of the 

groupings. In addition, we note that 

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

the Secretary to review, on a recurring 

basis occurring no less than annually, 

and revise the groups, the relative 

payment weights, and the wage and 

other adjustments to take into account 

changes in medical practice, changes in 

technology, the addition of new 

services, new cost data, and other 

relevant information and factors. 

Although we do not discuss every APC 

change in the proposed and final rules 

with comment period, these changes are 

listed in Addendum B to the proposed 

and final rules with comment period. 

Specifically, procedure codes with 

proposed revisions to the APC and/or 

status indicator assignments are 

assigned to comment indicator ‘‘CH’’ 

(Active HCPCS code in current year and 

next calendar year, status indicator and/ 

or APC assignment has changed) in 

Addendum B to the proposed rule. 

c. Level IV Anal/Rectal Procedures (APC 

0150) 

We created HCPCS code C9735 

(Anoscopy; with directed submucosal 

injection(s), any substance) effective 

April 1, 2013, and assigned the service 

to APC 0150 (Level IV Anal/Rectal 

Procedures) for CY 2013, which had a 

payment rate of $2,365.97. We 

maintained the assignment of HCPCS 

code C9735 to APC 0150 for CY 2014, 

with a payment rate of $2,501.31. 

HCPCS code C9735 involves injection of 

a bulking agent, L8605 (Injectable 

bulking agent dextranomer/hyaluronic 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66855 

acid copolymer implant, anal canal, 1 

ml, includes shipping and necessary 

supplies). One commenter in response 

to the CY 2014 OPPS/ASC proposed 

rule believed that the proposed 

assignment for HCPCS code C9735 to 

APC 0150 was inappropriate, and 

asserted that the entire HCPCS code 

C9735 procedure costs far more than the 

proposed payment rate for APC 0150. 

The commenter recommended creating 

a new Level V Anal/Rectal Procedures 

APC, composed of HCPCS code C9735, 

and two other procedures. CMS 

responded in the CY 2014 OPPS/ASC 

final rule with comment period that 

HCPCS code C9735 became effective 

April 1, 2013, so there were no claims 

data yet on this procedure, and that our 

longstanding policy is to wait until 

there are claims data on a new 

procedure before reassigning the service 

to another clinical APC (78 FR 74981). 

We did not agree with the commenters 

that creating a Level V Anal/Rectal 

Procedures APC was warranted for CY 

2014. We believed that the suggested 

Level V APC would have a low volume 

of single frequency claims, and HCPCS 

code C9735 had no claims volume at 

that time. We stated that the low volume 

of claims for such an APC would 

contribute to APC cost and payment 

volatility. 

For CY 2015, we proposed to 

maintain the assignment of HCPCS code 

C9735 to APC 0150, which had a 

proposed payment rate of $2,612.71. 

The AMA’s CPT Editorial Panel created 

new Category III CPT code 0377T 

(Anoscopy with directed submucosal 

injection of bulking agent for fecal 

incontinence), which describes the 

procedure performed by HCPCS code 

C9735, to be effective January 1, 2015. 

Comment: A few commenters 

recommended that CMS divide APC 

0150 into two APCs by creating a higher 

cost Level V Anal/Rectal Procedures 

APC. The commenters stated that there 

are four procedure codes that have a 

geometric mean cost that is more than 

$500 higher than the proposed 

geometric mean cost of APC 0150, 

which is $2,735.52, and one procedure 

code that has a geometric mean cost that 

is approximately $300 higher than the 

proposed geometric mean cost of APC 

0150. One commenter specifically stated 

that the proposed payment rate for APC 

0150 is insufficient to cover the cost of 

the procedure described by HCPCS code 

C9735, which is one of the five 

procedure codes recommended for 

assignment to the suggested Level V 

Anal/Rectal Procedures APC, because 

the proposed payment rate for APC 0150 

is lower than the total cost of the 

procedure. The commenter pointed out 

that the proposed geometric mean cost 

of HCPCS code C9735 is $3,241.32, 

which is considerably higher that the 

proposed geometric mean cost of APC 

0150, which is $2,735.52. The 

commenter also recommended creating 

a Level V Anal/Rectal Procedures APC, 

and assigning HCPCS code C9735 and 

other codes to this recommended APC. 

In addition, the commenter 

recommended that CMS use new CPT 

code 0377T for hospitals to report the 

anoscopy with directed submucosal 

injection of bulking agent for fecal 

incontinence procedure, effective 

January 1, 2015. 

Response: The claims data available 

for this final rule with comment period, 

which are used to establish final 

payment rates for the CY 2015 OPPS, 

show a geometric mean cost of 

approximately $2,698 for APC 0150, 

while the geometric mean cost for 

HCPCS code C9735 is approximately 

$2,863 based on 56 single frequency 

claims. We believe that the geometric 

mean cost of HCPCS code C9735 is 

similar to the geometric mean cost of 

APC 0150. Further, the procedure 

described by HCPCS code C9735 is no 

longer one of the five highest cost 

procedures assigned to APC 0150 based 

on claims data available for this final 

rule with comment period. Similarly, 

there are other higher cost, lower 

volume procedures with geometric 

mean costs that are greater than the 

geometric mean cost of APC 0150, but 

do not create a violation of the 2 times 

rule because of the APC assignment. For 

instance, CPT code 46762 

(Sphincteroplasty, anal, for 

incontinence, adult; implantation 

artificial sphincter) has a final rule 

geometric mean cost of approximately 

$11,873 based on 9 single frequency 

claims. The volume of claims for this 

CPT code is too low to consider this 

procedure significant for purposes of 

evaluating a potential violation of the 2 

times rule. Therefore, we do not believe 

that the range of costs for the significant 

procedures assigned to APC 0150 

warrants the creation of a higher level 

APC. Based on claims data available for 

this final rule with comment period, the 

five highest cost procedures assigned to 

APC 0150 have a total number of single 

frequency claims that equals less than 

220 claims. The suggested Level V Anal/ 

Rectal Procedures APC would have a 

low volume of single frequency claims 

and would contribute to APC cost and 

payment volatility, as was the case 

when based on CY 2014 claims data. As 

we stated in the CY 2014 OPPS/ASC 

final rule with comment period, we are 

not accepting the commenter’s 

recommendation because a low volume 

APC will contribute to the APC’s cost 

volatility, which in turn contributes to 

payment volatility for the procedures 

assigned to the low volume APC (78 FR 

74981). 

After consideration of the public 

comments we received regarding the 

composition of APC 0150, we are 

finalizing our proposal to continue to 

assign HCPCS code C9735 to APC 0150 

for CY 2015. The CY 2015 final 

geometric mean cost of APC 0150 is 

approximately $2,698. In addition, new 

CPT code 0377T also is assigned to APC 

0150 for CY 2015 because we agree with 

the commenters that HCPCS code C9735 

should be deleted after December 31, 

2014. We are instructing hospitals to use 

CPT code 0377T to report this service 

beginning with the code’s effective date, 

January 1, 2015. 

d. Percutaneous Renal Cryoablation 

(APC 0423) 

For CY 2014, we assigned CPT codes 

50593 (Ablation, renal tumor(s), 

unilateral, percutaneous, cryotherapy) 

and 0340T (Ablation, pulmonary 

tumor(s), including pleura or chest wall 

when involved by tumor extension, 

percutaneous, cryoablation, unilateral, 

includes imaging guidance) to APC 0423 

(Level II Percutaneous Abdominal and 

Biliary Procedures), which has a 

payment rate of $4,106.19. For CY 2015, 

we proposed to continue to assign these 

two CPT codes to APC 0423, with a 

proposed payment rate of $4,053.32. 

Comment: One commenter believed 

that CMS’ proposal to continue to assign 

CPT codes 50593 and 0340T to APC 

0423 does not accurately reflect the 

costs incurred when performing these 

cryoablation procedures. The 

commenter noted that APC 0423 

includes several other radiofrequency 

ablation and endoscopy procedures, 

which do not include high-cost device 

systems like the cryoablation 

procedures described by CPT codes 

50593 and 0340T. Although the 

commenter acknowledged that there is 

no violation of the 2 times rule, the 

commenter stated that the proposed 

geometric mean cost of CPT code 50593 

is significantly higher than the proposed 

geometric mean cost of APC 0423. In 

addition, the commenter asserted that 

the cryoablation procedures described 

by CPT codes 50593 and 0340T are not 

clinically similar to other procedures 

assigned to APC 0423. The commenter 

further noted that less than half of 

claims used to establish the proposed 

geometric mean cost of CPT code 50593 

were correctly coded, and did not 

include the device HCPCS code C2618 

(Probe, cryoablation). The commenter 


tkelley on DSK3SPTVN1PROD with RULES2
66856 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

recommended that CMS create a new 

Level III Percutaneous Abdominal and 

Biliary Procedures APC, and assign CPT 

codes 50593 and 0340T to this APC. 

Response: We disagree with the 

commenter that the proposed geometric 

mean cost of CPT code 50593, which is 

$4,937.12 is significantly higher than 

the proposed geometric mean cost of 

APC 0423, which is $4,243.84. The 

claims data available for this final rule 

with comment period show a geometric 

mean cost of approximately $4,249 for 

APC 0423, and approximately $4,985 for 

CPT code 50593, which is based on 749 

single frequency claims. The geometric 

mean cost of CPT code 50593 is the 

highest cost procedure assigned to APC 

0423, but is well within a normal range 

of costs associated with the other 

procedures assigned to this APC, and 

does not approach the 2 times limit that 

would create a violation of the 2 times 

rule. CPT code 0340T has no claims at 

this time because the procedure code 

became effective beginning in CY 2014. 

Therefore, we do not believe that a new 

Level III Percutaneous Abdominal and 

Biliary Procedures APC is warranted 

based on the geometric mean cost of 

CPT code 50593 relative to the 

geometric mean cost of APC 0423. We 

also remind the commenter that we 

typically do not investigate allegations 

of hospital cost underreporting or 

incorrect coding. As we stated in the CY 

2011 OPPS/ASC final rule with 

comment period, ‘‘Beyond our standard 

OPPS trimming methodology . . . that 

we apply to those claims that have 

passed various types of claims 

processing edits, it is not our general 

policy to judge the accuracy of hospital 

coding and charging for purposes of 

ratesetting’’ (75 FR 71838). We believe 

that the cryoablation procedures 

described by CPT codes 50593 and 

0340T are clinically similar to the other 

procedures assigned to APC 0423. Many 

of the procedures assigned to APC 0423 

are ablative procedures, and all of the 

procedures assigned to this APC are 

abdominal or biliary. Therefore, we are 

finalizing the CY 2015 proposal, 

without modification, to continue to 

assign CPT codes 50593 and 0340T to 

APC 0423. We will specifically review 

the APC assignment of CPT code 0340T 

when claims data for this service 

become available. 

4. Nervous System Services 

a. Chemodenervation (APC 0206) 

For CY 2015, we proposed to continue 

to assign CPT code 64616 

(Chemodenervation of muscle(s); neck 

muscle(s), excluding muscles of the 

larynx, unilateral (eg, for cervical 

dystonia, spasmodic torticollis)) to APC 

0204 (Level I Nerve Injections), with a 

proposed payment rate of approximately 

$218. We note that CPT code 64616 

became effective January 1, 2014. 

Comment: One commenter requested 

that CMS reassign CPT code 64616 from 

APC 0204 to APC 0206 (Level II Nerve 

Injections), which had a proposed 

payment rate of approximately $375. 

The commenter noted that this 

recommendation for APC reassignment 

was also submitted in response to the 

CY 2014 OPPS/ASC final rule with 

comment period. The commenter stated 

that APC 0206 is the APC that was 

assigned to CPT code 64613 

(Chemodenervation of muscle(s); neck 

muscle(s) (eg, for spasmodic torticollis, 

spasmodic dysphonia), which is the 

predecessor code for CPT code 64616 in 

effect prior to January 1, 2014. Based on 

the commenter’s analysis of the CY 2013 

hospital outpatient claims data that was 

used for the CY 2015 OPPS/ASC 

proposed rule, the commenter believed 

that APC 0206 is the most appropriate 

APC assignment for CPT code 64616 

based on the resource costs and clinical 

homogeneity of the predecessor code, 

CPT code 64613, in relation to the other 

procedures assigned to APC 0206. 

Response: We reviewed the latest 

hospital outpatient claims data 

reporting the service described by 

predecessor code, CPT code 64613, and 

the replacement code, CPT code 64616. 

We acknowledge that the procedure 

described by CPT code 64616 was 

previously described by CPT code 

64613. Based on our analysis of the 

latest hospital outpatient claims data 

available for this final rule with 

comment period, we agree with the 

commenter’s recommendation that CPT 

code 64616 should be reassigned from 

APC 0204 to APC 0206 for the CY 2015 

update. Specifically, we reviewed the 

latest hospital outpatient claims data for 

CPT code 64613 based on claims 

submitted by hospitals for dates of 

service between January 1, 2013, and 

December 31, 2013, that were processed 

on or before June 30, 2014. Our review 

of the latest claims data shows a 

geometric mean cost of approximately 

$322 for CPT code 64613 based on 

11,177 single claims (out of 13,743 total 

claims), which is comparable to the 

geometric mean cost of approximately 

$387 for APC 0206. There are 21 

procedures assigned to APC 0206 and 

the geometric mean costs for the 

procedures with significant claims data 

range approximately between $322 (for 

CPT code 64613) and $536 (for CPT 

code 62270). Based on these data, we 

agree with the commenter that APC 

0206 is the most appropriate APC 

assignment for CPT code 64616 based 

on clinical homogeneity to the other 

procedures assigned to this APC and the 

resource similarity of the predecessor 

code, CPT code 64613, to the other 

procedures assigned to APC 0206. 

Therefore, after consideration of the 

public comment we received, we are not 

adopting our proposal to continue to 

assign CPT code 64616 to APC 0204. 

Instead, we are reassigning CPT code 

64616 to APC 0206 for the CY 2015 

OPPS update. The final CY 2015 

payment rate for CPT code 64616 can be 

found in Addendum B to this CY 2015 

OPPS/ASC final rule with comment 

period (which is available via the 

Internet on the CMS Web site). 

b. Epidural Lysis (APCs 0203 and 0207) 

For CY 2015, we proposed to continue 

to assign CPT code 62263 (Percutaneous 

lysis of epidural adhesions using 

solution injection (eg, hypertonic saline, 

enzyme) or mechanical means (eg, 

catheter) including radiologic 

localization (includes contrast when 

administered), multiple adhesiolysis 

sessions; 2 or more days) to APC 0203 

(Level IV Nerve Injections), with a 

proposed payment rate of approximately 

$1,524. We also proposed to continue to 

assign CPT code 62264 (Percutaneous 

lysis of epidural adhesions using 

solution injection (eg, hypertonic saline, 

enzyme) or mechanical means (eg, 

catheter) including radiologic 

localization (includes contrast when 

administered), multiple adhesiolysis 

sessions; 1 day) to APC 0207 (Level III 

Nerve Injections), with a proposed 

payment rate of approximately $683. 

Comment: One commenter opposed 

CMS’ proposals to continue to assign 

CPT code 62263 to APC 0203 and CPT 

code 62264 to APC 0207. The 

commenter stated that CMS has 

overcompensated for the cost of 

providing the service described by CPT 

code 62263 by assigning the procedure 

to APC 0203. Alternatively, the 

commenter believed that CMS has 

undercompensated the cost of providing 

the service described by CPT code 

62264 by assigning the procedure to 

APC 0207. The commenter stated that 

the resources utilized during the 

performance of the services described 

by both CPT codes are comparable, and 

each CPT code should be reassigned to 

a more appropriate APC to ensure 

adequate payment for the services 

provided. 

Response: We reviewed the latest 

hospital outpatient claims data 

reporting services described by CPT 

codes 62263 and 62264 for dates of 

service between January 1, 2013, and 

December 31, 2013, that were processed 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66857 

on or before June 30, 2014. For CPT 

code 62263, our analysis of the claims 

data shows a geometric mean cost of 

approximately $1,215 based on 70 

single claims (out of 88 total claims), 

which is comparable to the geometric 

mean cost of approximately $1,525 for 

APC 0203. For CPT code 62264, our 

analysis of the claims data shows a 

geometric mean cost of approximately 

$798 based on 1,971 single claims (out 

of 4,174 total claims), which is 

comparable to the geometric mean cost 

of approximately $697 for APC 0207. 

Therefore, we believe that the 

procedures described by CPT code 

66263 and CPT code 62264 are 

appropriately assigned to APCs 0203 

and 0207, respectively, based on clinical 

and resource similarities in relation to 

the other procedures assigned to these 

APCs. We remind the commenter that 

the OPPS is a system of averages, in 

which the costs of services, calculated 

from the most recent year’s claims data, 

are weighted relative to the other 

services in the system, for that given 

year. Furthermore, as has been our 

practice since the implementation of the 

OPPS, we annually review all the items 

and services within an APC group to 

determine, with respect to 

comparability of the use of resources, 

any violations of the 2 times rule. In 

making this determination, we review 

our claims data and determine whether 

we need to make changes to the current 

APC assignments for the following year. 

We will reevaluate the APC assignment 

for CPT codes 62263 and 62264 for the 

CY 2016 OPPS rulemaking. 

After consideration of the public 

comment that we received, we are 

finalizing our CY 2015 proposal, 

without modification, to continue to 

assign CPT code 62263 to APC 0203 and 

CPT code 62264 to APC 0207. The final 

CY 2015 payment rates for the two 

procedures can be found in Addendum 

B to this CY 2015 OPPS/ASC final rule 

with comment period (which is 

available via the Internet on the CMS 

Web site). 

c. Transcranial Magnetic Stimulation 

(TMS) Therapy (APC 0218) 

Since July 2006, CPT codes have 

existed to describe Transcranial 

Magnetic Stimulation (TMS) therapy. 

The initial CPT codes were temporary 

Category III CPT codes, specifically, 

CPT codes 0160T (Therapeutic 

repetitive transcranial magnetic 

stimulation treatment planning) and 

0161T (Therapeutic repetitive 

transcranial magnetic stimulation 

treatment delivery and management, per 

session), that became effective July 1, 

2006. For CY 2011, the CPT Editorial 

Panel deleted CPT code 0160T on 

December 31, 2010, and replaced this 

procedure code with CPT code 90867 

(Therapeutic repetitive transcranial 

magnetic stimulation (tms) treatment; 

initial, including cortical mapping, 

motor threshold determination, delivery 

and management), effective January 1, 

2011. Similarly, CPT code 0161T was 

deleted on December 31, 2010, and was 

replaced with CPT code 90868 

(Therapeutic repetitive transcranial 

magnetic stimulation (tms) treatment; 

subsequent delivery and management, 

per session), effective January 1, 2011. 

In CY 2012, the CPT Editorial Panel 

established an additional TMS therapy 

code, specifically, CPT code 90869 

(Therapeutic repetitive transcranial 

magnetic stimulation (tms) treatment; 

subsequent motor threshold redetermination with delivery and 

management), that became effective 

January 1, 2012. 

For the CY 2014 update, CPT codes 

90867 and 90868 were assigned to APC 

0216 (Level II Nerve and Muscle Tests), 

with a payment rate of $216.79, and 

CPT code 90869 was assigned to APC 

0218 (Level II Nerve and Muscle Tests), 

with a payment rate of $127.75. For the 

CY 2015 update, as listed in Addendum 

B to the CY 2015 OPPS/ASC proposed 

rule, we proposed to continue to assign 

CPT code 90869 to APC 0218, with a 

proposed payment rate of approximately 

$160. In addition, we proposed to 

reassign CPT codes 90867 and 90868 

from APC 0216 to APC 0218, the same 

APC assignment for CPT code 90869. 

Comment: One commenter disagreed 

with CMS’ proposal to reassign CPT 

codes 90867 and 90868 from APC 0216 

to APC 0218, and to continue to assign 

CPT code 90869 to APC 0218. The 

commenter stated that the proposed 

addition of certain nerve conduction 

study codes to APC 0218 for the CY 

2015 update has negatively affected the 

proposed payment rate for APC 0218. 

The commenter believed that this 

proposal resulted in a decreased 

payment rate of approximately $160 for 

APC 0218, compared to the CY 2014 

payment rate of approximately $217; 

thereby effectuating a potential financial 

loss for the provider with each 

treatment because a typical course of 

TMS therapy includes a total of 25 daily 

treatment sessions. In addition, the 

commenter stated that assigning CPT 

codes 90867, 90868, and 90869 to APC 

0218 is clinically inappropriate because 

these CPT codes describe therapy 

services, whereas the other procedure 

codes assigned to APC 0218 describe 

diagnostic tests (simple nerve 

conduction and electromyography 

studies). To correct the perceived 

clinical and resource discrepancies, the 

commenter suggested that CMS 

establish a new APC specifically for the 

TMS therapy codes, and that CMS title 

the APC ‘‘Transcranial Magnetic 

Stimulation.’’ 

Response: We believe that APC 0218 

is the most appropriate APC assignment 

for the three TMS therapy CPT codes. 

The CPT codes describing the 

procedures assigned to APC 0218 all 

describe noninvasive services that affect 

the nervous system. Based on the latest 

hospital outpatient claims data used for 

this final rule with comment period, our 

analysis revealed that the resources 

associated with providing the services 

described by CPT codes 90867, 90868, 

and 90869 are comparable to the other 

services assigned to APC 0218. 

Specifically, based on CY 2013 claims 

data used for this final rule with 

comment period, the geometric mean 

cost for CPT code 90867 is 

approximately $210 based on 72 single 

claims (out of 72 total claims), the 

geometric mean cost for CPT code 90868 

is approximately $201 based on 2,513 

single claims (out of 2,516 total claims), 

and the geometric mean cost for CPT 

code 90869 is approximately $194 based 

on 28 single claims (out of 30 total 

claims). In addition, a review of the 

procedures assigned to APC 0218 shows 

that the range of geometric mean cost for 

the services assigned to APC 0218 is 

approximately between $95 (for CPT 

code 95937) and $327 (for CPT code 

95875), which is comparable to the 

geometric mean costs for all three TMS 

therapy CPT codes. Based on the 

clinical and resource similarities in 

relation to the other procedures 

currently assigned to APC 0218, we 

believe that the TMS therapy codes 

would be appropriately assigned to APC 

0218. 

After consideration of the public 

comment we received, we are finalizing 

our CY 2015 proposal, without 

modification, to reassign CPT codes 

90867 and 90868 from APC 0216 to APC 

0218, and to continue to assign CPT 

code 90869 to APC 0218 for CY 2015. 

5. Ocular Services: Ophthalmic 

Procedures and Services 

For the CY 2015 OPPS update, based 

on our evaluation of the latest hospital 

outpatient claims data, we proposed to 

restructure all of the ophthalmic APCs 

to better reflect the costs and clinical 

characteristics of the procedures within 

each APC. This proposed restructuring 

resulted in the use of 13 APCs for the 

ophthalmology-related procedures for 

the CY 2015 OPPS update, as compared 

to the 24 APCs used for the CY 2014 

OPPS update. We believe that this major 


tkelley on DSK3SPTVN1PROD with RULES2
66858 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

restructuring and consolidation of APCs 

more appropriately categorizes all of the 

ophthalmology-related procedures and 

services within an APC group, such that 

the services within each newlyconfigured APC are more comparable 

clinically and with respect to resource 

use. Tables 19 and 20 in the proposed 

rule showed the current CY 2014 and 

proposed CY 2015 ophthalmologyrelated APCs. Specifically, Table 19 of 

the CY 2015 OPPS/ASC proposed rule 

(79 FR 40981) showed the CY 2014 

ophthalmology-related APCs and status 

indicator assignments, while Table 20 

showed the proposed restructured 

ophthalmology-related APCs and their 

status indicator assignments for CY 

2015 (79 FR 40981 through 40982). The 

proposed payment rates for the 

ophthalmology-related APCs listed in 

Table 20 were listed in Addendum B to 

the proposed rule (which is available 

via the Internet on the CMS Web site). 

In the CY 2015 OPPS/ASC proposed 

rule, we invited public comments on 

this proposal. 

Comment: Several commenters stated 

that the proposed restructuring and 

consolidation of the CY 2015 

ophthalmic APC is substantial, and 

requested that CMS not finalize this 

proposal. The commenters also stated 

that CMS has not provided information 

regarding the criteria used to 

differentiate the various levels of 

treatments or procedures for the 

restructured 13 ophthalmic APCs. The 

commenters stated that the 

configuration and structure of the 

existing 24 APCs do not appear to be 

inconsistent with the requirements for 

clinical coherence or resource use. The 

commenters disagreed with CMS’ 

proposal to establish broader categories 

within these APCs, and indicated that 

such a change in APC groupings has the 

potential to aggregate procedures that 

vary significantly in resource costs and 

clinical coherence. In addition, the 

commenters stated that some of the 

procedures in the restructured 

ophthalmic APCs appear to be 

inappropriately categorized. For 

example, the restructuring of the 

ophthalmic APCs has resulted in the 

consolidation of cornea procedures 

within one of the restructured APCs, 

and the procedures are no longer 

assigned to a separate classification 

grouping based on the previous APC 

configurations. The commenters pointed 

out that the major cornea transplant 

codes have been reassigned to 

restructured APC 0673 (Level III 

Intraocular Procedures), along with 

procedures that treat glaucoma and 

retina conditions. The commenters 

further explained that the equipment 

used for these services when performed 

in alternative settings and the depths of 

the condition of the eye and the 

appropriate treatments vastly differ, as 

does the time and other resources 

necessary to perform these types of 

surgeries. As a result, the commenters 

believed that additional APCs are 

needed to appropriately categorize 

ophthalmic procedures based on 

clinical homogeneity and resource 

consumption. The commenters also 

requested the opportunity to work with 

CMS to make appropriate adjustments 

to the restructured ophthalmic APC 

groupings to ensure clinical coherence 

and to minimize payment variances for 

these procedures. 

Response: Consistent with CMS’ 

statutory requirement under section 

1833(t)(9) of the Act to review and 

revise APC assignments annually and to 

construct the most appropriate APC 

groupings, as well as, to the extent 

desirable, correct any 2 times rule 

violations, we evaluated the resource 

consumption and clinical coherence 

associated with the ophthalmic APCs 

for the CY 2015 update. Based on our 

analysis of the latest hospital outpatient 

claims data used for this final rule with 

comment period and understanding of 

the clinical aspects of these procedures, 

we believe that the restructured and 

consolidated ophthalmic APCs more 

appropriately group these 

ophthalmology-related services 

according to their current resource 

costs, as well as their clinical 

characteristics. The former ophthalmic 

procedures APC structure unnecessarily 

separated, from a clinical and resource 

similarity prospective, ophthalmic 

procedures based on disease state or 

traditional subdivisions within 

ophthalmic surgery. APC groupings 

were never intended to precisely track 

traditional ophthalmology subspecialty 

divisions, such as cornea surgery, retina 

surgery, or glaucoma surgery, as the 

commenters suggested. We also believe 

that larger APC groupings are more 

consistent with a prospective payment 

system than smaller groupings. We note 

that we regularly accept meetings from 

interested parties throughout the year, 

and we encourage stakeholders to 

continue a dialogue with us during the 

rulemaking cycle and throughout the 

year on our continuing efforts to 

improve the coherence of the OPPS APC 

groupings. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to restructure and 

consolidate the ophthalmic APCs. Table 

22 below shows the final 

ophthalmology-related APCs and their 

status indicator assignments for CY 

2015. The final payment rates for these 

APCs can be found in Addendum B to 

this CY 2015 OPPS/ASC final rule with 

comment period (which is available via 

the Internet on the CMS Web site). We 

also remind the public that we review 

the OPPS and APC structures and 

assignments annually and may propose 

additional restructurings of the APCs 

and procedure code assignments for 

other clinical areas and APC groupings 

in CY 2016 and future rulemakings. 

TABLE 22—FINAL CY 2015 APC ASSIGNMENTS FOR THE OPHTHALMIC PROCEDURES AND SERVICES

Final CY 2015 APC Final CY 2015 APC title description 

Final CY 

2015 status 

indicator 

0230 ................................ Level I Eye Tests & Treatments ................................................................................................................ S 

0231 ................................ Level III Eye Tests & Treatments .............................................................................................................. S 

0233 ................................ Level II Intraocular Procedures .................................................................................................................. T 

0238 ................................ Level I Extraocular, Repair, and Plastic Eye Procedures ......................................................................... T 

0239 ................................ Level II Extraocular, Repair, and Plastic Eye Procedures ........................................................................ T 

0240 ................................ Level III Extraocular, Repair, and Plastic Eye Procedures ....................................................................... T 

0242 ................................ Level IV Extraocular, Repair, and Plastic Eye Procedures ....................................................................... T 

0247 ................................ Laser Eye Procedures ............................................................................................................................... T 

0255 ................................ Level I Intraocular Procedures ................................................................................................................... T 

0293 ................................ Level IV Intraocular Procedures ................................................................................................................ J1 

0351 ................................ Level V Intraocular Procedures ................................................................................................................. J1 

0673 ................................ Level III Intraocular Procedures ................................................................................................................. T 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66859 

TABLE 22—FINAL CY 2015 APC ASSIGNMENTS FOR THE OPHTHALMIC PROCEDURES AND SERVICES—Continued 

Final CY 2015 APC Final CY 2015 APC title description 

Final CY 

2015 status 

indicator 

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

6. Imaging 

a. Echocardiography Services Without 

Contrast (APCs 0269, 0270, and 0697) 

We proposed to continue to use for 

the CY 2015 update the three APCs that 

describe echocardiography services 

without contrast, APC 0697 (Level I 

Echocardiogram Without Contrast), APC 

0269 (Level II Echocardiogram Without 

Contrast), and APC 0270 (Level III 

Echocardiogram Without Contrast), and 

to maintain the CY 2014 HCPCS code 

assignments for these APCs. 

Comment: One commenter requested 

that CMS reexamine the services 

assigned to the APCs for 

echocardiography services without 

contrast. In particular, the commenter 

requested that CMS reassign CPT codes 

76825 (Echocardiography, fetal, 

cardiovascular system, real time with 

image documentation (2D), with or 

without M-mode recording); and 76826 

(Echocardiography, fetal, cardiovascular 

system, real time with image 

documentation (2D), with or without Mmode recording; follow-up or repeat 

study) from APC 0697 to APC 0269 

based on the clinical and resource 

similarities to the other 

echocardiography procedures assigned 

to APC 0269. 

Response: Based on our review of the 

latest hospital outpatient claims data 

available for this final rule with 

comment period, we agree with the 

commenter that CPT codes 76825 and 

76826 should be reassigned to APC 

0269, which more appropriately 

supports the clinical and resource 

homogeneity of the APCs rather than 

reassigning the procedure codes to APC 

0697. The geometric mean cost of CPT 

code 76825 is approximately $384, and 

the geometric mean cost of CPT code 

76826 is approximately $285. These 

costs are sufficiently close to the 

geometric mean cost of CPT code 93306 

(Echocardiography, transthoracic, real 

time with image documentation (2D), 

includes M-mode recording, when 

performed, complete, with spectral 

Doppler echocardiography, and with 

color flow Doppler echocardiography), 

which is approximately $430. CPT code 

93306 comprises 93 percent of the 

service volume within APC 0269. By 

reassigning CPT codes 76825 and 76826 

to APC 0269, only one procedure code 

would remain in APC 0697. Therefore, 

we also are reassigning CPT code 93308 

(Echocardiography, transthoracic, real 

time with image documentation (2D), 

includes M-mode recording, when 

performed, follow-up or limited study) 

from APC 0697 to APC 0267 (Level III 

Diagnostic and Screening Ultrasound) 

for CY 2015. We are deleting APC 0697 

for the CY 2015 OPPS update because 

all of the procedure codes previously 

assigned to APC 0697 have been 

reassigned to more appropriate APCs to 

ensure adequate payment for the 

services provided and the clinical and 

resource homogeneity of APCs. 

b. Optical Coherence Tomography 

(OCT) Procedures of the Breast 

For the July 2014 quarterly update, 

the CPT Editorial Panel established four 

new Category III CPT codes to describe 

optical coherence tomography (OCT) 

procedures of the breast: CPT code 

0351T (Optical coherence tomography 

of breast or axillary lymph node, 

excised tissue, each specimen; real time 

intraoperative); CPT code 0352T 

(Optical coherence tomography of breast 

or axillary lymph node, excised tissue, 

each specimen; interpretation and 

report, real time or referred); CPT code 

0353T (Optical coherence tomography 

of breast, surgical cavity; real time 

intraoperative); and CPT code 0354T 

(Optical coherence tomography of 

breast, surgical cavity; interpretation 

and report, real time or referred). As 

listed in Table 17 of the CY 2015 OPPS/ 

ASC proposed rule (79 FR 40976), we 

proposed to assign CPT codes 0351T 

and 0353T to OPPS status indicator ‘‘N’’ 

(paid under OPPS; payment is packaged 

into payment for other services; there is 

no separate APC payment), and CPT 

codes 0352T and 0354T to OPPS status 

indicator ‘‘B’’ (codes that are not 

recognized by OPPS when submitted on 

an outpatient hospital Part B bill type 

(12x and 13x)). 

Comment: Some commenters 

expressed concern regarding CMS’ 

proposal to assign CPT codes 0351T and 

0353T to OPPS status indicator ‘‘N’’ and 

noted that both procedures describe 

independent, unique services and 

should be assigned to specific APCs. 

The commenters recommended 

assigning CPT codes 0351T and 0353T 

to any one of the following APCs: APC 

0028 (Level I Breast and Skin Surgery), 

which had a proposed payment rate of 

approximately $2,176; APC 0029 (Level 

II Breast and Skin Surgery), which had 

a proposed payment rate of 

approximately $3,018; or APC 0030 

(Level III Breast and Skin Surgery), 

which had a proposed payment rate of 

approximately $4,150. 

Response: Consistent with our 

packaging policy for intraoperative 

procedures, we proposed to assign CPT 

codes 0351T and 0353T to OPPS status 

indicator ‘‘N’’ because both procedure 

codes describe supportive dependent 

services that are performed during 

independent procedures. As clarified in 

the CY 2008 OPPS final rule with 

comment period (72 FR 66627), we 

define ‘‘intraoperative’’ procedures as 

services that are provided during and, 

therefore, on the same date of service as 

another procedure that is separately 

payable under the OPPS. We further 

define intraoperative as services that 

support the performance of an 

independent procedure and are 

provided in the same operative session 

as the independent procedure. Both of 

the procedures described by CPT codes 

0351T and 0353T must always be 

performed in conjunction with another 

procedure; specifically, the surgical 

procedure is performed followed by the 

breast OCT to improve the surgical 

outcome. We believe that these 

procedure codes clearly describe 

services that conform to the definition 

of ‘‘intraoperative’’ procedures. For 

further information on our policy for 

intraoperative services under the 

hospital OPPS, we refer readers to the 

CY 2008 OPPS final rule with comment 

period (72 FR 66627 through 66630). 

In summary, we believe that CPT 

codes 0351T and 0353T are procedures 

that support the performance of an 

independent procedure and are 

provided in the same operative session 

as the independent procedure. 

Specifically, we believe that both 

procedures are provided during and, 

therefore, on the same date of service as 

another procedure that is separately 

payable under the OPPS. In addition, 

we believe that CPT codes 0351T and 

0353T are always integral to, and 

dependent upon, the independent 

procedure that they support. Therefore, 

payment for these services will be 


tkelley on DSK3SPTVN1PROD with RULES2
66860 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

packaged because the procedures would 

generally be performed on the same date 

as another procedure that is separately 

payable under the OPPS. After 

consideration of the public comments 

we received, we are finalizing our 

proposals to assign CPT codes 0351T 

and 0353T to OPPS status indicator ‘‘N’’ 

and CPT codes 0352T and 0354T to 

OPPS status indicator ‘‘B’’ for CY 2015. 

c. Parathyroid Planar Imaging (APCs 

0263, 0317, 0406, and 0414) 

For CY 2015, we proposed to assign 

CPT code 78071 (Parathyroid planar 

imaging (including subtraction, when 

performed); with tomographic (SPECT)) 

to APC 0263 (Level I Miscellaneous 

Radiology Procedures), for which we 

proposed a CY 2015 geometric mean 

cost of approximately $357. We also 

proposed to assign CPT code 78072 

(Parathyroid planar imaging (including 

subtraction, when performed); with 

tomographic (SPECT), and concurrently 

acquired computed tomography (CT) for 

anatomical localization) to APC 0317 

(Level II Miscellaneous Radiology 

Procedures), for which we proposed a 

CY 2015 geometric mean cost of 

approximately $577. In addition, we 

proposed to change the status indicators 

for CPT codes 78071 and 78072 from 

‘‘X’’ to ‘‘S.’’ 

Comment: Commenters agreed with 

CMS’ proposal to assign CPT codes 

78071 and 78072 to status indicator ‘‘S,’’ 

but opposed the proposal to assign CPT 

code 78071 to APC 0263. The 

commenters believed that CPT codes 

78071 and 78072 should be assigned to 

the nuclear medicine APCs instead of 

the radiology APCs because the nuclear 

medicine APCs are more representative 

of the resources utilized in the 

performance of these procedures. The 

commenters suggested that CMS assign 

CPT codes 78071 and 78072 to either 

APC 0414 (Level II Tumor/Infection 

Imaging) or 0408 (Level III Tumor/

Infection Imaging). 

Response: We agree with the 

commenters that the resources utilized 

in the performance of the procedures 

described by CPT codes 78071 and 

78072 are more comparable to the 

procedures assigned to the nuclear 

medicine APCs. However, we do not 

agree with the commenters that CPT 

codes 78071 and 78072 are more 

appropriately assigned to either APC 

0408 or APC 0414. We believe that APC 

0406 (Level I Tumor/Infection Imaging) 

is the most appropriate APC assignment 

for CPT codes 78071 and 78072 because 

the procedures currently assigned to 

APC 0406 are similar to the procedures 

described by CPT codes 78071 and 

78072 in clinical nature and resource 

utilization. The final CY 2015 APC 

geometric mean costs of approximately 

$362 for CPT code 78071 and 

approximately $427 for CPT code 78072 

are similar to the geometric mean costs 

of the significant procedures assigned to 

APC 0406, which range between 

approximately $307 and approximately 

$427. 

After consideration of the public 

comments we received, we are not 

finalizing our CY 2015 proposal to 

assign CPT codes 78071 and 78072 to 

APCs 0263 and 0317, respectively. 

Instead, based on consideration of the 

public comments we received, for CY 

2015, we are assigning CPT codes 78071 

and 78072 to APC 0406, which has a 

final CY 2015 APC geometric mean cost 

of approximately $391. 

7. Radiology Oncology 

a. Proton Beam Therapy and 

Magnetoencephalography (MEG) 

Services (APCs 0065, 0412, 0446, 0664, 

and 0667) 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40989), we proposed several 

changes to the radiation therapy APCs 

for CY 2015. To correct a violation of 

the 2 times rule within APC 0664 (Level 

I Proton Beam Radiation Therapy), we 

proposed to reassign CPT code 77520 

from APC 0664 to APC 0412 (Level III 

Radiation Therapy). We believe that 

CPT code 77520 is both clinically 

similar and comparable in geometric 

mean cost to the other services assigned 

to APC 0412. We also proposed to 

reassign CPT code 77522 from APC 

0664 to proposed newly renamed APC 

0667 (Level IV Radiation Therapy) 

because we believe that the procedure 

described by CPT code 77522 is both 

clinically similar and comparable in 

geometric mean cost to the other 

services assigned to APC 0667. Because 

there would be no other codes assigned 

to APC 0664 if these proposed 

reassignments are finalized, we also 

proposed to delete APC 0664 for CY 

2015 (79 FR 40989). In addition, we 

proposed to rename existing APC 0667 

to ‘‘Level IV Radiation Therapy’’ 

(instead of using the existing title of 

‘‘Level II Proton Beam Radiation 

Therapy’’), to make the title consistent 

with other APCs in the radiation 

therapy series. In conjunction with this 

proposed change, we proposed to 

reassign the following three services to 

proposed newly renamed APC 0667 for 

CY 2015: CPT codes 77522, 77523, and 

77525. 

Comment: Commenters generally 

supported CMS’ proposals regarding the 

radiation therapy APCs, with one 

exception. The commenters supported 

the proposal to reassign CPT code 77520 

from APC 0664 to APC 0412. However, 

the commenters expressed concern 

regarding the proposal to reassign CPT 

code 77522 from APC 0664 to proposed 

newly renamed APC 0667. Commenters 

disagreed with CMS’ determination that 

the procedure described by CPT code 

77522 is clinically similar and 

comparable in geometric mean cost to 

the other services assigned to APC 0667 

in 2014, specifically the procedures 

described by CPT codes 77523 and 

77525. The commenters recommended 

that CMS maintain the assignment of 

CPT code 77522 to APC 0664 and not 

delete the classification grouping, which 

would result in CPT code 77522 being 

the only service assigned to this APC. 

Response: We appreciate the 

commenters’ support for our proposals 

regarding the radiation therapy APCs, 

specifically our proposal to reassign 

CPT code 77520 from APC 0664 to APC 

0412. In regard to the proposed 

reassignment of CPT code 77522 from 

APC 0664 to APC 0667, we disagree 

with the commenters for the following 

reasons. The three CPT codes, 77522, 

77523, and 77525, are similar clinically. 

All three of these CPT codes describe 

procedures that involve proton beam 

therapy delivery services with a 

continuum of complexity. The 

procedure described by CPT code 77520 

is the least complex. The procedure 

described by CPT code 77522 is more 

complex than the procedure described 

by CPT code 77520, and the procedure 

described by CPT code 77523 is more 

complex than the procedure described 

by CPT code 77522. The procedure 

described by CPT code 77525 is the 

most complex procedure of the series 

proposed to be reassigned to APC 0667. 

We proposed to reassign CPT code 

77520 from APC 0664 to APC 0412 

because of the resource comparability 

with respect to the other procedures 

involving proton beam therapy delivery 

services assigned to APC 0412, not 

based on the clinical dissimilarity with 

respect to the procedures assigned to 

APC 0664. In regard to the remaining 

three procedures involving proton beam 

therapy delivery services (the 

procedures described by CPT codes 

77522, 77523, and 77525), we believe 

that these procedures are clinically 

similar, but each has a slightly varying 

level of complexity relative to the 

others. The proposed configuration of 

APC 0667 only contains the three 

proton beam therapy delivery services 

described by CPT codes 77522, 77523, 

and 77525, and does not include any 

other service codes. APC 0667 is the 

most clinically homogeneous APC 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66861 

under the OPPS to assign these services 

that would ensure adequate payment, 

with the exception of single service 

APCs. With regard to the resource 

comparability of the procedures 

described by CPT codes 77522, 77523 

and 77525, the lowest geometric mean 

cost among these procedures is 

associated with the procedure described 

by CPT code 77522, which is 

approximately $1,033, and the highest 

geometric mean cost is associated with 

the procedure described by CPT code 

77525, which is approximately $1,244. 

The statutory prong that dictates when 

resources become dissimilar between 

two services is the 2 times rule. Based 

on the limitations imposed by the 2 

times rule, the highest cost significant 

service assigned to an APC cannot 

exceed the lowest cost by greater than 

two times. In this case, the geometric 

mean cost of the procedure described by 

CPT code 77525 is only 1.2 times the 

geometric mean cost of the procedure 

described by CPT code 77522, which is 

well within the 2 times limit. Therefore, 

we determined that the resource 

similarity among the services proposed 

to be reassigned to APC 0667 is 

comparable. In addition, we generally 

prefer to assign procedures to the most 

appropriate APC that would ensure 

adequate payment, as opposed to using 

single-service APCs, which the 

commenters recommended for the 

procedure described by CPT code 

77522, unless no other reasonable 

options exist, because single-service 

APCs are more consistent with a fee 

schedule than a prospective payment 

system. 

Therefore, we are finalizing the 

following proposals affecting the proton 

beam therapy services for CY 2015: (1) 

We are reassigning CPT code 77520 

from APC 0664 to APC 0412; (2) we are 

reassigning CPT code 77522 from 0664 

to APC 0667;(3) we are reassigning CPT 

codes 77523 and 77525 to APC 0667; (4) 

we are deleting APC 0664; and (5) we 

are renaming APC 0667 to ‘‘Level IV 

Radiation Therapy.’’ 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40989), we also proposed to 

delete APC 0065 (IORT, MRgFUS, and 

MEG) because we proposed to reassign 

the services assigned to this APC to 

more appropriate APCs based on 

clinical similarities and comparable 

geometric mean cost. With respect to 

MEG services, we proposed to reassign 

the MEG CPT codes 95965 and 95966 

from APC 0065 to APC 0446 (Level IV 

Nerve and Muscle Services), which 

would only contain MEG services. 

Comment: One commenter applauded 

CMS for the establishment of new APC 

0446, the APC to which the MEG 

procedures are proposed to be 

reassigned. The commenter believed 

that the reassignment of CPT codes 

95965 and 95966 would produce more 

accurate data related to MEG usage. 

Alternatively, one commenter expressed 

concern that the current proposal does 

not adequately cover the costs 

associated with providing MEG services, 

and urged CMS to work with hospitals 

and other stakeholders to ensure that 

HOPDs submit claims correctly to 

capture the full costs of providing these 

services. 

Response: Based on our analysis of 

the latest hospital outpatient claims data 

used for this final rule with comment 

period, we believe that the 

establishment of APC 0446 is necessary 

to ensure clinical and resource 

homogeneity and adequate payment for 

MEG services. Therefore, after 

consideration of the public comments 

we received, we are finalizing our CY 

2015 proposal without modification. As 

we do every year, we will review our 

claims data for these services for the CY 

2016 OPPS rulemaking. 

b. Stereotactic Radiosurgery Services 

(SRS) and Magnetic Resonance Image 

Guided Focused Ultrasound (MRgFUS) 

(APC 0066) 

For CY 2015, for SRS, we proposed to 

continue to assign CPT code 77373 

(Stereotactic body radiation therapy, 

treatment delivery, per fraction to 1 or 

more lesions, including image guidance, 

entire course not to exceed 5 fractions) 

to APC 0066, with a proposed payment 

rate of approximately $1,893. We also 

proposed to rename APC 0066 from 

‘‘Level I Stereotactic Radiosurgery’’ to 

‘‘Level V Radiation Therapy’’ (79 FR 

40989). 

In addition, we proposed to continue 

to assign CPT codes 77371 (Radiation 

treatment delivery, stereotactic 

radiosurgery (SRS), complete course of 

treatment of cranial lesion(s) consisting 

of 1 session; multi-source cobalt 60 

based) and 77372 (Radiation treatment 

delivery, stereotactic radiosurgery 

(SRS), complete course of treatment of 

cranial lesion(s) consisting of 1 session; 

linear accelerator based) to APC 0067 

(Single Session Cranial Stereotactic 

Radiosurgery), with a proposed payment 

rate of approximately $9,768. We also 

proposed to rename APC 0067 from 

‘‘Level II Stereotactic Radiosurgery’’ to 

‘‘Single Session Cranial Stereotactic 

Radiosurgery,’’ which we proposed as a 

C–APC. For further discussion regarding 

C–APCs and SRS CPT codes 77371 and 

77372 assigned to C–APC 0067, we refer 

readers to section II.A.2.e. of this final 

rule with comment period. 

Comment: Several commenters 

requested that CMS reinstate the use of 

SRS G-codes because the SRS CPT 

codes do not accurately describe current 

clinical practices or adequately cover 

the cost of providing fractionated linacbased SRS. 

Response: For the CY 2014 update, we 

finalized our proposal to adopt the full 

range of SRS CPT codes and to 

discontinue the use of the remaining 

SRS G-codes under the OPPS. HOPDs 

must use and report SRS CPT codes 

77371, 77372, and 77371 to describe the 

delivery of stereotactic radiosurgery 

treatment services under the OPPS. For 

a full discussion of this issue, we refer 

readers to the CY 2014 OPPS/ASC final 

rule with comment period (78 FR 74989 

through 749995). In addition, for the CY 

2015 update, HCPCS code G0173 

(Linear accelerator based stereotactic 

radiosurgery, complete course of 

therapy in one session), and HCPCS 

code G0251 ((Linear accelerator based 

stereotactic radiosurgery, delivery 

including collimator changes and 

custom plugging, fractionated treatment, 

all lesions, per session, maximum five 

sessions per course of treatment)) will 

be deleted, effective December 31, 2014, 

because these codes will no longer be 

used under the MPFS. However, HCPCS 

code G0339 (Image-guided robotic linear 

accelerator-based stereotactic 

radiosurgery, complete course of 

therapy in one session or first session of 

fractionated treatment) and HCPCS code 

G0340 (Image-guided robotic linear 

accelerator-based stereotactic 

radiosurgery, delivery including 

collimator changes and custom 

plugging, fractionated treatment, all 

lesions, per session, second through 

fifth sessions, maximum five sessions 

per course of treatment) will continue to 

be used under the MPFS and, therefore, 

will continue to be active codes for the 

CY 2015 MPFS update. However, 

HCPCS codes G0339 and G0340 will not 

be active codes for the CY 2015 OPPS 

update. Instead, HOPDs must use and 

report SRS CPT codes 77371, 77372, 

and 77373 to describe the delivery of 

stereotactic radiosurgery treatment 

services under the OPPS. 

Comment: Many commenters 

requested that CMS reassign HCPCS 

code G0251 to a different APC to resolve 

a violation of the 2 times rule within 

APC 0066. Several commenters 

recommended excluding the claims data 

for HCPCS code G0251 prior to 

determining the final payment rate for 

APC 0066. The commenters indicated 

that HCPCS code G0251 is used most 

often for fractionated cranial SRS, not 

for stereotactic body radiation therapy 

(SBRT), as described by CPT code 

77373. 


tkelley on DSK3SPTVN1PROD with RULES2
66862 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

Response: Both HCPCS code G0251 

and CPT code 77373 describe 

fractionated cranial stereotactic 

radiosurgery services that involve 

between 2 and 5 fractions of treatment. 

Single-session cranial SRS are reported 

using either CPT code 77371 or 77372. 

Based on the code descriptor, we 

believe that the service described by 

HCPCS code G0251 is appropriately 

crosswalked to the service described by 

CPT code 77373. We explained the code 

crosswalk in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

74991). 

We note that, under the OPPS, we 

may make exceptions to the 2 times rule 

in unusual cases, such as low-volume 

items or services. For the CY 2015 

update (taking into consideration the 

APC changes that we proposed for CY 

2015), we reviewed all of the APCs to 

determine which APCs would not 

satisfy the requirement of the 2 times 

rule. In the case of APC 0066, we 

believe that it is necessary to make an 

exception to the 2 times rule for this 

APC because the three G-codes that 

caused the violation of the 2 times rule 

to occur have been crosswalked to CPT 

code 77373. We expect to have claims 

data for only CPT code 77373 available 

for the CY 2016 rulemaking. At that 

time, we will reevaluate the APC 

assignments for all of the SRS CPT 

codes. 

In addition to our proposal to 

continue to assign SRS CPT code 77373 

to APC 0066, we proposed to assign all 

four of the MRgFUS procedures to APC 

0066 because in the past MRgFUS 

services were assigned to the same APC 

as some of the former SRS G-codes for 

fractionated linac-based SRS. 

Specifically, for CY 2015, we proposed 

to reassign HCPCS codes 0071T 

(Focused ultrasound ablation of uterine 

leiomyomata, including mr guidance; 

total leiomyomata volume less than 200 

cc of tissue), 0072T (Focused ultrasound 

ablation of uterine leiomyomata, 

including mr guidance; total 

leiomyomata volume greater or equal to 

200 cc of tissue), C9734 (Focused 

ultrasound ablation/therapeutic 

intervention, other than uterine 

leiomyomata, with magnetic resonance 

(mr) guidance), and 0301T (Destruction/ 

reduction of malignant breast tumor 

with externally applied focused 

microwave, including interstitial 

placement of disposable catheter with 

combined temperature monitoring probe 

and microwave focusing sensocatheter 

under ultrasound thermotherapy 

guidance) from APC 0065 (IORT, 

MRgFUS, and MEG) to APC 0066. We 

proposed to delete APC 0065 for CY 

2015. 

Comment: Several commenters stated 

that the proposed payment rate for APC 

0066 of approximately $1,893 does not 

adequately reflect the level of resources 

required to perform MRgFUS 

procedures. Instead, the commenters 

believed that the MRgFUS procedures 

are similar to the stereotactic 

radiosurgery procedures that are 

assigned to C–APC 0067 in terms of 

treatment set-up, delivery of radiation, 

and post-procedure recovery. The 

commenters further believed that the 

MRgFUS procedures would be more 

appropriately assigned to a C–APC from 

a clinical and resource perspective. The 

commenters explained that certain 

procedures are commonly reported in 

conjunction with MRgFUS procedures, 

similar to stereotactic radiosurgery 

procedures. Therefore, the commenters 

recommended that CMS reassign the 

MRgFUS procedures to C–APC 0067. 

Response: CPT codes 0071T and 

0072T became effective January 1, 2005. 

CPT code 0301T became effective 

January 1, 2012. HCPCS code C9734 

became effective April 1, 2013. 

Currently, we do not have any single 

claims reporting any of the four 

MRgFUS procedures. However, because 

we are deleting APC 0065, we believe 

that reassigning these procedures to 

APC 0066 for the CY 2015 update is 

more appropriate because, in the past, 

MRgFUS services were assigned to the 

same APC as some of the former 

fractionated linac-based SRS G-codes. 

We also believe that the MRgFUS 

procedures are clinically dissimilar to 

single-session cranial SRS because 

MRgFUS procedures may involve more 

than one treatment session. However, 

we will review and consider the 

comments related to C–APC 0067 in a 

future annual update. 

After consideration of the public 

comments we received, we are 

finalizing our proposal without 

modification. Specifically, for SRS CPT 

code 77373, we are finalizing our 

proposal to continue to assign this code 

to APC 0066 for the CY 2015 update. In 

addition, we are finalizing our proposal 

to reassign MRgFUS HCPCS codes 

0071T, 0072T, 0301T, and C9734 from 

APC 0065 to APC 0066 for CY 2015. We 

are deleting APC 0065 for CY 2015. 

Because we are deleting APC 0065, we 

are renaming APC 0066 from ‘‘Level I 

Stereotactic Radiosurgery’’ to ‘‘Level V 

Radiation Therapy.’’ The final payment 

rates for SRS CPT code 77373 and 

MRgFUS HCPCS codes 0071T, 0072T, 

0301T, and C9734 can be found in 

Addendum B to this final rule with 

comment period, which is available via 

the Internet on the CMS Web site. 

8. Respiratory Services: Level II 

Endoscopy Lower Airway (APC 0415) 

In the CY 2015 OPPS/ASC proposed 

rule, we proposed to continue the APC 

assignment of the procedure codes that 

have been historically assigned to APC 

0415 (Level II Endoscopy Lower 

Airway). Commenters responding to the 

CY 2014 OPPS/ASC proposed rule had 

recommended that CMS split the 

procedure codes assigned to APC 0415 

into two levels of lower airway 

endoscopy APCs. We did not split APC 

0415 into two levels for CY 2014, as the 

commenters suggested, because the 

geometric mean costs would have been 

based on a relatively low volume of 

single frequency claims and would have 

potentially effectuated APC and cost 

volatility (78 FR 74996). In the CY 2015 

OPPS/ASC proposed rule, we did not 

propose any changes to the composition 

of APC 0415. There were not any 

violations of the 2 times rule for the 

services assigned to APC 0415 based on 

claims data available for the proposed 

rule. The proposed geometric mean cost 

of APC 0415 was approximately $2,368. 

Comment: Several commenters 

recommended that CMS create a Level 

III Lower Airway Endoscopy APC and 

assign the procedure codes currently 

assigned and proposed for continued 

assignment to APC 0415 to this newly 

created APC based on geometric mean 

costs, procedure complexity, and 

clinical similarity. Specifically, one 

commenter recommended that CMS 

assign CPT code 31647 (Bronchoscopy, 

rigid or flexible, including fluoroscopic 

guidance, when performed; with 

balloon occlusion, when performed, 

assessment of air leak, airway sizing, 

and insertion of bronchial valve(s), 

initial lobe) to the recommended Level 

III APC. Another commenter 

recommended that CMS assign CPT 

code 31626 (Bronchoscopy, rigid or 

flexible, including fluoroscopic 

guidance, when performed; with 

placement of fiducial markers, single or 

multiple) to the recommended Level III 

APC. One commenter recommended 

that seven specific procedure codes be 

assigned to the newly created Level III 

APC, namely: CPT codes 31634 

(Bronchoscopy, rigid or flexible, 

including fluoroscopic guidance, when 

performed; with balloon occlusion, with 

assessment of air leak, with 

administration of occlusive substance 

(eg, fibrin glue), if performed), 31638 

(Bronchoscopy, rigid or flexible, 

including fluoroscopic guidance, when 

performed; with revision of tracheal or 

bronchial stent inserted at previous 

session (includes tracheal/bronchial 

dilation as required)), 31626, 31631 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66863 

(Bronchoscopy, rigid or flexible, 

including fluoroscopic guidance, when 

performed; with placement of tracheal 

stent(s) (includes tracheal/bronchial 

dilation as required)), 31636 

(Bronchoscopy, rigid or flexible, 

including fluoroscopic guidance, when 

performed; with placement of bronchial 

stent(s) (includes tracheal/bronchial 

dilation as required), initial bronchus), 

31660 (Bronchoscopy, rigid or flexible, 

including fluoroscopic guidance, when 

performed; with bronchial 

thermoplasty, 1 lobe), and 31661 

(Bronchoscopy, rigid or flexible, 

including fluoroscopic guidance, when 

performed; with bronchial 

thermoplasty, 2 or more lobes). The 

commenters believed that a new Level 

III Lower Airway Endoscopy APC 

would more accurately reflect the costs 

of expensive lower airway procedures 

that utilize new technologies. 

Response: We believe that there is 

considerable clinical similarity in regard 

to the procedures assigned to APC 0415. 

All of the procedures are lower airway 

bronchoscopy procedures and are 

generally clinically more complex than 

the lower airway endoscopy procedures 

assigned to APC 0076 (Level I 

Endoscopy Lower Airway). We do not 

believe that the range of costs for the 

significant procedures assigned to APC 

0415 warrants the creation of a Level III 

lower airway endoscopy APC. The final 

rule geometric mean cost for APC 0415 

is approximately $2,341. Several of the 

procedures that the commenters 

recommended for assignment to the 

recommended Level III APC have final 

rule geometric mean costs comparable 

to the geometric mean cost of APC 0415. 

For CY 2015, CPT code 31634 has a 

final geometric mean cost of 

approximately $1,539; CPT code 31638 

has a final geometric mean cost of 

approximately $2,320; and CPT code 

31626 has a final geometric mean cost 

of approximately $2,897. The other CPT 

codes recommended by the commenters 

have somewhat higher approximate 

geometric mean costs, namely: CPT 

code 31631 (which has a geometric 

mean cost of approximately $3,488), 

CPT code 31661 (which has a geometric 

mean cost of approximately $3,789), 

CPT code 31660 (which has a geometric 

mean cost of approximately $3,840), and 

CPT code 31636 (which has a geometric 

mean cost of approximately $4,090). 

Assigning any of these procedures to 

APC 0415 does not create a violation of 

the 2 times rule when compared to the 

geometric mean cost of the lowest 

significant procedure assigned to this 

APC, CPT code 31629 (Bronchoscopy, 

rigid or flexible, including fluoroscopic 

guidance, when performed; with 

transbronchial needle aspiration 

biopsy(s), trachea, main stem and/or 

lobar bronchus(i)), which is 

approximately $2,186. Among the 

procedures discussed above, CPT codes 

31626 and 31660 describe the only 

significant procedures assigned to this 

APC and are the procedures that we 

would normally apply the 2 times rule 

provisions. There are not any violations 

of the 2 times rule in regard to these 

procedures’ costs. Although CPT code 

31647 has a considerably higher 

geometric mean cost of approximately 

$5,373 based on 11 single frequency 

claims, it is not a significant procedure. 

We would not reassign this procedure to 

another APC based on a violation of the 

2 times rule. Moreover, considering the 

final rule claims data for the five highest 

cost procedures assigned to APC 0415, 

the total number of single frequency 

claims is 649. The possible composition 

of a Level III lower airway endoscopy 

APC would still be based on a low 

volume of claims, similar to the low 

volume of claims in regard to the Level 

III lower airway endoscopy APC 

recommended by the commenters in CY 

2014. As we stated in the CY 2014 

OPPS/ASC final rule with comment 

period, a low-volume APC would 

contribute to the APC’s cost volatility, 

which in turn contributes to payment 

volatility for the procedures assigned to 

the low-volume APC (78 FR 74996). 

After consideration of the public 

comments we received regarding the 

composition of APC 0415, we are 

finalizing our proposal to continue the 

assignment of the procedure codes that 

have been historically assigned to APC 

0415 for CY 2015. However, for CY 

2016, we will explore possible changes 

to the lower airway endoscopy APCs as 

a part of our broader efforts to 

thoroughly review, revise, and 

consolidate APCs to improve both 

clinical and resource homogeneity. The 

CY 2015 final geometric mean cost of 

APC 0415 is approximately $2,341. 

9. Other Services 

a. Epidermal Autograft (APC 0327) 

In the CY 2014 OPPS/ASC final rule 

with comment period, we assigned CPT 

code 15110 to APC 0329 (Level IV Skin 

Repair), with a payment rate of 

approximately $2,260. The payment rate 

for CPT code 15110 was derived from 

the latest hospital outpatient claims data 

used for the CY 2014 ratesetting, which 

showed a geometric mean cost of 

approximately $2,174 based on 10 

single claims (out of 29 total claims). 

As stated in section III.B. of this final 

rule with comment period, we review, 

on an annual basis, the APC 

assignments for all services and items 

paid under the OPPS. Analysis of the 

latest hospital outpatient claims data 

available for the CY 2015 OPPS/ASC 

proposed rule showed a geometric mean 

cost for CPT code 15110 of 

approximately $774 based on 90 single 

claims (out of 122 total claims). 

Therefore, in the CY 2015 OPPS/ASC 

proposed rule (79 FR 40987), we 

proposed to reassign CPT code 15110 

from APC 0329 to APC 0327 (Level II 

Skin Procedures), which has a geometric 

mean cost of approximately $451. We 

believe that APC 0327 is the most 

appropriate APC assignment for CPT 

code 15110 when considering the 

similarities in relation to the other 

procedures assigned to this APC. 

In addition, we proposed to revise the 

APC titles for the four skin repair APCs 

(79 FR 40987). Specifically, we 

proposed to rename APC 0326 from 

‘‘Level I Skin Repair’’ to ‘‘Level I Skin 

Procedures,’’ APC 0327 from ‘‘Level II 

Skin Repair’’ to ‘‘Level II Skin 

Procedures,’’ APC 0328 from ‘‘Level III 

Skin Repair’’ to ‘‘Level III Skin 

Procedures,’’ and APC 0329 from ‘‘Level 

IV Skin Repair’’ to ‘‘Level IV Skin 

Procedures.’’ 

Table 28 of the proposed rule (79 FR 

40987) showed the long descriptor, as 

well as the proposed CY 2015 APC and 

status indicator assignment for CPT 

code 15110. The proposed CY 2015 

payment rate for CPT code 15110 can be 

found in Addendum B to the proposed 

rule (which is available via the Internet 

on the CMS Web site). 

Comment: Several commenters 

requested that CMS reevaluate the 

claims data for CPT code 15110, and 

recommended that CMS not finalize the 

proposal to reassign the procedure code 

to APC 0327. The commenters stated 

that the procedure described by CPT 

code 15110 allows patients with chronic 

or non-healing wounds to recover much 

sooner and without the use of expensive 

surgical interventions, which has 

resulted in cost savings for hospitals, 

patients, and payers. Other commenters 

suggested that CMS reassign CPT code 

15110 to APC 0328 (Level III Skin 

Procedures), which has a proposed CY 

2015 payment rate of approximately 

$1,408. The commenters believed that 

APC 0328 has clinically similar 

procedures and is more comparable to 

the geometric mean costs of CPT code 

15110. Another commenter believed 

that the low volume of claims data for 

CPT code 15110 is attributable to 

providers and hospitals miscoding the 

performance of the service by not 

including the cost of the device. 

Response: We reviewed the historical 

claims data for CPT code 15110, dating 


tkelley on DSK3SPTVN1PROD with RULES2
66864 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

back to CY 2008, which is the first year 

that claims data for this code became 

available. As listed in Table 23 below, 

for CY 2008 through CY 2013, the 

payment rate for CPT code 15110 has 

ranged between $288.30 and $393.38 

based on a range of single claims 

between 3 and 8. In addition, for the CY 

2014 update, which was based on 

hospital outpatient claims data that 

were submitted between January 1, 

2012, and December 31, 2012, and 

processed on or before June 30, 2013, 

the payment rate for CPT code 15110 

was significantly higher (approximately 

$2,260.46) based on 10 single claims. 

However, as has been our practice since 

the implementation of the OPPS in 

2000, we review, on an annual basis, the 

APC assignments for the procedures and 

services paid under the OPPS. Based on 

the latest hospital outpatient claims data 

used for this final rule with comment 

period, our analysis does not support 

the continued assignment of CPT code 

15110 to APC 0329, which is the APC 

to which the procedure was assigned 

during CY 2014, or the suggested APC 

0328. We examined the latest hospital 

outpatient claims data for CPT code 

15110 for dates of service between 

January 1, 2013, and December 31, 2013, 

that were processed on or before June 

30, 2014. Our analysis of the claims data 

shows a geometric mean cost for CPT 

code 15110 of approximately $748 

based on 127 single claims (out of 165 

total claims). We do not believe that 

APC 0328 is the most appropriate APC 

assignment because the geometric mean 

cost for this APC is approximately 

$1,460, which is significantly higher 

than the geometric mean cost for CPT 

code 15110, which is approximately 

$748. Assigning CPT code 15110 to APC 

0328 would result in an overpayment 

for the service provided. We believe that 

APC 0327 is the most appropriate APC 

assignment for CPT code 15110 based 

on clinical homogeneity to the other 

skin-related procedures assigned to this 

APC. 

TABLE 23—HISTORICAL AND CURRENT OPPS CLAIMS AND PAYMENT INFORMATION FOR CPT CODE 15110 

Calendar year 

(CY) 

OPPS payment rate Single claims Total claims 

2008 ............................................................................................................................................. $288.30 3 16 

2009 ............................................................................................................................................. 292.68 3 15 

2010 ............................................................................................................................................. 299.19 8 22 

2011 ............................................................................................................................................. 319.74 5 16 

2012 ............................................................................................................................................. 344.98 4 19 

2013 ............................................................................................................................................. 393.38 4 30 

2014 ............................................................................................................................................. 2,260.46 10 29 

2015 ............................................................................................................................................. 429.95 127 165 

Further, based on our analysis of the 

CY 2013 hospital outpatient claims data 

used for this final rule with comment 

period, we are unable to determine 

whether hospitals are miscoding claims 

reporting this service. For all APCs 

whose payment rates are based upon 

relative payment weights, we note that 

the quality and accuracy of reported 

units and charges influence the 

geometric mean costs that are the basis 

for our payment rates, especially for 

low-volume items and services. Beyond 

our standard OPPS trimming 

methodology (described in section 

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

period) that we apply to those claims 

that have passed various types of claims 

processing edits, it is not our general 

policy to determine the accuracy of 

hospital coding and charging practices 

for purposes of ratesetting (75 FR 

71838). We rely on hospitals to bill all 

HCPCS codes accurately in accordance 

with their code descriptors and CPT and 

CMS instructions, as applicable, and to 

report charges on claims and charges 

and costs on their Medicare hospital 

cost report appropriately. In addition, 

we do not specify the methodologies 

that hospitals must use to set charges for 

this or any other service. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to reassign CPT code 

15110 to APC 0327 for CY 2015. The 

final payment rate for CPT code 15110 

can be found in Addendum B to this 

final rule with comment period, which 

is available via the Internet on the CMS 

Web site. 

b. Image-Guided Breast Biopsy 

Procedures and Image-Guided Abscess 

Drainage Procedures (APCs 0005 and 

0007) 

For the CY 2014 OPPS update, the 

AMA’s CPT Editorial Panel deleted the 

image-guided breast biopsy CPT codes 

19102 and 19103 and replaced these 

procedure codes with six new CPT 

codes that ‘‘bundled’’ payment for 

associated imaging services, effective 

January 1, 2014. As shown in Table 23 

of the proposed rule (79 FR 40983), CPT 

codes 19102 and 19103 described 

percutaneous image-guided breast 

biopsies using specific devices. 

Specifically, CPT code 19102 described 

a breast biopsy performed using a core 

needle, and CPT code 19103 described 

a breast biopsy performed using either 

a vacuum-assisted or rotating device. 

In CY 2013, to appropriately report 

the performance of an image-guided 

breast biopsy using a core needle, an 

automated vacuum-assisted device, or a 

rotating biopsy device, multiple 

procedure codes were required to 

identify the specific service performed. 

That is, a procedure code describing the 

device-related breast biopsy procedure 

was required to be reported in 

combination with the procedure code 

describing the localization device used 

during the procedures, as well as the 

specific image-guidance procedure 

codes describing the imaging service. 

Table 23 of the proposed rule showed 

how image-guided breast biopsy 

procedures were reported prior to CY 

2014. Table 23 of the proposed rule also 

showed the CY 2013 OPPS status 

indicators, APC assignments, and 

payment rates for the breast biopsy 

procedure codes, the localization 

devices used during the procedures, and 

the specific image-guidance procedure 

codes describing the imaging service. 

For the CY 2014 OPPS update, the 

AMA’s CPT Editorial Panel grouped the 

multiple procedures that describe these 

imaging services into single 

comprehensive service codes; 

specifically, CPT codes 19081, 19082, 

19083, 19084, 19085, and 19086. Table 

24 of the proposed rule showed the six 

new CPT codes that replaced obsolete 

CPT codes 19102 and 19103. These 

comprehensive breast biopsy procedure 

codes are differentiated based on the use 

of specific imaging-guidance devices— 

specifically imaging services performed 

using stereotactic guidance, ultrasound 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66865 

guidance, or magnetic-resonance 

guidance. 

As has been our practice since the 

implementation of the OPPS in 2000, 

we review all new procedure codes 

before assigning the codes to an APC. 

Consistent with our longstanding policy 

for the treatment of new codes, we 

assigned these new replacement CPT 

codes to interim APCs for CY 2014. 

Based on our understanding of the 

resources required to furnish the service 

as defined in the code descriptor, as 

well as input from our medical advisors, 

we assigned replacement CPT codes 

19081, 19083, and 19085 to APC 0005 

(Level II Needle Biopsy/Aspiration 

Except Bone Marrow) for the CY 2014 

OPPS update. In addition, we assigned 

new CPT codes 19081, 19083, and 

19085 to comment indicator ‘‘NI’’ in 

Addendum B to the CY 2014 OPPS/ASC 

final rule with comment period (which 

is available via the CMS Web site) to 

indicate that the codes were new with 

an interim APC assignment that was 

subject to public comment. We note 

that, for the CY 2014 OPPS update, we 

finalized our policy to package all addon codes (except those for drug 

administration), effective January 1, 

2014. Consequently, payment for 

replacement CPT codes 19082, 19084, 

and 19086, which describe add-on 

procedures, was packaged for CY 2014. 

At the Panel’s March 10, 2014 

meeting, one presenter requested that 

CMS reassign comprehensive CPT codes 

19081, 19083, and 19085 from APC 

0005 (Level II Needle Biopsy/Aspiration 

Except Bone Marrow), which has a CY 

2014 OPPS payment rate of $702.08, to 

APC 0037 (Level IV Needle Biopsy/

Aspiration Except Bone Marrow), which 

has a CY 2014 OPPS payment rate of 

$1,223.25. The presenter indicated that 

it is inappropriate to combine all of the 

new replacement CPT codes into one 

APC without regard for the imaging 

modality or device used to perform the 

procedure. The presenter also requested 

that CMS maintain the historic 

assignment of the predecessor CPT 

codes cost data until claims data 

become available for the new 

comprehensive CPT codes. The Panel 

agreed with the presenter and 

recommended that CMS reassign the 

new replacement comprehensive CPT 

codes, as the presenter suggested. 

In light of the public presentation, the 

Panel’s recommendation, and our 

longstanding policy of reviewing, on an 

annual basis, the APC assignments for 

all services and items paid under the 

OPPS, we evaluated the geometric mean 

costs associated with all of the 

procedures assigned to the existing four 

needle biopsy APCs, specifically, APCs 

0004 (Level I Needle Biopsy/Aspiration 

Except Bone Marrow), 0005, 0685 (Level 

III Needle Biopsy/Aspiration Except 

Bone Marrow), and 0037. In the CY 

2015 OPPS/ASC proposed rule (79 FR 

40984), based on our review of the latest 

hospital outpatient claims data available 

for the proposed rule, we proposed to 

reassign all of the procedures assigned 

to APCs 0685 and 0037 to either APC 

0004 or APC 0005 based on clinical and 

resource homogeneity. If CMS finalizes 

this proposed revision, there would be 

no procedures assigned to APCs 0685 or 

0037. Therefore, in the CY 2015 OPPS/ 

ASC proposed rule (79 FR 40984), we 

proposed to delete APCs 0685 and 0037 

for CY 2015. 

Consequently, for the CY 2015 OPPS 

update, we proposed to only use two 

needle biopsy APCs, specifically, APCs 

0004 and 0005. The proposed 

reassignment of all of the procedures 

assigned to APCs 0685 and 0037 results 

in increased payment rates for both 

APCs 0004 and 0005. For CY 2015, the 

proposed payment rate for APC 0004 is 

approximately $494, which is 20 

percent higher than the CY 2014 OPPS 

payment rate of approximately $411. 

Similarly, the proposed payment rate for 

APC 0005 is approximately $1,062, 

which is 51 percent higher than the CY 

2014 OPPS payment rate of 

approximately $702. Therefore, we 

proposed to continue to assign CPT 

codes 19081, 19083, and 19085 to APC 

0005 for the CY 2015 OPPS update (79 

FR 40985). In addition, we proposed to 

continue to package payment for add-on 

CPT codes 19082, 19084, and 19086 

under the OPPS for CY 2015, consistent 

with our packaging policy for add-on 

codes that was implemented on January 

1, 2014. Because we proposed to delete 

APC 0037 we believe that the proposed 

increased payment rate for APC 0005 is 

consistent with the Panel’s 

recommendation to reassign CPT codes 

19081, 19083, and 19085 to an 

appropriate APC based on resource 

utilization and clinical coherence. 

Comment: Commenters supported 

CMS’ proposal to continue to assign 

CPT codes 19081, 19083, and 19085 to 

APC 0005. The commenters stated that 

the assignment of these CPT codes to 

APC 0005 is clinically coherent and 

more accurately captures the resource 

cost associated with providing these 

services when compared to the CY 2014 

APC assignment. 

Response: We appreciate the 

commenters’ support. 

Comment: Some commenters 

expressed concern regarding the 

inadequate payment for ancillary 

services associated with multiple 

biopsies that may be performed on the 

same date of service. The commenters 

indicated that patients sometimes 

present with multiple lesions, which 

requires a biopsy of each lesion. 

According to the commenters, prior to 

the establishment of the comprehensive 

CY 2014 breast biopsy CPT codes, 

hospitals would report each biopsy, 

imaging guidance, and marker or 

localization placements separately. The 

commenters requested that CMS 

provide guidance on how to report 

multiple biopsies performed on the 

same date of service. 

Response: We expect hospitals to 

report the performance of breast 

biopsies using the comprehensive breast 

biopsy CPT codes, consistent with the 

latest CPT coding guidelines. As stated 

in the CY 2014 CPT code book, imageguided breast biopsies, including the 

placement of localization devices when 

performed, are reported using the 

comprehensive breast biopsy CPT codes 

19081 through 19086. Image-guided 

placement of localization devices 

without the performance of a biopsy are 

required to be reported using CPT codes 

19281 through 19288. In addition, when 

more than one biopsy is performed 

using the same imaging modality, 

hospitals are required to report each 

biopsy using an add-on code. However, 

if more than one biopsy is performed 

using different imaging modalities, 

hospitals are required to report a 

separate primary code for each 

additional imaging modality. 

We note that it is extremely important 

that hospitals use all of the required 

HCPCS codes to report the performance 

of all services they furnish, consistent 

with the code descriptors, CPT and/or 

CMS instructions, and correct coding 

principles, whether payment for the 

services is made separately or packaged. 

The accuracy of the OPPS payment rates 

depends on the quality and 

completeness of the claims data that 

hospitals submit for the services they 

furnish to Medicare beneficiaries. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to continue to 

assign CPT codes 19081, 19083, and 

19085 to APC 0005 for CY 2015. In 

addition, we are finalizing our proposal 

to continue to package payment for addon CPT codes 19082, 19084, and 19086 

under the OPPS for CY 2015, consistent 

with our packaging policy for add-on 

codes that was implemented on January 

1, 2014. Furthermore, we are finalizing 

our proposal to delete APC 0037 

because we believe that the proposed 

increased payment rate for APC 0005 is 

consistent with the Panel’s 

recommendation to reassign CPT codes 

19081, 19083, and 19085 to an 


tkelley on DSK3SPTVN1PROD with RULES2
66866 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

appropriate APC based on resource 

utilization and clinical coherence. Table 

24 below shows the final status 

indicators, APC assignments, and 

payment rates for the image-guided 

breast biopsy CPT codes 19081 through 

19086. 

TABLE 24—FINAL CY 2015 APCS TO WHICH IMAGE-GUIDED BREAST BIOPSY PROCEDURE CODES ARE ASSIGNED

CPT Code Long descriptor CY 2014 SI CY 2014 

APC 

CY 2014 

Payment 

Final CY 

2015 SI 

Final CY 

2015 APC 

Final CY 

2015 payment 

19081 ........... Biopsy, breast, with placement of 

breast localization device(s) (eg, clip, 

metallic pellet), when performed, and 

imaging of the biopsy specimen, 

when performed, percutaneous; first 

lesion, including stereotactic guidance.

T 0005 702.08 T 0005 $1,052.22 

19082 ........... Biopsy, breast, with placement of 

breast localization device(s) (eg, clip, 

metallic pellet), when performed, and 

imaging of the biopsy specimen, 

when performed, percutaneous; each 

additional lesion, including 

stereotactic guidance (List separately 

in addition to code for primary procedure).

N N/A N/A N N/A N/A 

19083 ........... Biopsy, breast, with placement of 

breast localization device(s) (eg, clip, 

metallic pellet), when performed, and 

imaging of the biopsy specimen, 

when performed, percutaneous; first 

lesion, including ultrasound guidance.

T 0005 $702.08 T 0005 1,052.22 

19084 ........... Biopsy, breast, with placement of 

breast localization device(s) (eg, clip, 

metallic pellet), when performed, and 

imaging of the biopsy specimen, 

when performed, percutaneous; each 

additional lesion, including ultrasound 

guidance (List separately in addition 

to code for primary procedure).

N N/A N/A N N/A N/A 

19085 ........... Biopsy, breast, with placement of 

breast localization device(s) (eg, clip, 

metallic pellet), when performed, and 

imaging of the biopsy specimen, 

when performed, percutaneous; first 

lesion, including magnetic resonance 

guidance.

T 0005 $702.08 T 0005 1,052.22 

19086 ........... Biopsy, breast, with placement of 

breast localization device(s) (eg, clip, 

metallic pellet), when performed, and 

imaging of the biopsy specimen, 

when performed, percutaneous; each 

additional lesion, including magnetic 

resonance guidance (List separately 

in addition to code for primary procedure).

N N/A N/A N N/A N/A 

In addition to the proposal to 

maintain the APC assignment of the 

breast biopsy comprehensive CPT codes 

to APC 0005, we also discussed in the 

CY 2015 OPPS/ASC proposed rule our 

proposal to reassign CPT code 10030 

from APC 0006 (Level I Incision & 

Drainage) to APC 0007 (Level II Incision 

and Drainage). We note that, for the CY 

2014 OPPS update, the AMA’s CPT 

Editorial Panel established CPT code 

10030 to report the bundled service of 

image-guided fluid collection drainage 

by catheter for percutaneous soft tissue, 

and CPT code 49407 to report the 

bundled service of image-guided fluid 

collection drainage by catheter for 

peritoneal, retroperitoneal, transvaginal 

or transrectal collections, effective 

January 1, 2014. As shown in Table 25 

of the CY 2015 OPPS/ASC proposed 

rule, which showed the long descriptors 

for CPT codes 10030 and 49407, and as 

listed in Addendum B to the CY 2014 

OPPS/ASC final rule with comment 

period, we assigned CPT code 10030 to 

APC 0006, with a payment rate of 

$159.66 and CPT code 49407 to APC 

0685, with a payment rate of $757.76. 

As listed in Addendum B to the CY 

2014 OPPS/ASC final rule with 

comment period, both procedure codes 

were assigned to comment indicator 

‘‘NI’’ to indicate that the codes were 

new codes and assigned interim APC 

and status indicator assignments that 

were subject to public comment. 

At the Panel’s March 10, 2014 

meeting, one presenter requested that 

CMS reassign CPT codes 10030 and 

49407 from APC 0006 and APC 0685, 

respectively, to APC 0037 (Level IV 

Needle Biopsy/Aspiration Except Bone 

Marrow), which has a CY 2014 OPPS 

payment rate of $1,223.25. The 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66867 

commenter noted that similar 

procedures also are assigned to APC 

0037. Specifically, the presenter 

indicated that all the image-guided fluid 

collection drainage procedures should 

be treated as one clinically cohesive 

group and assigned to APC 0037. The 

Panel agreed with the presenter and 

recommended that CMS reassign CPT 

code 49407 to APC 0037. However, the 

Panel did not agree with the presenter 

that CPT code 10030 would be more 

appropriately assigned to APC 0037. 

Rather, the Panel believed that the most 

appropriate APC assignment for CPT 

code 10030 would be APC 0007. We 

agreed with the Panel’s 

recommendation that CPT code 10030 

should be assigned to APC 0007. 

Therefore, in the CY 2015 OPPS/ASC 

proposed rule (79 FR 40986), we 

proposed to reassign CPT code 10030 

from APC 0006 to APC 0007 for the CY 

2015 OPPS update. In light of the 

Panel’s recommendation to reassign 

CPT code 49407 and the image-guided 

breast biopsy procedures to APC 0037 

and APC 0007, respectively, and our 

longstanding policy of reviewing, on an 

annual basis, the APC assignments for 

all services and items paid under the 

OPPS, we evaluated the geometric mean 

costs associated with the procedures 

assigned to the existing four needle 

biopsy APCs, as previously stated, and 

proposed to reassign the procedures 

assigned to APCs 0685 and 0037 to 

either APC 0004 or APC 0005 based on 

clinical and resource homogeneity and 

to delete APCs 0685 and 0037 for CY 

2015. Specifically, we proposed to 

reassign CPT code 49407 from APC 

0685 to APC 0005 for CY 2015, and to 

delete APCs 0037 and 0685. Table 25 of 

the proposed rule also showed the long 

descriptors for CPT codes 10030 and 

49407, and their proposed status 

indicator and APC assignments for the 

CY 2015 OPPS update. The proposed 

CY 2015 payment rate for CPT codes 

10030 and 49407 can be found in 

Addendum B to this CY 2015 OPPS/

ASC proposed rule (which is available 

via the Internet on the CMS Web site). 

Comment: Some commenters 

recommended that CMS reassign CPT 

code 10030 from APC 0006 to APC 

0005. The commenters stated that, 

according to an internal analysis, CPT 

code 10030 is comparable with respect 

to clinical and resource characteristics 

and costs to the other abscess drainage 

procedures assigned to APC 0005. 

Response: In light of the Panel’s 

recommendation to reassign the 

procedure to APC 0007 and because 

CPT code 10030 is a new code for CY 

2014, we are not accepting the 

commenters’ suggestion to assign this 

procedure to APC 0005. Rather, we are 

reassigning CPT code 10030 from APC 

0006 to APC 0007 for the CY 2015 OPPS 

update, as recommended by the Panel. 

We note that we will have CY 2014 

hospital claims data available for CPT 

codes 10030 and 49407 in preparation 

for the CY 2016 OPPS rulemaking. At 

that time, we will reevaluate the APC 

assignments for all the abscess drainage 

CPT codes. 

Therefore, after consideration of the 

public comments we received, we are 

finalizing our proposal, without 

modification, to reassign CPT code 

10030 from APC 0006 to APC 0007. In 

addition, we are finalizing our proposal 

to reassign the procedures assigned to 

APCs 0685 and 0037 to either APC 0004 

or APC 0005 based on clinical and 

resource homogeneity. Because there 

would be no other procedures assigned 

to APCs 0685 and 0037 as a result of 

this reassignment, we are finalizing our 

proposal to delete APCs 0685 and 0037 

for CY 2015. The final CY 2015 payment 

rate for CPT codes 10030 and 49407 can 

be found in Addendum B to this CY 

2015 OPPS/ASC final rule (which is 

available via the Internet on the CMS 

Web site). 

c. Negative Pressure Wound Therapy 

(NPWT) (APCs 0012, 0013, 0015 and 

0016) 

For CY 2015, we proposed to assign 

all of the NPWT services to APC 0015 

(Level II Debridement & Destruction), 

with a proposed payment rate of 

$141.66. We proposed to continue to 

assign CPT code 97606 (Negative 

pressure wound therapy (eg, vacuum 

assisted drainage collection), including 

topical application(s), wound 

assessment, and instruction(s) for 

ongoing care, per session; total 

wound(s) surface area greater than 50 

square centimeters) to APC 0015. In 

addition, for the CY 2015 OPPS update, 

we proposed to reassign CPT code 

97605 (Negative pressure wound 

therapy (eg, vacuum assisted drainage 

collection), including topical 

application(s), wound assessment, and 

instruction(s) for ongoing care, per 

session; total wound(s) surface area less 

than or equal to 50 square centimeters) 

from APC 0013 (Level II Debridement & 

Destruction), the APC to which the 

procedure is assigned for CY 2014, to 

APC 0015. As listed in Table 29 of the 

CY 2015 OPPS/ASC proposed rule (79 

FR 40916), we also proposed to reassign 

HCPCS codes G0456 (Negative pressure 

wound therapy (e.g. vacuum assisted 

drainage collection) using a 

mechanically-powered device, not 

durable medical equipment, including 

provision of cartridge and dressing(s), 

topical application(s), wound 

assessment, and instructions for ongoing 

care, per session; total wounds(s) 

surface area less than or equal to 50 

square centimeters) and G0457 

(Negative pressure wound therapy (e.g. 

vacuum assisted drainage collection) 

using a mechanically-powered device, 

not durable medical equipment, 

including provision of cartridge and 

dressing(s), topical application(s), 

wound assessment, and instructions for 

ongoing care, per session; total 

wounds(s) surface area greater than 50 

square centimeters) from APC 0016 

(Level III Debridement & Destruction) to 

APC 0015. 

We note that CPT codes 97605 and 

97606 became effective on January 1, 

2005, and describe the type of NPWT 

services that employ durable medical 

equipment (DME). Alternatively, HCPCS 

codes G0456 and G0457, which are 

relatively new codes that became 

effective on January 1, 2013, were 

established by CMS to provide a 

payment mechanism for NPWT services 

furnished using disposable supplies 

instead of DME. We proposed to 

maintain the assignment of status 

indicator ‘‘T’’ to these two codes. 

For the CY 2013 OPPS update, we 

assigned CPT code 97605 to APC 0013 

(Level II Debridement & Destruction), 

with a payment rate of $71.54 and CPT 

code 97606 to APC 0015 (Level III 

Debridement & Destruction), with a 

payment rate of $106.96. In addition, we 

assigned HCPCS codes G0456 and 

G0457 to APC 0016 (Level IV 

Debridement & Destruction), with a 

payment rate of $209.65. 

For the CY 2014 OPPS update, we 

continued to assign CPT code 97605 to 

APC 0013 and CPT code 97606 to APC 

0015. We also continued to assign 

HCPCS codes G0456 and G0457 to APC 

0016, with a payment rate of $274.81. 

We note that we stated in the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75001) that some 

commenters requested the reassignment 

of HCPCS codes G0456 and G0457 to a 

higher paying APC, with a payment rate 

specifically ranging between $450 and 

$500. The commenters believed that a 

higher paying APC would be more 

reflective of the cost of providing NPWT 

services using disposable supplies. We 

further stated that because HCPCS codes 

G0456 and G0457 were new codes for 

the CY 2013 OPPS update, we expected 

to have claims data available for these 

codes during the CY 2015 rulemaking 

cycle and, at that time, we would 

reevaluate the APC assignments for 

these services in preparation for the CY 

2015 OPPS update. 


tkelley on DSK3SPTVN1PROD with RULES2
66868 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

For the CY 2015 OPPS update, we 

analyzed the latest hospital outpatient 

claims data available for the CY 2015 

OPPS/ASC proposed rule, which was 

based on claims submitted between 

January 1, 2013 and December 31, 2013, 

and processed on or before December 

31, 2013. The data indicated that the 

geometric mean cost of APC 0013 was 

comparable to the geometric mean cost 

of APC 0015. Therefore, in the CY 2015 

OPPS/ASC proposed rule (79 FR 40988), 

we proposed to combine these APCs by 

reassigning all of the procedures from 

APC 0013 to APC 0015; delete APC 

0013, and retain APC 0015 for the CY 

2015 OPPS update. In addition, we 

proposed to rename the Debridement 

and Destruction APC series (excluding 

APC 0012) as follows: APC 0015 (Level 

II Debridement and Destruction); APC 

0016 (Level III Debridement and 

Destruction); and APC 0017 (Level IV 

Debridement and Destruction). 

Furthermore, the CY 2013 claims data 

available for the proposed rule also 

indicated that the geometric mean cost 

for HCPCS code G0456 was 

approximately $152 based on 4,509 

single claims (out of 5,772 total claims), 

and approximately $193 for HCPCS 

code G0457 based on 386 single claims 

(out of 591 total claims). The claims 

data also showed that the geometric 

mean cost for CPT code 97605 was 

approximately $101 based on 58,901 

single claims (out of 75,378 total 

claims), and approximately $140 for 

CPT code 97606 based on 6,722 single 

claims (out of 9,063 total claims). The 

proposed geometric mean costs of 

HCPCS codes G0456 and G0457, and 

CPT codes 97605 and 97606 were all 

comparable to the proposed geometric 

mean cost for APC 0015 of 

approximately $148. Based on analysis 

of the most recent claims data available 

for the proposed rule, we stated that we 

believed that the most appropriate 

assignment for all of the NPWT services 

was APC 0015 based on the clinical and 

resource homogeneity of the services 

assigned to this APC. The next higher 

cost APC in the series, APC 0016, had 

a proposed geometric mean cost of 

approximately $284, which was 

significantly higher than the proposed 

geometric mean cost of any of the 

NPWT services. Therefore, in the CY 

2015 OPPS/ASC proposed rule, we 

proposed to continue to assign CPT 

code 97606 to APC 0015, reassign CPT 

code 97605 from APC 0013 to APC 

0015, and reassign HCPCS codes G0456 

and G0457 from APC 0016 to APC 0015 

for the CY 2015 OPPS update. 

Comment: Most commenters 

requested that CMS continue to assign 

the disposable NPWT HCPCS codes 

G0456 and G0457 to APC 0016 for the 

CY 2015 OPPS update, which is the 

same APC to which these services are 

assigned for CY 2014. The commenters 

believed that hospitals may have 

miscoded claims reporting these 

services and, consequently, the CY 2015 

proposed payment rate of approximately 

$142 for HCPCS codes G0456 and 

G0457 is insufficient because the CY 

2013 OPPS claims data do not 

accurately capture the cost of the 

disposable supplies that is included in 

providing the service. One commenter 

stated that the cost of the disposable 

NPWT supplies range between $200 and 

$700 per case. The commenter provided 

copies of individual invoices that were 

forwarded to various hospitals from the 

manufacturer that showed a cost of 

approximately $220 for one disposable 

NPWT system. In addition, based on its 

analysis of charges reported by 

hospitals, the commenter believed that 

hospitals failed to understand the 

differences between the type of NPWT 

services that employ DME, which are 

described by CPT codes 97605 and 

97606, and the type of disposable 

NPWT services described by HCPCS 

G-codes. The commenter stated that, 

according to its data analysis, there was 

no difference in hospital charges for the 

two types of NPWT services reported on 

claims. The commenter believed that 

hospitals miscoded these claims 

because they may have believed that the 

services described by the CPT codes for 

the type of NPWT services that use DME 

are similar to the services described by 

the disposable NPWT HCPCS G-codes. 

Several commenters explained that the 

cost of the type of NPWT services that 

use DME does not include the cost of 

the devices and supplies that are used 

to provide the services described by the 

HCPCS G-codes. The commenter 

speculated that, although it appeared 

that hospitals did not include the cost 

of the disposable devices when 

reporting their charges for the services 

described by the disposable NPWT 

HCPCS G-codes, hospitals should have 

included such costs. Therefore, the 

commenters urged CMS to continue to 

assign HCPCS codes G0456 and G0457 

to APC 0016 for the CY 2015 OPPS 

update. 

Response: Based on the significant 

number of claims that are available for 

this final rule with comment period, we 

believe that APC 0015 best reflects the 

clinical characteristics and resource 

costs of HCPCS codes G0456 and G0457. 

In addition, we do not believe that 

continuing to assign HCPCS codes 

G0456 and G0457 to APC 0016 would 

be appropriate for CY 2015. Our 

analysis of the latest hospital outpatient 

claims data available for this CY 2015 

OPPS/ASC final rule with comment 

period, which is based on claims 

submitted between January 1, 2013 and 

December 31, 2013, and processed on or 

before June 30, 2014, indicates that the 

geometric mean costs for both HCPCS 

codes (G0456 and G0457) are very 

similar to the geometric mean cost of 

APC 0015. Specifically, our latest 

hospital outpatient claims data for this 

final rule with comment period show a 

geometric mean cost of approximately 

$158 for HCPCS code G0456 based on 

5,198 single claims (out of 6,645 total 

claims), which is close to the geometric 

mean cost of APC 0015, which is 

approximately $152. Similarly, our 

claims data show a geometric mean cost 

of approximately $202 for HCPCS code 

G0457 based on 476 single claims (out 

of 676 total claims), which is also closer 

to the geometric mean cost of APC 0015, 

which is approximately $152 than the 

geometric mean cost of APC 0016, 

which is approximately $294. 

In addition, we are not convinced that 

hospitals are reporting the same charges 

for the two types of NPWT services 

(DME-based and disposable) because a 

review of the latest claims data shows 

that the geometric mean costs for the 

most highly utilized procedures 

described by HCPCS code G0456 

(geometric mean cost of approximately 

$158) and CPT code 97605 (geometric 

mean cost of approximately $101) are 

significantly different. This difference in 

costs captured in the claims data 

demonstrates that hospitals are not 

reporting identical charges for the 

different types of NPWT services, DME 

and disposable-based. Furthermore, we 

note that for all APCs whose payment 

rates are based upon relative payment 

weights, the quality and accuracy of 

reported units and charges influence the 

geometric mean costs that are the basis 

for our payment rates, especially for low 

volume items and services. However, 

beyond our standard OPPS trimming 

methodology (described in section 

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

period) that we apply to those claims 

that have passed various types of claims 

processing edits, it is not our general 

policy to judge the accuracy of hospital 

coding and charging for purposes of 

ratesetting (75 FR 71838). We rely on 

hospitals to bill all HCPCS codes 

accurately in accordance with their code 

descriptors and CPT and CMS 

instructions, as applicable, and to report 

charges on claims and charges and costs 

on their Medicare hospital cost reports 

appropriately. In addition, we do not 

specify the methodologies that hospitals 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66869 

must use to set charges for this or any 

other service. Therefore, based on the 

latest hospital outpatient claims data 

available for this final rule with 

comment period, we believe that APC 

0015 best reflects the clinical 

characteristics and resource costs of 

HCPCS codes G0456 and G0457. 

Comment: One commenter 

recommended that CMS make certain 

changes to APCs 0015 and 0016. 

Specifically, the commenter 

recommended that CMS lower the 

geometric mean cost for APC 0016 to 

$190, which would result in reassigning 

certain codes that were in APC 0015 

whose geometric mean cost met or 

exceeded this amount to APC 0016. This 

commenter stated that such 

reassignment would retain HCPCS 

codes G0456 and G0457 in APC 0016. 

Response: We believe that the 

proposed structures of APCs 0015 and 

0016 (aside from the few code 

reassignments that are being made for 

the purpose of resolving a violation of 

the 2 times rule in APC 0015 that are 

discussed below) are optimal in terms of 

clinical and resource homogeneity. The 

geometric mean cost range for 

significant procedures assigned to APC 

0015 is between approximately $110 

(for CPT code 17250) and approximately 

$201 (for CPT code 11100). The 

geometric mean cost range for 

significant procedures assigned to APC 

0016 is between approximately $230 

(for CPT code 17282) and approximately 

$368 (for CPT code 11043). Reassigning 

HCPCS code G0456 from APC 0015 to 

APC 0016 would either violate the 2 

times rule in APC 0016 or necessitate 

dividing APC 0016 into two APCs, 

which we do not believe is appropriate 

or necessary. Both of these options are 

undesirable, especially given that the 

geometric mean cost of HCPCS code 

G0456 (approximately $158) is 

comparable to the geometric mean cost 

of APC 0015 (approximately $152). 

In summary, based on the latest 

claims data used for this final rule with 

comment period, we believe that HCPCS 

codes G0456 and G0457 are 

appropriately assigned in APC 0015 for 

the CY 2015 update based on the 

clinical and resource similarity to the 

other procedures in APC 0015. As has 

been our practice since the 

implementation of the OPPS in 2000, 

we review, on an annual basis, the APC 

assignments for the procedures and 

services paid under the OPPS. We will 

again review the APC assignments for 

all the NPWT services in light of the CY 

2014 claims data and the proposed APC 

structures for clinically relevant APCs 

and determine whether an APC 

reassignment for any of the NPWT codes 

would be appropriate in the CY 2016 

rulemaking. 

In addition, in the CY 2015 OPPS/

ASC proposed rule, there were 

violations of the 2 times rule noted for 

both APCs 0012 and 0015 (79 FR 

40981). Every year we make every effort 

to minimize the number of APCs that 

are listed as exceptions to the 2 times 

rule. To resolve the violations of the 2 

times rule in APCs 0012 and 0015, we 

are making the following code 

reassignments: 

• CPT codes 11719, 11720, 11721, 

11740, and 17340, and HCPCS code 

G0127 from APC 0012 to APC 0340. 

• CPT codes 11901, 12014, 96920, 

and 97605 from APC 0015 to APC 0012. 

These code reassignments eliminated 

the 2 times rule violations that existed 

in APCs 0012 and 0015 in the CY 2015 

OPPS/ASC proposed rule. We note that 

APC 0012 is one of the APCs included 

in the ancillary services packaging 

policy that is discussed in section 

II.A.3.c.(1) of this final rule with 

comment period. Because CPT code 

97605 is assigned to APC 0012, the code 

will be conditionally packaged and 

assigned to status indicator ‘‘Q1’’ for CY 

2015. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2015 proposal, with 

modification. Specifically, we are 

finalizing our proposal to assign CPT 

code 97606 and HCPCS codes G0456 

and G0457 to APC 0015. However, we 

are reassigning CPT code 97605 from 

our proposed APC 0015 to APC 0012 for 

the CY 2015 update to eliminate the 

violation of the 2 times rule that existed 

in APC 0015 based on claims data 

available for the proposed rule. 

In addition, for the CY 2015 update, 

the CPT Editorial Panel established two 

new CPT codes to describe disposable 

NPWT services and revised the long 

descriptors for existing CPT codes 

97605 and 97606, effective January 1, 

2015. Consistent with our general policy 

of using permanent codes rather than 

using temporary HCPCS G-codes in 

order to streamline coding, we are 

deleting HCPCS codes G0456 and G0457 

because they are replaced with two new 

CPT codes effective January 1, 2015. 

Table 25 below shows the replacement 

CPT codes for HCPCS codes G0456 and 

G0457 as well as the revised long 

descriptors for existing CPT codes 

97605 and 97606. The final CY 2015 

payment rate for the NPWT services 

codes can be found in Addendum B to 

this final rule with comment period 

(which is available via the Internet on 

the CMS Web site). Like all new codes 

effective January 1, 2015, the APC 

assignments for the new disposable 

NPWT CPT codes are open for comment 

for 60 days after display of this CY 2015 

OPPS/ASC final rule with comment 

period. 

TABLE 25—FINAL APC ASSIGNMENTS FOR THE NPWT SERVICES FOR CY 2015 

CY 2014 CPT/

HCPCS Code 

CY 2015 CPT 

Code CY 2015 Long descriptor 

Proposed 

CY 2015 

OPPS SI 

Proposed 

CY 2015 

OPPS APC 

Final CY 

2015 OPPS 

SI 

Final CY 

2015 OPPS 

APC 

97605 ................ 97605 ............... Negative pressure wound therapy (eg, vacuum 

assisted drainage collection), utilizing durable medical equipment (DME), including topical application(s), wound assessment, and 

instruction(s) for ongoing care, per session; 

total wound(s) surface area less than or 

equal to 50 square centimeters.

T 0015 Q1 0012 

97606 ................ 97606 ............... Negative pressure wound therapy (eg, vacuum 

assisted drainage collection), utilizing durable medical equipment (DME), including topical application(s), wound assessment, and 

instruction(s) for ongoing care, per session; 

total wound(s) surface area greater than 50 

square centimeters.

T 0015 T 0015 


tkelley on DSK3SPTVN1PROD with RULES2
66870 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

TABLE 25—FINAL APC ASSIGNMENTS FOR THE NPWT SERVICES FOR CY 2015—Continued 

CY 2014 CPT/

HCPCS Code 

CY 2015 CPT 

Code CY 2015 Long descriptor 

Proposed 

CY 2015 

OPPS SI 

Proposed 

CY 2015 

OPPS APC 

Final CY 

2015 OPPS 

SI 

Final CY 

2015 OPPS 

APC 

G0456 ............... 97607 ............... Negative pressure wound therapy, (eg, vacuum 

assisted drainage collection), utilizing disposable, non-durable medical equipment including provision of exudate management collection system, topical application(s), wound assessment, and instructions for ongoing care, 

per session; total wound(s) surface area less 

than or equal to 50 square centimeters.

T 0015 T 0015 

G0457 ............... 97608 ............... Negative pressure wound therapy, (eg, vacuum 

assisted drainage collection), utilizing disposable, non-durable medical equipment including provision of exudate management collection system, topical application(s), wound assessment, and instructions for ongoing care, 

per session; total wound(s) surface area 

greater than 50 square centimeters.

T 0015 T 0015 

d. Platelet Rich Plasma (PRP) (APC 

0327) 

For CY 2015, we proposed to continue 

to assign HCPCS code G0460 

(Autologous platelet rich plasma for 

chronic wounds/ulcers, including 

phlebotomy, centrifugation, and all 

other preparatory procedures, 

administration and dressings, per 

treatment) to APC 0327 (Level II 

Debridement & Destruction), with a 

proposed payment rate of approximately 

$431. We note that HCPCS code G0460, 

which became effective July 1, 2013, 

describes both the procedure and 

product components associated with the 

autologous platelet rich plasma service. 

Comment: One commenter requested 

that CMS exempt HCPCS code G0460 

from the geographic wage index 

variations to enable hospitals to more 

willingly participate in the AutoloGel 

Coverage with Evidence Development 

(CED) protocols. According to the 

commenter, HOPDs are reluctant to 

enroll in the CED protocols because they 

are concerned that the proposed APC 

payment rate will not cover the cost of 

the product, the procedure, the 

overhead, and the additional 

administrative effort associated with 

CED data collection requirements. In 

addition, the commenter requested that 

CMS establish a final payment rate for 

APC 0327 based on the geometric mean 

cost of $496.99 to help achieve some 

stability regarding the payment for the 

procedures assigned to this APC. 

Response: We note that comments 

related to CED protocols or data 

collection are outside the scope of the 

proposed rule. With regard to the 

geographic wage index exemption 

requested by the commenter, we have 

never made such an exception. Under 

the hospital OPPS, all procedures and 

services that include devices are wage 

adjusted. Moreover, the payment rates 

for procedures and APCs are not based 

on a specific projected amount. The 

final payment rate for APC 0327 is 

based on the geometric mean cost of all 

the procedures described by the HCPCS 

codes assigned to this APC. We believe 

that the procedure described by HCPCS 

code G0460 is appropriately assigned to 

APC 0327 for the CY 2015 OPPS update 

based on the clinical and resource 

similarities in relation to the other 

procedures assigned to APC 0327. We 

note that, for this final rule with 

comment period, which is based on 

hospital outpatient claims submitted 

between January 1, 2013, and December 

31, 2013, that were processed on or 

before June 30, 2014, our latest hospital 

outpatient claims data show no claims 

reporting the service described by 

HCPCS code G0460. As has been our 

practice since the implementation of the 

OPPS in 2000, we review, on an annual 

basis, the APC assignments for the 

procedures and services paid under the 

OPPS. We will review the APC 

assignment for HCPCS code G0460 

when sufficient claims data become 

available to determine whether a 

reassignment to a more appropriate APC 

is necessary for the CY 2016 update. 

After consideration of the public 

comment we received, we are finalizing 

our proposal, without modification, to 

continue to assign HCPCS code G0460 

to APC 0327 for CY 2015. The final CY 

2015 payment rate for HCPCS code 

G0460 can be found in Addendum B to 

this CY 2015 OPPS/ASC final rule 

(which is available via the Internet on 

the CMS Web site). 

IV. OPPS Payment for Devices 

A. Pass-Through Payments for Devices 

1. Expiration of Transitional PassThrough Payments for Certain Devices 

a. Background 

Section 1833(t)(6)(B)(iii) of the Act 

sets forth the period for which a device 

category eligible for transitional passthrough payments under the OPPS may 

be in effect. The implementing 

regulation at 42 CFR 419.66(g) provides 

that this pass-through payment 

eligibility period begins on the date 

CMS establishes a particular transitional 

pass-through category of devices. We 

may establish a new device category for 

pass-through payment in any quarter, 

and under our established policy, we 

base the pass-through status expiration 

date for a device category on the date on 

which pass-through payment is effective 

for the category; that is, the date CMS 

establishes a particular category of 

devices eligible for transitional passthrough payments. We propose and 

finalize the dates for expiration of passthrough status for device categories as 

part of the OPPS annual update. 

We also have an established policy to 

package the costs of the devices that are 

no longer eligible for pass-through 

payments into the costs of the 

procedures with which the devices are 

reported in the claims data used to set 

the payment rates (67 FR 66763). 

Brachytherapy sources, which are now 

separately paid in accordance with 

section 1833(t)(2)(H) of the Act, are an 

exception to this established policy. 

b. CY 2015 Policy 

There currently is one device category 

eligible for pass-through payment, 

which we established effective October 

1, 2013: HCPCS code C1841 (Retinal 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66871 

prosthesis, includes all internal and 

external components). Recognizing that 

this device category has been eligible for 

at least 2 years, but not more than 3 

years, of pass-through status by the end 

of CY 2015, in the CY 2015 OPPS/ASC 

proposed rule (79 FR 40989), we 

proposed the expiration of pass-through 

payment for HCPCS code C1841 devices 

on December 31, 2015. Therefore, in 

accordance with our established policy, 

beginning with CY 2016, we proposed 

to package the costs of the HCPCS code 

C1841 devices into the costs related to 

the procedures with which the device is 

reported in the hospital claims data (79 

FR 40989 through 40990). 

Comment: A few commenters 

requested that CMS extend the passthrough payment period for the device 

described by HCPCS code C1841 due to 

delay of the first date of sale of the 

device until January 2014. The 

commenters asserted that the delay was 

due to various regulatory delays, 

including the Food and Drug 

Administration’s (FDA’s) Humanitarian 

Device Exemption (HDE) approval 

process and Federal Communications 

Commission (FCC) regulations regarding 

utilization of a radiofrequency (RF) 

band approval. The commenters 

therefore requested that CMS use the 

date of the first sale or the date of the 

first HCPCS code C1841 device implant 

(January 16, 2014) to ‘‘reset’’ the start 

date for pass-through payment 

eligibility, which would result in 

another year of pass-through payment 

status. 

Response: According to 42 CFR 

419.66(g), ‘‘CMS limits the eligibility for 

a pass-through payment established 

under this section to a period of at least 

2 years, but not more than 3 years, 

beginning on the date that CMS 

establishes a category of devices’’ 

(emphasis added). We cannot extend the 

pass-through payment status of HCPCS 

code C1841 beyond CY 2015 because 

such an extension would make the passthrough payment status effective longer 

than the maximum 3-year period 

permitted under 42 CFR 419.66(g). 

Moreover, the HCPCS code C1841 

device category was made effective in 

the OPPS on October 1, 2013. The 

HCPCS code C1841 device category will 

have had more than 2 years of passthrough payment status as of December 

31, 2015. Extending pass-through 

payment status through December 31, 

2016, as requested by the commenter, 

would afford the HCPCS code C1841 

device category longer than the 3-year 

maximum pass-through payment 

period. Therefore, after consideration of 

the public comments we received, we 

are finalizing our proposal to expire 

HCPCS code C1841 device category 

from pass-through payment status after 

December 31, 2015. We are finalizing 

our proposal to package the costs for 

devices described by HCPCS code 

C1841 into the costs of the procedure 

with which the device is reported in the 

hospital claims data used in the 

development of the OPPS relative 

payment weights that will be used to 

establish the ASC payment rates for CY 

2016. 

With the expiration of HCPCS code 

C1841 device category from passthrough payment status at the end of CY 

2015, there are no other currently active 

categories for which we would expire 

pass-through status in CY 2015. If we 

create new device categories for passthrough payment status during the 

remainder of CY 2014 or during CY 

2015, we will propose future expiration 

dates in accordance with 42 CFR 

419.66(g). 

2. Provisions for Reducing Transitional 

Pass-Through Payments To Offset Costs 

Packaged Into APC Groups 

a. Background 

Section 1833(t)(6)(D)(ii) of the Act sets 

the amount of additional pass-through 

payment for an eligible device as the 

amount by which the hospital’s charges 

for a device, adjusted to cost (the cost 

of the device) exceeds the portion of the 

otherwise applicable Medicare 

outpatient department fee schedule 

amount (the APC payment amount) 

associated with the device. We have an 

established policy to estimate the 

portion of each APC payment rate that 

could reasonably be attributed to the 

cost of the associated devices that are 

eligible for pass-through payments (66 

FR 59904) for purposes of estimating the 

portion of the otherwise applicable APC 

payment amount associated with passthrough devices. For eligible device 

categories, we deduct an amount that 

reflects the portion of the APC payment 

amount that we determine is associated 

with the cost of the device, defined as 

the device APC offset amount, from the 

charges adjusted to cost for the device, 

as provided by section 1833(t)(6)(D)(ii) 

of the Act, to determine the passthrough payment amount for the eligible 

device. We have consistently used an 

established methodology to estimate the 

portion of each APC payment rate that 

could reasonably be attributed to the 

cost of an associated device eligible for 

pass-through payment, using claims 

data from the period used for the most 

recent recalibration of the APC rates (72 

FR 66751 through 66752). We establish 

and update the applicable device APC 

offset amounts for eligible pass-through 

device categories through the 

transmittals that implement the 

quarterly OPPS updates. 

We published a list of all procedural 

APCs with the CY 2014 portions (both 

percentages and dollar amounts) of the 

APC payment amounts that we 

determined are associated with the cost 

of devices on the CMS Web site at: 

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

Medicare-Fee-for-Service-Payment/

HospitalOutpatientPPS/index.html. The 

dollar amounts are used as the device 

APC offset amounts. In addition, in 

accordance with our established 

practice, the device APC offset amounts 

in a related APC are used in order to 

evaluate whether the cost of a device in 

an application for a new device category 

for pass-through payment is not 

insignificant in relation to the APC 

payment amount for the service related 

to the category of devices, as specified 

in our regulations at § 419.66(d). 

Beginning in CY 2010, we include 

packaged costs related to implantable 

biologicals in the device offset 

calculations in accordance with our 

policy that the pass-through evaluation 

process and payment methodology for 

implantable biologicals that are 

surgically inserted or implanted 

(through a surgical incision or a natural 

orifice) and that are newly approved for 

pass-through status beginning on or 

after January 1, 2010, be the device passthrough process and payment 

methodology only (74 FR 60476). 

b. CY 2015 Policy 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40990), we proposed to 

continue, for CY 2015, our established 

methodology to estimate the portion of 

each APC payment rate that could 

reasonably be attributed to (that is, 

reflect) the cost of an associated device 

eligible for pass-through payment, using 

claims data from the period used for the 

most recent recalibration of the APC 

payment rates. We proposed to continue 

our policy, for CY 2015, that the passthrough evaluation process and passthrough payment methodology for 

implantable biologicals that are 

surgically inserted or implanted 

(through a surgical incision or a natural 

orifice) and that are newly approved for 

pass-through status, be the device passthrough process and payment 

methodology only. The rationale for this 

policy is provided in the CY 2010 

OPPS/ASC final rule with comment 

period (74 FR 60471 through 60477). We 

also proposed to continue our 

established policies for calculating and 

setting the device APC offset amounts 

for each device category eligible for 

pass-through payment. In addition, we 


tkelley on DSK3SPTVN1PROD with RULES2
66872 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

proposed to continue to review each 

new device category on a case-by-case 

basis to determine whether device costs 

associated with the new category are 

already packaged into the existing APC 

structure. If device costs packaged into 

the existing APC structure are 

associated with the new category, we 

proposed to deduct the device APC 

offset amount from the pass-through 

payment for the device category. As 

stated earlier, these device APC offset 

amounts also would be used in order to 

evaluate whether the cost of a device in 

an application for a new device category 

for pass-through payment is not 

insignificant in relation to the APC 

payment amount for the service related 

to the category of devices (§ 419.66(d)). 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40990), for CY 2015, we also 

proposed to continue our policy 

established in CY 2010 to include 

implantable biologicals in our 

calculation of the device APC offset 

amounts. In addition, we proposed to 

continue to calculate and set any device 

APC offset amount for any new device 

pass-through category that includes a 

newly eligible implantable biological 

beginning in CY 2015, using the same 

methodology we have historically used 

to calculate and set device APC offset 

amounts for device categories eligible 

for pass-through payment, and to 

include the costs of implantable 

biologicals in the calculation of the 

device APC offset amounts (79 FR 

40990). 

In addition, in the CY 2015 OPPS/

ASC proposed rule (79 FR 40900), we 

proposed to update the list of all 

procedural APCs with the final CY 2015 

portions of the APC payment amounts 

that we determine are associated with 

the cost of devices on the CMS Web site 

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

Medicare-Fee-for-Service-Payment/

HospitalOutpatientPPS/index.html so 

that this information is available for use 

by the public in developing potential 

CY 2015 device pass-through payment 

applications and by CMS in reviewing 

those applications. 

Comment: One commenter objected to 

CMS’ proposal to continue its policy of 

evaluating implantable biological passthrough applications through the device 

evaluation process. The commenter 

believed that all biologicals should be 

evaluated through the drug and 

biological pass-through process, which 

is intended for the evaluation of drugs 

and biologicals. 

Response: We have discussed our 

rationale for this policy in the CY 2010 

OPPS/ASC final rule (74 FR 60463). 

Implantable biologicals function as 

implantable medical devices and are 

used in the HOPD in surgical 

procedures in a manner similar to 

implantable medical devices. Therefore, 

since CY 2010, we have treated them as 

medical devices for pass-through 

payment purposes. In addition, like 

implantable medical devices, 

implantable biologicals are treated as 

packaged surgical supplies in the OPPS 

under 42 CFR 419.2(b)(16). For these 

reasons, we will continue to treat 

implantable biologicals as devices for 

pass-through payment purposes in CY 

2015. 

After consideration of the public 

comment we received, we are finalizing, 

without modification, the 

aforementioned proposed policies for 

calculation of the device APC offset 

amounts for CY 2015. In addition, we 

are updating, on the CMS Web site at 

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

Medicare-Fee-for-Service-Payment/

HospitalOutpatientPPS/index.html, the 

list of all procedural APCs with the final 

CY 2015 portions of the APC payment 

amounts that we determine are 

associated with the cost of devices so 

that this information is available for use 

by the public in developing potential 

CY 2015 device pass-through payment 

applications and by CMS in reviewing 

those applications. 

B. Adjustment to OPPS Payment for No 

Cost/Full Credit and Partial Credit 

Devices 

1. Background 

To ensure equitable OPPS payment 

when a hospital receives a device 

without cost or with full credit, in CY 

2007, we implemented a policy to 

reduce the payment for specified 

device-dependent APCs by the 

estimated portion of the APC payment 

attributable to device costs (that is, the 

device offset) when the hospital receives 

a specified device at no cost or with full 

credit (71 FR 68071 through 68077). 

Hospitals are instructed to report no 

cost/full credit cases on the claim using 

the ‘‘FB’’ modifier on the line with the 

procedure code in which the no cost/

full credit device is used. In cases in 

which the device is furnished without 

cost or with full credit, the hospital is 

instructed to report a token device 

charge of less than $1.01. In cases in 

which the device being inserted is an 

upgrade (either of the same type of 

device or to a different type of device) 

with a full credit for the device being 

replaced, the hospital is instructed to 

report as the device charge the 

difference between its usual charge for 

the device being implanted and its usual 

charge for the device for which it 

received full credit. In CY 2008, we 

expanded this payment adjustment 

policy to include cases in which 

hospitals receive partial credit of 50 

percent or more of the cost of a specified 

device. Hospitals are instructed to 

append the ‘‘FC’’ modifier to the 

procedure code that reports the service 

provided to furnish the device when 

they receive a partial credit of 50 

percent or more of the cost of the new 

device. We refer readers to the CY 2008 

OPPS/ASC final rule with comment 

period for more background information 

on the ‘‘FB’’ and ‘‘FC’’ payment 

adjustment policies (72 FR 66743 

through 66749). 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75005 

through 75007), beginning in CY 2014, 

we modified our policy of reducing 

OPPS payment for specified APCs when 

a hospital furnishes a specified device 

without cost or with a full or partial 

credit. For CY 2013 and prior years, our 

policy had been to reduce OPPS 

payment by 100 percent of the device 

offset amount when a hospital furnishes 

a specified device without cost or with 

a full credit and by 50 percent of the 

device offset amount when the hospital 

receives partial credit in the amount of 

50 percent or more of the cost for the 

specified device. For CY 2014, we 

reduced OPPS payment, for the 

applicable APCs, by the full or partial 

credit a hospital receives for a replaced 

device. Specifically, under this 

modified policy, hospitals are required 

to report on the claim the amount of the 

credit in the amount portion for value 

code ‘‘FD’’ (Credit Received from the 

Manufacturer for a Replaced Medical 

Device) when the hospital receives a 

credit for a replaced device that is 50 

percent or greater than the cost of the 

device. For CY 2014, we also limited the 

OPPS payment deduction for the 

applicable APCs to the total amount of 

the device offset when the ‘‘FD’’ value 

code appears on a claim. 

2. Policy for CY 2015 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40990 through 40992), for 

CY 2015, we proposed to continue our 

existing policy of reducing OPPS 

payment for specified APCs when a 

hospital furnishes a specified device 

without cost or with a full or partial 

credit. Specifically, for CY 2015, we 

proposed to continue to reduce the 

OPPS payment, for the applicable APCs 

listed in Table 31 of the proposed rule, 

by the full or partial credit a provider 

receives for a replaced device. Under 

this proposed policy, hospitals would 

continue to be required to report on the 

claim the amount of the credit in the 

amount portion for ‘‘FD’’ when the 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66873 

hospital receives a credit for a replaced 

device listed in Table 32 of the 

proposed rule that is 50 percent or 

greater than the cost of the device. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40990 through 40992), for 

CY 2015, we also proposed to continue 

using the three criteria established in 

the CY 2007 OPPS/ASC final rule with 

comment period for determining the 

APCs to which our proposed CY 2015 

policy would apply (71 FR 68072 

through 68077). Specifically: (1) All 

procedures assigned to the selected 

APCs must involve implantable devices 

that would be reported if device 

insertion procedures were performed; 

(2) the required devices must be 

surgically inserted or implanted devices 

that remain in the patient’s body after 

the conclusion of the procedure (at least 

temporarily); and (3) the device offset 

amount must be significant, which, for 

purposes of this policy, is defined as 

exceeding 40 percent of the APC cost. 

We also proposed to continue to restrict 

the devices to which the APC payment 

adjustment would apply to a specific set 

of costly devices to ensure that the 

adjustment would not be triggered by 

the implantation of an inexpensive 

device whose cost would not constitute 

a significant proportion of the total 

payment rate for an APC. We stated that 

we continue to believe these criteria are 

appropriate because no cost devices and 

device credits are likely to be associated 

with particular cases only when the 

device must be reported on the claim 

and is of a type that is implanted and 

remains in the body when the 

beneficiary leaves the hospital. We 

believe that the reduction in payment is 

appropriate only when the cost of the 

device is a significant part of the total 

cost of the APC into which the device 

cost is packaged, and that the 40-percent 

threshold is a reasonable definition of a 

significant cost. 

Comment: One commenter urged 

CMS to discontinue its current policy of 

reducing OPPS payment for specified 

APCs when a hospital furnishes a 

specified device without cost or with a 

full or partial credit. The commenter 

stated that procedures which involve 

the replacement of a device are of 

greater complexity than the original 

insertion of the device. The commenter 

recommended that, because the 

replacement procedures are not paid at 

a higher rate, CMS not further penalize 

the hospital by reducing the OPPS 

payment when the device is furnished 

without cost or with a full or partial 

credit to the hospital. 

Response: We do not agree with the 

commenter and believe that it is 

appropriate to reduce the OPPS 

payment for specified APCs when a 

hospital furnishes a specified device 

without cost or with a full or partial 

credit. 

After consideration of the public 

comments we received, we are 

finalizing our proposals to continue our 

existing policy of reducing OPPS 

payment for specified APCs when a 

hospital furnishes a specified device 

without cost or with a full or partial 

credit, and to continue using the three 

criteria established in the CY 2007 

OPPS/ASC final rule with comment 

period (71 FR 68072 through 68077) for 

determining the APCs to which our CY 

2015 policy will apply. 

We examined the offset amounts 

calculated from the CY 2015 final rule 

with comment period data and the 

clinical characteristics of the final CY 

2015 APCs to determine which APCs 

meet the criteria for CY 2015. Table 26 

below lists the APCs to which the 

payment adjustment policy for no cost/ 

full credit and partial credit devices will 

apply in CY 2015. Table 27 below lists 

the devices to which the payment 

adjustment policy for no cost/full credit 

and partial credit devices will apply in 

CY 2015. 

Based on the final CY 2013 claims 

data available for this CY 2015 OPPS/

ASC final rule with comment period, we 

have updated the lists of APCs and 

devices to which the no cost/full credit 

and partial credit device adjustment 

policy will apply for CY 2015, 

consistent with the three criteria 

discussed earlier in this section. 

TABLE 26—APCS TO WHICH THE NO

COST/FULL CREDIT AND PARTIAL

CREDIT DEVICE PAYMENT ADJUSTMENT POLICY WILL APPLY IN CY 

2015 

CY 2015 

APC CY 2015 APC title 

0039 ......... Level III Neurostimulator & Related Procedures. 

0061 ......... Level II Neurostimulator & Related Procedures. 

0064 ......... Level III Treatment Fracture/Dislocation. 

0089 ......... Level III Pacemaker and Similar 

Procedures. 

0090 ......... Level II Pacemaker and Similar 

Procedures. 

0107 ......... Level I ICD and Similar Procedures. 

0108 ......... Level II ICD and Similar Procedures. 

0227 ......... Implantation of Drug Infusion 

Device. 

0229 ......... Level II Endovascular Procedures. 

0259 ......... Level VII ENT Procedures. 

0293 ......... Level IV Intraocular Procedures. 

TABLE 26—APCS TO WHICH THE NO

COST/FULL CREDIT AND PARTIAL

CREDIT DEVICE PAYMENT ADJUSTMENT POLICY WILL APPLY IN CY 

2015—Continued 

CY 2015 

APC CY 2015 APC title 

0318 ......... Level IV Neurostimulator & Related Procedures. 

0319 ......... Level III Endovascular Procedures. 

0351 ......... Level V Intraocular Procedures. 

0385 ......... Level I Urogenital Procedures. 

0386 ......... Level II Urogenital Procedures. 

0425 ......... Level V Musculoskeletal Procedures Except Hand and Foot. 

0655 ......... Level IV Pacemaker and Similar 

Procedures. 

TABLE 27—DEVICES TO WHICH THE

NO COST/FULL CREDIT AND PARTIAL

CREDIT DEVICE PAYMENT ADJUSTMENT POLICY WILL APPLY IN CY 

2015 

CY 2015 

Device 

HCPCS 

code 

CY 2015 Short descriptor 

C1721 ...... AICD, dual chamber. 

C1722 ...... AICD, single chamber. 

C1728 ...... Cath, brachytx seed adm. 

C1764 ...... Event recorder, cardiac. 

C1767 ...... Generator, neurostim, imp. 

C1771 ...... Rep dev, urinary, w/sling. 

C1772 ...... Infusion pump, programmable. 

C1776 ...... Joint device (implantable). 

C1777 ...... Lead, AICD, endo single coil. 

C1778 ...... Lead, neurostimulator. 

C1779 ...... Lead, pmkr, transvenous VDD. 

C1785 ...... Pmkr, dual, rate-resp. 

C1786 ...... Pmkr, single, rate-resp. 

C1789 ...... Prosthesis, breast, imp. 

C1813 ...... Prosthesis, penile, inflatab. 

C1815 ...... Pros, urinary sph, imp. 

C1818 ...... Integrated keratoprosthesis. 

C1820 ...... Generator, neuro rechg bat sys. 

C1840 ...... Lens, intraocular (telescopic). 

C1881 ...... Dialysis access system. 

C1882 ...... AICD, other than sing/dual. 

C1891 ...... Infusion pump, non-prog, perm. 

C1895 ...... Lead, AICD, endo dual coil. 

C1896 ...... Lead, AICD, non sing/dual. 

C1897 ...... Lead, neurostim, test kit. 

C1898 ...... Lead, pmkr, other than trans. 

C1899 ...... Lead, pmkr/AICD combination. 

C1900 ...... Lead coronary venous. 

C2619 ...... Pmkr, dual, non rate-resp. 

C2620 ...... Pmkr, single, non rate-resp. 

C2621 ...... Pmkr, other than sing/dual. 

C2622 ...... Prosthesis, penile, non-inf. 

C2626 ...... Infusion pump, non-prog, temp. 

C2631 ...... Rep dev, urinary, w/o sling. 


tkelley on DSK3SPTVN1PROD with RULES2
66874 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

V. OPPS Payment Changes for Drugs, 

Biologicals, and Radiopharmaceuticals 

A. OPPS Transitional Pass-Through 

Payment for Additional Costs of Drugs, 

Biologicals, and Radiopharmaceuticals 

1. Background 

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

for temporary additional payments or 

‘‘transitional pass-through payments’’ 

for certain drugs and biologicals. 

Throughout this final rule with 

comment period, the term ‘‘biological’’ 

is used because this is the term that 

appears in section 1861(t) of the Act. 

‘‘Biological’’ as used in this final rule 

with comment period includes 

‘‘biological product’’ or ‘‘biologic’’ as 

defined in the Public Health Service 

Act. As enacted by the Medicare, 

Medicaid, and SCHIP Balanced Budget 

Refinement Act of 1999 (BBRA) (Pub. L. 

106–113), this provision requires the 

Secretary to make additional payments 

to hospitals for: current orphan drugs, as 

designated under section 526 of the 

Federal Food, Drug, and Cosmetic Act; 

current drugs and biologicals and 

brachytherapy sources used in cancer 

therapy; and current 

radiopharmaceutical drugs and 

biologicals. ‘‘Current’’ refers to drugs or 

biologicals that are outpatient hospital 

services under Medicare Part B for 

which payment was made on the first 

date the hospital OPPS was 

implemented. 

Transitional pass-through payments 

also are provided for certain ‘‘new’’ 

drugs and biologicals that were not 

being paid for as an HOPD service as of 

December 31, 1996 and whose cost is 

‘‘not insignificant’’ in relation to the 

OPPS payments for the procedures or 

services associated with the new drug or 

biological. For pass-through payment 

purposes, radiopharmaceuticals are 

included as ‘‘drugs.’’ As required by 

statute, transitional pass-through 

payments for a drug or biological 

described in section 1833(t)(6)(C)(i)(II) 

of the Act can be made for a period of 

at least 2 years, but not more than 3 

years, after the payment was first made 

for the product as a hospital outpatient 

service under Medicare Part B. CY 2015 

pass-through drugs and biologicals and 

their designated APCs are assigned 

status indicator ‘‘G’’ in Addenda A and 

B to this final rule with comment 

period, which are available via the 

Internet on the CMS Web site. 

Section 1833(t)(6)(D)(i) of the Act 

specifies that the pass-through payment 

amount, in the case of a drug or 

biological, is the amount by which the 

amount determined under section 

1842(o) of the Act for the drug or 

biological exceeds the portion of the 

otherwise applicable Medicare OPD fee 

schedule that the Secretary determines 

is associated with the drug or biological. 

If the drug or biological is covered 

under a competitive acquisition contract 

under section 1847B of the Act, the 

pass-through payment amount is 

determined by the Secretary to be equal 

to the average price for the drug or 

biological for all competitive acquisition 

areas and the year established under 

such section as calculated and adjusted 

by the Secretary. However, we note that 

the Part B drug competitive acquisition 

program (CAP) has been postponed 

since CY 2009, and such a program has 

not been reinstated for CY 2015. 

This methodology for determining the 

pass-through payment amount is set 

forth in regulations at 42 CFR 419.64. 

These regulations specify that the 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 ‘‘ASPbased’’ 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-PartB-Drugs/McrPartBDrugAvgSalesPrice/

index.html. 

The pass-through application and 

review process for drugs and biologicals 

is explained on the CMS Web site at: 

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

Medicare-Fee-for-Service-Payment/

HospitalOutpatientPPS/passthrough_

payment.html. 

2. Drugs and Biologicals With Expiring 

Pass-Through Payment Status in CY 

2014 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40992), we proposed that 

the pass-through status of 9 drugs and 

biologicals would expire on December 

31, 2014, as listed in Table 33 of the 

proposed rule (79 FR 40993). All of 

these drugs and biologicals will have 

received OPPS pass-through payment 

for at least 2 years and no more than 3 

years by December 31, 2014. These 

drugs and biologicals were approved for 

pass-through status on or before January 

1, 2013. With the exception of those 

groups of drugs and biologicals that are 

always packaged when they do not have 

pass-through status (specifically, 

diagnostic radiopharmaceuticals; 

contrast agents; anesthesia drugs; drugs, 

biologicals, and radiopharmaceuticals 

that function as supplies when used in 

a diagnostic test or procedure; and drugs 

and biologicals that function as supplies 

when used in a surgical procedure), our 

standard methodology for providing 

payment for drugs and biologicals with 

expiring pass-through status in an 

upcoming calendar year is to determine 

the product’s estimated per day cost and 

compare it with the OPPS drug 

packaging threshold for that calendar 

year (which is $95 for CY 2015), as 

discussed further in section V.B.2. of 

this final rule with comment period. If 

the estimated per day cost for the drug 

or biological is less than or equal to the 

applicable OPPS drug packaging 

threshold, we would package payment 

for the drug or biological into the 

payment for the associated procedure in 

the upcoming calendar year. If the 

estimated per day cost of the drug or 

biological is greater than the OPPS drug 

packaging threshold, we would provide 

separate payment at the applicable 

relative ASP-based payment amount 

(which is ASP+6 percent for CY 2015, 

as discussed further in section V.B.3. of 

this final rule with comment period). 

Comment: Commenters, including 

several hospitals, physicians, and a 

manufacturer, requested that CMS 

continue to pay separately for Exparel®

(bupivacaine liposome injectable 

suspension) described by HCPCS code 

C9290 (Injection, bupivicaine liposome, 

1 mg) once pass-through payment status 

expires on December 31, 2014. 

Commenters disagreed with CMS’ 

proposal to package Exparel® as a 

surgical supply and stated that the drug 

is used to control postoperative pain 

and is not used in the actual surgical 

procedure. In addition, commenters 

noted that the product cost of Exparel®

exceeds the proposed CY 2015 

packaging threshold of $90 and is not 

FDA-approved as a local anesthetic. 

Response: We disagree with the 

commenters’ characterization of 

Exparel® as not functioning as a surgical 

supply because it is indicated for the 

alleviation of postoperative pain. The 

indications and usage of Exparel® as 

listed in the FDA-approved label are as 

follows: ‘‘Exparel® is a liposome 

injection of bupivacaine, an amide-type 

local anesthetic, indicated for 

administration into the surgical site to 

produce postsurgical analgesia.’’ 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66875 

Exparel® is injected immediately after 

the surgical procedure while the patient 

is still on the operating room table at the 

surgical wound site to control 

postoperative pain, which is an 

important part of the surgical care of the 

patient affecting the surgical outcome. 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 74925 

through 74939), we finalized our policy 

at 42 CFR 419.2(b)(16) to 

unconditionally package all drugs and 

biologicals that function as supplies in 

a surgical procedure. According to 

OPPS policy, drugs, biologicals, 

radiopharmaceuticals, implantable 

medical devices, and other items and 

products that are not equipment can be 

supplies in the OPPS (78 FR 43571 and 

43575). While the commenter stated that 

the cost of Exparel® exceeds the drug 

packaging threshold, we emphasize that 

cost consideration is not a factor in 

determining whether an item is a 

surgical supply. We consider all items 

related to the surgical outcome and 

provided during the hospital stay in 

which the surgery is performed, 

including postsurgical pain 

management drugs, to be part of the 

surgery for purposes of our drug and 

biological surgical supply packaging 

policy. Therefore, for CY 2015, we are 

finalizing our proposal to package 

Exparel® described by HCPCS code 

C9290 and to assign status indicator 

‘‘N’’ to the code for CY 2015. 

Comment: A few commenters 

recommended that CMS continue passthrough payment status for new drugs, 

specifically diagnostic 

radiopharmaceuticals and contrast 

agents, for a full 3 years. The 

commenters asserted that providing 

pass-through payment status for 3 years 

would help provide a more current and 

accurate data set on which to base 

payment amounts of the procedure 

when the diagnostic 

radiopharmaceutical or contrast agent is 

subsequently packaged. The 

commenters further recommended that 

CMS expire pass-through payment 

status for drugs and biologicals on a 

quarterly as opposed to an annual basis. 

Response: As we stated in the CY 

2012 OPPS/ASC final rule with 

comment period (76 FR 74287), the CY 

2013 OPPS/ASC final rule with 

comment period (77 FR 68363), and the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75010), and as 

described in section V.A. of this final 

rule with comment period, section 

1833(t)(6)(c)(i)(II) of the Act permits 

CMS to make pass-through payments for 

a period of at least 2 years, but not more 

than 3 years, after the product’s first 

payment as a hospital outpatient service 

under Medicare Part B OPPS. We 

continue to believe that this period of 

payment appropriately facilitates 

dissemination of these new products 

into clinical practice and facilitates the 

collection of sufficient hospital claims 

data reflective of their costs for future 

OPPS ratesetting. Our longstanding 

practice has been to provide passthrough payment for a period of 2 to 3 

years, with expiration of pass-through 

payment status proposed and finalized 

through the annual rulemaking process. 

Each year, when proposing to expire the 

pass-through payment status of certain 

drugs and biologicals, we examine our 

claims data for these products. We 

observe that hospitals typically have 

incorporated these products into their 

chargemasters based on the utilization 

and costs observed in our claims data. 

Under the existing pass-through 

payment policy, we begin pass-through 

payment on a quarterly basis, depending 

on when applications are submitted to 

us for consideration. We are confident 

that the period of time for which drugs, 

biologicals, contrast agents, and 

radiopharmaceuticals receive passthrough payment status, which is at 

least 2 but no more than 3 years, is 

appropriate for CMS to collect the 

sufficient amount of data to make a 

packaging determination. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to expire the pass-through 

payment status of the nine drugs and 

biologicals listed in Table 28 below. 

Table 28 lists the drugs and biologicals 

for which pass-through payment status 

will expire on December 31, 2014, the 

status indicators, and the assigned APCs 

for CY 2015. 

TABLE 28—DRUGS AND BIOLOGICALS FOR WHICH PASS-THROUGH PAYMENT STATUS EXPIRES DECEMBER 31, 2014 

CY 2015 

HCPCS Code CY 2015 Long descriptor Final CY 2015 SI 

Final CY 2015 

APC 

C9290 ............... Injection, bupivicaine liposome, 1 mg ...................................................................................... N N/A 

C9293 ............... Injection, glucarpidase, 10 units ............................................................................................... K 9293 

J0178 ................ Injection, aflibercept, 1 mg vial ................................................................................................. K 1420 

J0716 ................ Injection, centruroides (scorpion) immune f(ab)2, up to 120 milligrams .................................. K 1431 

J9019 ................ Injection, asparaginase (erwinaze), 1,000 iu ............................................................................ K 9289 

J9306 ................ Injection, pertuzumab, 1 mg ..................................................................................................... K 1471 

Q4131 ............... EpiFix, per square centimeter .................................................................................................. N N/A 

Q4132 ............... Grafix core, per square centimeter ........................................................................................... N N/A 

Q4133 ............... Grafix prime, per square centimeter ......................................................................................... N N/A 

3. Drugs, Biologicals, and 

Radiopharmaceuticals With New or 

Continuing Pass-Through Payment 

Status in CY 2015 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40993), we proposed to 

continue pass-through payment status 

in CY 2015 for 22 drugs and biologicals. 

None of these drugs and biologicals will 

have received OPPS pass-through 

payment for at least 2 years and no more 

than 3 years by December 31, 2014. 

These drugs and biologicals, which 

were approved for pass-through status 

between January 1, 2013 and July 1, 

2014, were listed in Table 34 of the 

proposed rule (79 FR 40994). The APCs 

and HCPCS codes for these drugs and 

biologicals approved for pass-through 

status through July 1, 2014 were 

assigned status indicator ‘‘G’’ in 

Addenda A and B to the proposed rule. 

Addenda A and B to the proposed rule 

are available via the Internet on the 

CMS Web site. 

Section 1833(t)(6)(D)(i) of the Act sets 

the amount of pass-through payment for 

pass-through drugs and biologicals (the 

pass-through payment amount) as the 

difference between the amount 

authorized under section 1842(o) of the 

Act and the portion of the otherwise 

applicable OPD fee schedule that the 

Secretary determines is associated with 

the drug or biological. Payment for 

drugs and biologicals with pass-through 

status under the OPPS is currently made 

at the physician’s office payment rate of 

ASP+6 percent. We stated in the 

proposed rule that we believe it is 


tkelley on DSK3SPTVN1PROD with RULES2
66876 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

consistent with the statute to propose to 

continue to provide payment for drugs 

and biologicals with pass-through status 

at a rate of ASP+6 percent in CY 2015, 

which is the amount that drugs and 

biologicals receive under section 

1842(o) of the Act. 

Therefore, for CY 2015, we proposed 

to pay for pass-through drugs and 

biologicals at ASP+6 percent, equivalent 

to the rate these drugs and biologicals 

would receive in the physician’s office 

setting in CY 2015. We proposed that a 

$0.00 pass-through payment amount 

would be paid for most pass-through 

drugs and biologicals under the CY 2015 

OPPS because the difference between 

the amount authorized under section 

1842(o) of the Act, which is ASP+6 

percent, and the portion of the 

otherwise applicable OPD fee schedule 

that the Secretary determines is 

appropriate, proposed at ASP+6 

percent, is $0. 

In the case of policy-packaged drugs 

(which include the following: Contrast 

agents; diagnostic radiopharmaceuticals; 

anesthesia drugs; drugs, biologicals, and 

radiopharmaceuticals that function as 

supplies when used in a diagnostic test 

or procedure and drugs; and biologicals 

that function as supplies when used in 

a surgical procedure), we proposed that 

their pass-through payment amount 

would be equal to ASP+6 percent for CY 

2015 because, if not on pass-through 

status, payment for these products 

would be packaged into the associated 

procedure. 

In addition, we proposed to continue 

to update pass-through payment rates 

on a quarterly basis on the CMS Web 

site during CY 2015 if later quarter ASP 

submissions (or more recent WAC or 

AWP information, as applicable) 

indicate that adjustments to the 

payment rates for these pass-through 

drugs or biologicals are necessary. For a 

full description of this policy, we refer 

readers to the CY 2006 OPPS/ASC final 

rule with comment period (70 FR 68632 

through 68635). 

In CY 2015, as is consistent with our 

CY 2014 policy for diagnostic and 

therapeutic radiopharmaceuticals, we 

proposed to provide payment for both 

diagnostic and therapeutic 

radiopharmaceuticals that are granted 

pass-through payment status based on 

the ASP methodology. As stated above, 

for purposes of pass-through payment, 

we consider radiopharmaceuticals to be 

drugs under the OPPS. Therefore, if a 

diagnostic or therapeutic 

radiopharmaceutical receives passthrough payment status during CY 2015, 

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 

is ASP+6 percent. If ASP data are not 

available for a radiopharmaceutical, we 

proposed to provide pass-through 

payment at WAC+6 percent, the 

equivalent payment provided to passthrough drugs and biologicals without 

ASP information. If WAC information 

also is not available, we proposed to 

provide payment for the pass-through 

radiopharmaceutical at 95 percent of its 

most recent AWP. 

Comment: Several commenters 

supported CMS’ proposal to provide 

payment at ASP+6 percent for drugs, 

biologicals, contrast agents, and 

radiopharmaceuticals that are granted 

pass-through payment status. A few 

commenters requested that CMS 

provide an additional payment for 

radiopharmaceuticals that are granted 

pass-through payment status. 

Response: As discussed above, the 

statute provides that mandated passthrough payment for pass-through drugs 

and biologicals for CY 2015 equals the 

amount determined under section 

1842(o) of the Act minus the portion of 

the otherwise applicable APC payment 

that CMS determines is associated with 

the drug or biological. Therefore, the 

pass-through payment is determined by 

subtracting the otherwise applicable 

payment amount under the OPPS 

(ASP+6 percent for CY 2015) from the 

amount determined under section 

1842(o) of the Act (ASP+6 percent). 

Regarding the commenters’ request 

that CMS provide an additional 

payment for radiopharmaceuticals that 

are granted pass-through payment 

status, we note that, for CY 2015, 

consistent with our CY 2014 payment 

policy for diagnostic and therapeutic 

radiopharmaceuticals, we proposed to 

provide payment for both diagnostic 

and therapeutic radiopharmaceuticals 

with pass-through payment status based 

on the ASP methodology. As stated 

above, the ASP methodology, as applied 

under the OPPS, uses several sources of 

data as a basis for payment, including 

the ASP, the WAC if the ASP is 

unavailable, and 95 percent of the 

radiopharmaceutical’s most recent AWP 

if the ASP and WAC are unavailable. 

For purposes of pass-through payment, 

we consider radiopharmaceuticals to be 

drugs under the OPPS. Therefore, if a 

diagnostic or therapeutic 

radiopharmaceutical receives passthrough payment status during CY 2015, 

we proposed to follow the standard ASP 

methodology to determine its passthrough payment rate under the OPPS to 

account for the acquisition and 

pharmacy overhead costs, including 

compounding costs. We continue to 

believe that a single payment is 

appropriate for diagnostic 

radiopharmaceuticals with pass-through 

payment status in CY 2015, and that the 

payment rate of ASP+6 percent (or 

payment based on the ASP 

methodology) is appropriate to provide 

payment for both the 

radiopharmaceutical’s acquisition cost 

and any associated nuclear medicine 

handling and compounding costs. We 

refer readers to section V.B.3. of this 

final rule with comment period for 

further discussion of payment for 

therapeutic radiopharmaceuticals based 

on ASP information submitted by 

manufacturers, and readers also may 

refer to the CMS Web site at: http://

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

HospitalOutpatientPPS/index.html. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to provide 

payment for drugs, biologicals, 

diagnostic and therapeutic 

radiopharmaceuticals, and contrast 

agents that are granted pass-through 

payment status based on the ASP 

methodology. If a diagnostic or 

therapeutic radiopharmaceutical 

receives pass- through status during CY 

2015, we will follow the standard ASP 

methodology to determine the passthrough payment rate that drugs receive 

under section 1842(o) of the Act, which 

is ASP+6 percent. If ASP data are not 

available for a radiopharmaceutical, we 

will provide pass-through payment at 

WAC+6 percent, the equivalent 

payment provided to pass-through drugs 

and biologicals without ASP 

information. If WAC information also is 

not available, we will provide payment 

for the pass-through 

radiopharmaceutical at 95 percent of its 

most recent AWP. 

As discussed in more detail in section 

II.A.3. of this final rule with comment 

period, we implemented a policy 

whereby payment for the following 

nonpass-through items is packaged into 

payment for the associated procedure: 

diagnostic radiopharmaceuticals; 

contrast agents; anesthesia drugs; drugs, 

biologicals, and radiopharmaceuticals 

that function as supplies when used in 

a diagnostic test or procedure; and drugs 

and biologicals that function as supplies 

when used in a surgical procedure. As 

stated earlier, pass-through payment is 

the difference between the amount 

authorized under section 1842(o) of the 

Act and the portion of the otherwise 

applicable OPD fee schedule that the 

Secretary determines is associated with 

the drug or biological. Because payment 

for a drug that is policy-packaged would 

otherwise be packaged if the product 

did not have pass-through payment 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66877 

status, we believe the otherwise 

applicable OPPS payment amount 

would be equal to the policy-packaged 

drug APC offset amount for the 

associated clinical APC in which the 

drug or biological is utilized. The 

calculation of the policy-packaged drug 

APC offset amounts is described in more 

detail in section V.A.4. of this final rule 

with comment period. It follows that the 

copayment for the nonpass-through 

payment portion (the otherwise 

applicable fee schedule amount that we 

would also offset from payment for the 

drug or biological if a payment offset 

applies) of the total OPPS payment for 

those drugs and biologicals, therefore, 

would be accounted for in the 

copayment for the associated clinical 

APC in which the drug or biological is 

used. 

According to section 1833(t)(8)(E) of 

the Act, the amount of copayment 

associated with pass-through items is 

equal to the amount of copayment that 

would be applicable if the pass-through 

adjustment was not applied. Therefore, 

as we did in CY 2014, in the CY 2015 

OPPS/ASC proposed rule, we proposed 

to continue to set the associated 

copayment amount to zero for CY 2015 

for pass-through drugs and biologicals 

that would otherwise be packaged if the 

item did not have pass-through payment 

status. The 22 drugs and biologicals that 

we proposed would continue to have 

pass-through payment status for CY 

2015 or have been granted pass-through 

payment status as of January 2015 were 

shown in Table 34 of the proposed rule 

(79 FR 40994). 

Comment: Commenters supported the 

CY 2015 proposal to continue to set the 

associated copayment amounts for passthrough diagnostic 

radiopharmaceuticals and contrast 

agents that would otherwise be 

packaged if the product did not have 

pass-through payment status to zero. 

The commenters noted that this policy 

is consistent with statutory 

requirements and provides cost-saving 

benefits to Medicare beneficiaries. 

Response: We appreciate the 

commenters’ support of our proposal. 

As discussed in the CY 2015 OPPS/ASC 

proposed rule (79 FR 40993 through 

40994), we believe that for drugs and 

biologicals that are ‘‘policy-packaged,’’ 

the copayment for the nonpass-through 

payment portion of the total OPPS 

payment for this subset of drugs and 

biologicals is accounted for in the 

copayment of the associated clinical 

APC in which the drug or biological is 

used. According to section 1833(t)(8)(E) 

of the Act, the amount of copayment 

associated with pass-through items is 

equal to the amount of copayment that 

would be applicable if the pass-through 

adjustment was not applied. Therefore, 

we believe that the copayment amount 

should be zero for drugs and biologicals 

that are ‘‘policy-packaged,’’ including 

diagnostic radiopharmaceuticals and 

contrast agents. We also believe that the 

copayment amount should be zero for 

anesthesia drugs that would otherwise 

be packaged if the item did not have 

pass-through payment status. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to continue to set the 

associated copayment amount for passthrough diagnostic 

radiopharmaceuticals, contrast agents, 

and anesthesia drugs that would 

otherwise be packaged if the item did 

not have pass-through payment status to 

zero for CY 2015. 

The 35 drugs and biologicals that will 

continue to have pass-through payment 

status for CY 2015 or have been granted 

pass-through payment status as of 

January 1, 2015 are shown in Table 29 

below. As is our standard methodology, 

we annually review new permanent 

HCPCS codes and delete temporary 

HCPCS C-codes if an alternate 

permanent HCPCS code is available for 

purposes of OPPS billing and payment. 

Table 29 below includes those coding 

changes. 

TABLE 29—DRUGS AND BIOLOGICALS WITH PASS-THROUGH PAYMENT STATUS IN CY 2015 

CY 2014 

HCPCS 

code 

CY 2015 

HCPCS 

code 

CY 2015 Long descriptor 

Final 

CY 2015 

SI 

Final 

CY 2015 

APC 

A9520 ...... A9520 .......... Technetium Tc 99m tilmanocept, diagnostic, up to 0.5 millicuries .................................. G 1463 

N/A ........... A9586 .......... Florbetapir f18, diagnostic, per study dose, up to 10 millicuries ..................................... G 1664 

C9021 ...... J9301 .......... Injection, obinutuzumab, 10 mg ....................................................................................... G 1476 

C9022 ...... J1322 .......... Injection, elosulfase alfa, 1mg ......................................................................................... G 1480 

C9023 ...... J3145 .......... Injection, testosterone undecanoate, 1 mg ...................................................................... G 1487 

C9025 ...... C9025 .......... Injection, ramucirumab, 5 mg .......................................................................................... G 1488 

C9026 ...... C9026 .......... Injection, vedolizumab, 1 mg ........................................................................................... G 1489 

N/A ........... C9027 ......... Injection, pembrolizumab, 1 mg ....................................................................................... G 1490 

C9132 ...... C9132 .......... Prothrombin complex concentrate (human), Kcentra, per i.u. of Factor IX activity ........ G 9132 

C9133 ...... J7200 .......... Factor ix (antihemophilic factor, recombinant), Rixubus, per i.u ..................................... G 1467 

C9134 ...... J7181 .......... Injection, Factor XIII A-subunit, (recombinant), per i.u .................................................... G 1746 

C9135 ...... J7201 .......... Injection, factor ix, fc fusion protein (recombinant), per i.u ............................................. G 1486 

N/A ........... C9136 ......... Injection, factor viii, fc fusion protein, (recombinant), per i.u ........................................... G 1656 

C9441 ...... J1439 .......... Injection, ferric carboxymaltose, 1 mg ............................................................................. G 9441 

N/A ........... C9349 ......... FortaDerm, and FortaDerm Antimicrobial, any type, per square centimeter .................. G 1657 

N/A ........... C9442 ......... Injection, belinostat, 10 mg .............................................................................................. G 1658 

N/A ........... C9443 ......... Injection, dalbavancin, 10 mg .......................................................................................... G 1659 

N/A ........... C9444 ......... Injection, oritavancin, 10 mg ............................................................................................ G 1660 

N/A ........... C9446 ......... Injection, tedizolid phosphate, 1 mg ................................................................................ G 1662 

N/A ........... C9447 ......... Injection, phenylephrine and ketorolac, 4 ml vial ............................................................ G 1663 

C9497 ...... C9497 .......... Loxapine, inhalation powder, 10 mg ................................................................................ G 9497 

J1446 ....... J1446 .......... Injection, tbo-filgrastim, 5 micrograms ............................................................................. G 1477 

J1556 ....... J1556 .......... Injection, immune globulin (Bivigam), 500 mg ................................................................. G 9130 

J3060 ....... J3060 .......... Injection, taliglucerase alfa, 10 units ................................................................................ G 9294 

J7315 ....... J7315 .......... Mitomycin, ophthalmic, 0.2 mg ........................................................................................ G 1448 

J7316 ....... J7316 .......... Injection, Ocriplasmin, 0.125 mg ..................................................................................... G 9298 

J7508 ....... J7508 .......... Tacrolimus, Extended Release, Oral, 0.1 mg .................................................................. G 1465 

J9047 ....... J9047 .......... Injection, carfilzomib, 1 mg .............................................................................................. G 9295 

J9262 ....... J9262 .......... Injection, omacetaxine mepesuccinate, 0.01 mg ............................................................. G 9297 

J9354 ....... J9354 .......... Injection, ado-trastuzumab emtansine, 1 mg ................................................................... G 9131 

J9371 ....... J9371 .......... Injection, Vincristine Sulfate Liposome, 1 mg .................................................................. G 1466 


tkelley on DSK3SPTVN1PROD with RULES2
66878 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

TABLE 29—DRUGS AND BIOLOGICALS WITH PASS-THROUGH PAYMENT STATUS IN CY 2015—Continued 

CY 2014 

HCPCS 

code 

CY 2015 

HCPCS 

code 

CY 2015 Long descriptor 

Final 

CY 2015 

SI 

Final 

CY 2015 

APC 

J9400 ....... J9400 .......... Injection, Ziv-Aflibercept, 1 mg ........................................................................................ G 9296 

Q4121 ...... Q4121 ......... Theraskin, per square centimeter .................................................................................... G 1479 

Q4122 ...... Q4122 ......... Dermacell, per square centimeter .................................................................................... G 1419 

Q4127 ...... Q4127 ......... Talymed, per square centimeter ...................................................................................... G 1449 

4. Provisions for Reducing Transitional 

Pass-Through Payments for PolicyPackaged Drugs and Biologicals To 

Offset Costs Packaged Into APC Groups 

a. Background 

Prior to CY 2008, diagnostic 

radiopharmaceuticals and contrast 

agents were paid separately under the 

OPPS if their mean per day costs were 

greater than the applicable year’s drug 

packaging threshold. In CY 2008 (72 FR 

66768), we began a policy of packaging 

payment for all nonpass-through 

diagnostic radiopharmaceuticals and 

contrast agents as ancillary and 

supportive items and services into their 

associated nuclear medicine procedures. 

Therefore, beginning in CY 2008, 

nonpass-through diagnostic 

radiopharmaceuticals and contrast 

agents were not subject to the annual 

OPPS drug packaging threshold to 

determine their packaged or separately 

payable payment status, and instead all 

nonpass-through diagnostic 

radiopharmaceuticals and contrast 

agents were packaged as a matter of 

policy. 

For CY 2014, in the CY 2014 OPPS/ 

ASC final rule with comment period (78 

FR 74925), we continued to package 

payment for all nonpass-through 

diagnostic radiopharmaceuticals, 

contrast agents, and anesthesia drugs, 

and we began packaging all nonpassthrough drugs, biologicals, and 

radiopharmaceuticals that function as 

supplies when used in a diagnostic test 

or procedure and drugs and biologicals 

that function as supplies when used in 

a surgical procedure. These packaging 

policies are codified at 42 CFR 419.2(b). 

b. Payment Offset Policy for Diagnostic 

Radiopharmaceuticals 

As previously noted, 

radiopharmaceuticals are considered to 

be drugs for OPPS pass-through 

payment purposes. As described above, 

section 1833(t)(6)(D)(i) of the Act 

specifies that the transitional passthrough payment amount for passthrough 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 passthrough payment for diagnostic 

radiopharmaceuticals an amount 

reflecting the portion of the APC 

payment associated with predecessor 

radiopharmaceuticals in order to ensure 

no duplicate radiopharmaceutical 

payment is made. 

In CY 2009, we established a policy 

to estimate the portion of each APC 

payment rate that could reasonably be 

attributed to the cost of predecessor 

diagnostic radiopharmaceuticals when 

considering a new diagnostic 

radiopharmaceutical for pass-through 

payment (73 FR 68638 through 68641). 

Specifically, we use the policy-packaged 

drug offset fraction for APCs containing 

nuclear medicine procedures, calculated 

as 1 minus the following: The cost from 

single procedure claims in the APC after 

removing the cost for policy-packaged 

drugs divided by the cost from single 

procedure claims in the APC. To 

determine the actual APC offset amount 

for pass-through diagnostic 

radiopharmaceuticals that takes into 

consideration the otherwise applicable 

OPPS payment amount, we multiply the 

policy-packaged drug offset fraction by 

the APC payment amount for the 

nuclear medicine procedure with which 

the pass-through diagnostic 

radiopharmaceutical is used and, 

accordingly, reduce the separate OPPS 

payment for the pass-through diagnostic 

radiopharmaceutical by this amount. 

For CY 2015, as we did in CY 2014, we 

proposed to continue to apply the 

diagnostic radiopharmaceutical offset 

policy to payment for pass-through 

diagnostic radiopharmaceuticals. 

There is currently one diagnostic 

radiopharmaceutical with pass-through 

status under the OPPS. HCPCS code 

A9520 (Technetium Tc 99m 

tilmanocept, diagnostic, up to 0.5 

millicuries) was granted pass-through 

payment status beginning October 1, 

2013. We currently apply the 

established radiopharmaceutical 

payment offset policy to pass-through 

payment for this product. 

Table 35 of the CY 2015 OPPS/ASC 

proposed rule (79 FR 40995) displayed 

the proposed APCs to which nuclear 

medicine procedures would be assigned 

in CY 2015 and for which we expect 

that an APC offset could be applicable 

in the case of diagnostic 

radiopharmaceuticals with pass-through 

status. 

Comment: A few commenters 

requested that CMS reinstate the ‘‘FB’’ 

modifier to specified nuclear medicine 

procedures in cases in which the 

diagnostic radiopharmaceutical is 

received at no cost or full credit. The 

commenters requested that the policy be 

maintained for CY 2015 and beyond. 

Response: As we discussed in the 

CY2014 OPPS/ASC final rule with 

comment period (78 FR 75016), our 

review of claims data showed that 

hospitals rarely received diagnostic 

radiopharmaceuticals at no cost or full 

credit. Therefore, we do not believe that 

the ‘‘FB’’ modifier policy is warranted 

for diagnostic radiopharmaceuticals. 

Comment: A few commenters agreed 

that pass-through payment status for 

HCPCS code A9520 should be extended 

for CY 2015. 

Response: We appreciate the 

commenters’ support. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to continue to apply the 

diagnostic radiopharmaceutical offset 

policy to payment for pass-through 

diagnostic radiopharmaceuticals, as 

described in the CY 2015 OPPS/ASC 

proposed rule (79 FR 40994 through 

40995). We will continue to reduce the 

payment amount for procedures in the 

APCs listed in Table 30 in this final rule 

with comment period by the full policypackaged offset amount appropriate for 

diagnostic radiopharmaceuticals. 

Table 30 below displays the APCs to 

which nuclear medicine procedures will 

be assigned in CY 2015 and for which 

we expect that an APC offset could be 

applicable in the case of diagnostic 

radiopharmaceuticals with pass-through 

payment status. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66879 

TABLE 30—APCS TO WHICH A DIAGNOSTIC RADIOPHARMACEUTICAL

OFFSET MAY BE APPLICABLE IN CY 

2015 

CY 2015 

APC CY 2015 APC title 

0308 ....... Positron Emission Tomography 

(PET) Imaging. 

0377 ....... Level II Cardiac Imaging. 

0378 ....... Level II Pulmonary Imaging. 

0389 ....... Level I Non-imaging Nuclear 

Medicine. 

0390 ....... Level I Endocrine Imaging. 

0391 ....... Level II Endocrine Imaging. 

0392 ....... Level II Non-imaging Nuclear 

Medicine. 

0393 ....... Hematologic Processing & Studies. 

0394 ....... Hepatobiliary Imaging. 

0395 ....... GI Tract Imaging. 

0396 ....... Bone Imaging. 

0398 ....... Level I Cardiac Imaging. 

0400 ....... Hematopoietic Imaging. 

0401 ....... Level I Pulmonary Imaging. 

0402 ....... Level II Nervous System Imaging. 

0403 ....... Level I Nervous System Imaging. 

0404 ....... Renal and Genitourinary Studies. 

0406 ....... Level I Tumor/Infection Imaging. 

0408 ....... Level III Tumor/Infection Imaging. 

0414 ....... Level II Tumor/Infection Imaging. 

c. Payment Offset Policy for Contrast 

Agents 

Section 1833(t)(6)(D)(i) of the Act 

specifies that the transitional passthrough payment amount for passthrough 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 passthrough payment for contrast agents an 

amount reflecting the portion of the 

APC payment associated with 

predecessor contrast agents in order to 

ensure no duplicate contrast agent 

payment is made. 

In CY 2010, we established a policy 

to estimate the portion of each APC 

payment rate that could reasonably be 

attributed to the cost of predecessor 

contrast agents when considering new 

contrast agents for pass-through 

payment (74 FR 60482 through 60484). 

Specifically, we use the policy-packaged 

drug offset fraction for procedural APCs, 

calculated as 1 minus the following: The 

cost from single procedure claims in the 

APC after removing the cost for policy 

packaged drugs divided by the cost from 

single procedure claims in the APC. To 

determine the actual APC offset amount 

for pass-through contrast agents that 

takes into consideration the otherwise 

applicable OPPS payment amount, in 

the CY 2015 OPPS/ASC proposed rule 

(79 FR 40995), we proposed to multiply 

the policy packaged drug offset fraction 

by the APC payment amount for the 

procedure with which the pass-through 

contrast agent is used and, accordingly, 

reduce the separate OPPS payment for 

the pass-through contrast agent by this 

amount. For CY 2015, as we did in CY 

2014, we proposed to continue to apply 

our standard contrast agents offset 

policy to payment for pass-through 

contrast agents (we refer readers to the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75017) for the 

final CY 2014 policy and the CY 2015 

OPPS/ASC proposed rule (79 FR 40995 

through 40996) for the proposed CY 

2015 policy). 

Although there are currently no 

contrast agents with pass-through 

payment status under the OPPS, we 

believe that a payment offset is 

necessary in the event that a new 

contrast agent is approved for passthrough status during CY 2015 in order 

to provide an appropriate transitional 

pass-through payment for new contrast 

agents. We proposed to identify 

procedural APCs for which we expect a 

contrast offset could be applicable in the 

case of a pass-through contrast agent as 

any procedural APC with a policypackaged drug amount greater than $20 

that is not a nuclear medicine APC 

identified in Table 35 of the proposed 

rule, and these APCs were displayed in 

Table 36 of the proposed rule. The 

methodology used to determine a 

proposed threshold cost for application 

of a contrast agent offset policy is 

described in detail in the CY 2010 

OPPS/ASC final rule with comment 

period (74 FR 60483 through 60484). 

For CY 2015, we proposed to continue 

to recognize that when a contrast agent 

with pass-through status is billed with 

any procedural APC listed in Table 36 

of the proposed rule (79 FR 40995 

through 40996), a specific offset based 

on the procedural APC would be 

applied to payment for the contrast 

agent to ensure that duplicate payment 

is not made for the contrast agent. 

We did not receive any public 

comments on this proposal. Therefore, 

we are finalizing our proposal for CY 

2015 without modification. We will 

continue to recognize that when a 

contrast agent with pass-through 

payment status is billed with any 

procedural APC listed in Table 31 

below, a specific offset based on the 

procedural APC will be applied to the 

payment for the contrast agent to ensure 

that duplicate payment is not made for 

the contrast agent. 

TABLE 31—APCS TO WHICH A CONTRAST AGENT OFFSET MAY BE APPLICABLE FOR CY 2015 

CY 2015 

APC CY 2015 APC title 

0080 ....... Diagnostic Cardiac Catheterization. 

0083 ....... Coronary Angioplasty, 

Valvuloplasty, and Level I 

Endovascular 

Revascularization. 

0093 ....... Vascular Reconstruction/Fistula 

Repair. 

0152 ....... Level I Percutaneous Abdominal 

and Biliary Procedures. 

0177 ....... Level I Echocardiogram With 

Contrast. 

0178 ....... Level II Echocardiogram With 

Contrast. 

0229 ....... Level II Endovascular 

Revascularization of the Lower 

Extremity. 

0278 ....... Diagnostic Urography. 

0279 ....... Level II Angiography and 

Venography. 

0280 ....... Level III Angiography and 

Venography. 

0283 ....... Computed Tomography with Contrast. 

0284 ....... Magnetic Resonance Imaging 

and Magnetic Resonance 

Angiography with Contrast. 

0333 ....... Computed Tomography without 

Contrast followed by Contrast. 

0334 ....... Combined Abdomen and Pelvis 

CT with Contrast. 

0337 ....... Magnetic Resonance Imaging 

and Magnetic Resonance 

Angiography without Contrast 

followed by Contrast. 

0375 ....... Ancillary Outpatient Services 

When Patient Expires. 

0383 ....... Cardiac Computed Tomographic 

Imaging. 

0388 ....... Discography. 

0442 ....... Dosimetric Drug Administration. 

0662 ....... CT Angiography. 

0668 ....... Level I Angiography and 

Venography. 

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

8008 ....... MRI and MRA with Contrast 

Composite. 

d. Payment Offset Policy for Drugs, 

Biologicals, and Radiopharmaceuticals 

That Function as Supplies When Used 

in a Diagnostic Test or Procedure and 

Drugs and Biologicals That Function as 

Supplies When Used in a Surgical 

Procedure 

Section 1833(t)(6)(D)(i) of the Act 

specifies that the transitional passthrough payment amount for passthrough drugs and biologicals is the 

difference between the amount paid 

under section 1842(o) of the Act and the 

otherwise applicable OPD fee schedule 

amount. In the CY 2014 OPPS/ASC final 

rule with comment period (78 FR 

74925), we finalized our policy to 


tkelley on DSK3SPTVN1PROD with RULES2
66880 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

package drugs, biologicals, and 

radiopharmaceuticals that function as 

supplies when used in a diagnostic test 

or procedure and drugs and biologicals 

that function as supplies when used in 

a surgical procedure. As a part of this 

policy, we specifically finalized that 

skin substitutes and stress agents used 

in myocardial perfusion imaging (MPI) 

be policy packaged in CY 2014, in 

addition to diagnostic 

radiopharmaceuticals, contrast agents, 

and anesthesia drugs (78 FR 75019). 

Because a payment offset is necessary in 

order to provide an appropriate 

transitional pass-through payment, we 

finalized a policy for CY 2014 to deduct 

from the pass-through payment for skin 

substitutes and stress agents an amount 

reflecting the portion of the APC 

payment associated with predecessor 

skin substitutes and stress agents in 

order to ensure no duplicate skin 

substitute or stress agent payment is 

made (78 FR 75019). 

In CY 2014, we established a policy 

to estimate the portion of each APC 

payment rate that could reasonably be 

attributed to the cost of predecessor skin 

substitutes or stress agents when 

considering a new skin substitute or 

stress agent for pass-through payment 

(78 FR 75019). Specifically, in the case 

of pass-through skin substitutes, we use 

the policy-packaged drug offset fraction 

for skin substitute procedural APCs, 

calculated as 1 minus the following: The 

cost from single procedure claims in the 

APC after removing the cost for policypackaged drugs divided by the cost from 

single procedure claims in the APC. 

Because policy packaged 

radiopharmaceuticals also would be 

included in the drug offset fraction for 

the APC to which MPI procedures are 

assigned, in the case of pass-through 

stress agents, we use the policypackaged drug offset fraction for the 

procedural APC, calculated as 1 minus 

the following: The cost from single 

procedure claims in the APC after 

removing the cost for policy-packaged 

drugs excluding policy-packaged 

diagnostic radiopharmaceuticals 

divided by the cost from single 

procedure claims in the APC. To 

determine the actual APC offset amount 

for pass-through skin substitutes and 

pass-through stress agents that takes 

into consideration the otherwise 

applicable OPPS payment amount, we 

multiply the policy-packaged drug offset 

fraction by the APC payment amount for 

the procedure with which the passthrough skin substitute or pass-through 

stress agent is used and, accordingly, 

reduce the separate OPPS payment for 

the pass-through skin substitute or passthrough stress agent by this amount (78 

FR 75019). In the CY 2015 OPPS/ASC 

proposed rule (79 FR 40996), for CY 

2015, as we did in CY 2014, we 

proposed to continue to apply the skin 

substitute and stress agent offset policy 

to payment for pass-through skin 

substitutes and stress agents. 

There are currently six skin 

substitutes (HCPCS codes Q4121, 

Q4122, Q4127, Q4131, Q4132, and 

Q4133) with pass-through payment 

status under the OPPS. We currently 

apply the established skin substitute 

payment offset policy to pass-through 

payment for these products. Table 37 of 

the CY 2015 OPPS/ASC proposed rule 

(79 FR 40996) displayed the proposed 

APCs to which skin substitute 

procedures would be assigned in CY 

2015 and for which we expect that an 

APC offset could be applicable in the 

case of skin substitutes with passthrough status. 

Although there are currently no stress 

agents with pass-through status under 

the OPPS, we believe that a payment 

offset is necessary in the event that a 

new stress agent is approved for passthrough status during CY 2015 in order 

to provide an appropriate transitional 

pass through payment for new stress 

agents. Table 38 of the CY 2015 OPPS/ 

ASC proposed rule (79 FR 40996) 

displayed the proposed APCs to which 

MPI procedures would be assigned in 

CY 2015 and for which we expect that 

an APC offset could be applicable in the 

case of a stress agent with pass-through 

status. 

We did not receive any public 

comments on these proposals. 

Therefore, we are finalizing our 

proposal, without modification, to 

recognize that when a skin substitute 

with pass-through payment status is 

billed with any procedural APC listed in 

Table 32 below, a specific offset based 

on the procedural APC will be applied 

to the payment for the skin substitute to 

ensure that duplicate payment is not 

made for the skin substitute. In 

addition, when a stress agent with passthrough payment status is billed with 

any procedural APC listed in Table 33 

below, a specific offset based on the 

procedural APC will be applied to the 

payment for the stress agent to ensure 

that duplicate payment is not made for 

the stress agent. Table 32 below displays 

the APCs to which skin substitute 

procedures will be assigned in CY 2015 

and for which we expect that an APC 

offset could be applicable in the case of 

skin substitutes with pass-through 

payment status. Table 33 below displays 

the APCs to which MPI procedures will 

be assigned in CY 2015 and for which 

we expect that an APC offset could be 

applicable in the case of a stress agent 

with pass-through payment status. 

TABLE 32—APCS TO WHICH A SKIN

SUBSTITUTE OFFSET MAY BE APPLICABLE FOR CY 2015 

CY 2015 

APC CY 2015 APC title 

0328 ....... Level III Skin Repair. 

0329 ....... Level IV Skin Repair. 

TABLE 33—APCS TO WHICH A

STRESS AGENT OFFSET MAY BE

APPLICABLE FOR CY 2015 

CY 2015 

APC CY 2015 APC title 

0100 ....... Cardiac Stress Tests. 

0377 ....... Level II Cardiac Imaging. 

As we proposed, we will continue to 

post annually on the CMS Web site at 

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

Medicare-Fee-for-Service-Payment/

HospitalOutpatientPPS/index.html a 

file that contains the APC offset 

amounts that will be used for that year 

for purposes of both evaluating cost 

significance for candidate pass-through 

device categories and drugs and 

biologicals and establishing any 

appropriate APC offset amounts. 

Specifically, the file will continue to 

provide the amounts and percentages of 

APC payment associated with packaged 

implantable devices, policy-packaged 

drugs, and threshold packaged drugs 

and biologicals for every OPPS clinical 

APC. 

B. OPPS Payment for Drugs, Biologicals, 

and Radiopharmaceuticals Without 

Pass-Through Payment Status 

1. Background 

Under the CY 2013 OPPS, we 

currently pay for drugs, biologicals, and 

radiopharmaceuticals that do not have 

pass-through payment status in one of 

two ways: as a packaged payment 

included in the payment for the 

associated service, or as a separate 

payment (individual APCs). We 

explained in the April 7, 2000 OPPS 

final rule with comment period (65 FR 

18450) that we generally package the 

cost of drugs and radiopharmaceuticals 

into the APC payment rate for the 

procedure or treatment with which the 

products are usually furnished. 

Hospitals do not receive separate 

payment for packaged items and 

supplies, and hospitals may not bill 

beneficiaries separately for any 

packaged items and supplies whose 

costs are recognized and paid within the 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66881 

national OPPS payment rate for the 

associated procedure or service. 

Packaging costs into a single aggregate 

payment for a service, procedure, or 

episode-of-care is a fundamental 

principle that distinguishes a 

prospective payment system from a fee 

schedule. In general, packaging the costs 

of items and services into the payment 

for the primary procedure or service 

with which they are associated 

encourages hospital efficiencies and 

also enables hospitals to manage their 

resources with maximum flexibility. 

2. Criteria for Packaging Payment for 

Drugs, Biologicals, and 

Radiopharmaceuticals 

a. Background 

As indicated in section V.B.1. of this 

final rule with comment period, in 

accordance with section 1833(t)(16)(B) 

of the Act, the threshold for establishing 

separate APCs for payment of drugs and 

biologicals was set to $50 per 

administration during CYs 2005 and 

2006. In CY 2007, we used the four 

quarter moving average Producer Price 

Index (PPI) levels for Pharmaceutical 

Preparations (Prescription) to trend the 

$50 threshold forward from the third 

quarter of CY 2005 (when the Pub. L. 

108–173 mandated threshold became 

effective) to the third quarter of CY 

2007. We then rounded the resulting 

dollar amount to the nearest $5 

increment in order to determine the CY 

2007 threshold amount of $55. Using 

the same methodology as that used in 

CY 2007 (which is discussed in more 

detail in the CY 2007 OPPS/ASC final 

rule with comment period (71 FR 68085 

through 68086)), we set the packaging 

threshold for establishing separate APCs 

for drugs and biologicals at $90 for CY 

2014. 

Following the CY 2007 methodology, 

for the CY 2015 OPPS/ASC proposed 

rule (79 FR 40997), we used the most 

recently available four quarter moving 

average PPI levels to trend the $50 

threshold forward from the third quarter 

of CY 2005 to the third quarter of CY 

2015 and rounded the resulting dollar 

amount ($91.46) to the nearest $5 

increment, which yielded a figure of 

$90. In performing this calculation, we 

used the most recent forecast of the 

quarterly index levels for the PPI for 

Pharmaceuticals for Human Use 

(Prescription) (Bureau of Labor Statistics 

(BLS) series code WPUSI07003) from 

CMS’ Office of the Actuary (OACT). We 

refer below to this series generally as the 

PPI for Prescription Drugs. 

Based on the calculations described 

above, we proposed a packaging 

threshold for CY 2015 of $90. (For a 

more detailed discussion of the OPPS 

drug packaging threshold and the use of 

the PPI for Prescription Drugs, we refer 

readers to the CY 2007 OPPS/ASC final 

rule with comment period (71 FR 68085 

through 68086).) 

Following the CY 2007 methodology, 

for this CY 2015 OPPS/ASC final rule 

with comment period, we used the most 

recently available four quarter moving 

average PPI levels to trend the $50 

threshold forward from the third quarter 

of CY 2005 to the third quarter of CY 

2015 and rounded the resulting dollar 

amount ($93.48) to the nearest $5 

increment, which yielded a figure of 

$95. In performing this calculation, we 

used the most recent forecast of the 

quarterly index levels for the PPI for 

Pharmaceuticals for Human Use 

(Prescription) (Bureau of Labor Statistics 

(BLS) series code WPUSI07003) from 

CMS’ Office of the Actuary (OACT). 

Therefore, for this CY 2015 OPPS/ASC 

final rule with comment period, using 

the CY 2007 OPPS methodology, we are 

establishing a packaging threshold for 

CY 2015 of $95. 

b. Cost Threshold for Packaging of 

Payment for HCPCS Codes That 

Describe Certain Drugs, Certain 

Biologicals, and Therapeutic 

Radiopharmaceuticals (‘‘ThresholdPackaged Drugs’’) 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 40997), to determine the 

proposed CY 2015 packaging status for 

all nonpass-through drugs and 

biologicals that are not policy packaged, 

we calculated, on a HCPCS 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 2013 and were 

paid (via packaged or separate payment) 

under the OPPS. We used data from CY 

2013 claims processed before January 1, 

2014 for this calculation. However, we 

did not perform this calculation for 

those drugs and biologicals with 

multiple HCPCS codes that include 

different dosages, as described in 

section V.B.2.c. of the proposed rule, or 

for the following policy-packaged items 

that we proposed to continue to package 

in CY 2015: diagnostic 

radiopharmaceuticals; contrast agents; 

anesthesia drugs; drugs, biologicals, and 

radiopharmaceuticals that function as 

supplies when used in a diagnostic test 

or procedure; and drugs and biologicals 

that function as supplies when used in 

a surgical procedure. 

In order to calculate the per day costs 

for drugs, biologicals, and therapeutic 

radiopharmaceuticals to determine their 

proposed packaging status in CY 2015, 

we used the methodology that was 

described in detail in the CY 2006 OPPS 

proposed rule (70 FR 42723 through 

42724) and finalized in the CY 2006 

OPPS final rule with comment period 

(70 FR 68636 through 68638). For each 

drug and biological HCPCS code, we 

used an estimated payment rate of 

ASP+6 percent (which is the payment 

rate we proposed for separately payable 

drugs and biologicals for CY 2015, as 

discussed in more detail in section 

V.B.3.b. of the proposed rule) to 

calculate the CY 2015 proposed rule per 

day costs. We used the manufacturer 

submitted ASP data from the fourth 

quarter of CY 2013 (data that were used 

for payment purposes in the physician’s 

office setting, effective April 1, 2014) to 

determine the proposed rule per day 

cost. 

As is our standard methodology, for 

CY 2015, we proposed to use payment 

rates based on the ASP data from the 

fourth quarter of CY 2013 for budget 

neutrality estimates, packaging 

determinations, impact analyses, and 

completion of Addenda A and B to the 

proposed rule (which are available via 

the Internet on the CMS Web site) 

because these were the most recent data 

available for use at the time of 

development of the proposed rule. 

These data also were the basis for drug 

payments in the physician’s office 

setting, effective April 1, 2014. For 

items that did not have an ASP-based 

payment rate, such as some therapeutic 

radiopharmaceuticals, we used their 

mean unit cost derived from the CY 

2013 hospital claims data to determine 

their per day cost. 

We proposed to package items with a 

per day cost less than or equal to $90, 

and identify items with a per day cost 

greater than $90 as separately payable. 

Consistent with our past practice, we 

crosswalked historical OPPS claims data 

from the CY 2013 HCPCS codes that 

were reported to the CY 2014 HCPCS 

codes that we displayed in Addendum 

B to the proposed rule (which is 

available via the Internet on the CMS 

Web site) for payment in CY 2015. 

Comment: The majority of the 

commenters opposed the continuation 

of the OPPS packaging threshold of $90 

for CY 2015. The commenters believed 

that, over the past 5 years, CMS has 

rapidly increased the packaging 

threshold, which contradicts 

Congressional intent. As such, the 

commenters recommended that CMS 

eliminate the packaging threshold and 

provide separate payment for all drugs 

with HCPCS codes or freeze the 

packaging threshold at the current level 

($90). 


tkelley on DSK3SPTVN1PROD with RULES2
66882 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

Response: As stated in the CY 2007 

OPPS/ASC final rule with comment 

period (71 FR 68086), we believe that 

packaging certain items is a 

fundamental component of a 

prospective payment system, that 

updating the packaging threshold of $50 

for the CY 2005 OPPS is consistent with 

industry and government practices, and 

that the PPI for Prescription Drugs is an 

appropriate mechanism to gauge Part B 

drug inflation. Therefore, because of our 

continued belief that packaging is a 

fundamental component of a 

prospective payment system that 

continues to provide important 

flexibility and efficiency in the delivery 

of high quality hospital outpatient 

services, we are not adopting 

commenters’ recommendations to pay 

separately for all drugs, biologicals, and 

radiopharmaceuticals for CY 2015 or to 

eliminate the packaging threshold or to 

freeze the packaging threshold at $90. 

Since publication of the CY 2015 

OPPS/ASC proposed rule, consistent 

with our policy of updating the 

packaging threshold with more recently 

available data for this final rule with 

comment period, we have again 

followed the CY 2007 methodology for 

CY 2015 and used updated four quarter 

moving average PPI index levels 

provided by the CMS Office of the 

Actuary to trend the $50 threshold 

forward from the third quarter of CY 

2005 to the third quarter of CY 2015. We 

then rounded the resulting updated 

dollar amount ($93.48) to the nearest $5 

increment, which yielded a figure of 

$95. Therefore, after consideration of 

the public comments we received, and 

consistent with our methodology for 

establishing the packaging threshold 

using the most recent PPI forecast data, 

we are adopting a CY 2015 packaging 

threshold of $95. 

Our policy during previous cycles of 

the OPPS has been to use updated ASP 

and claims data to make final 

determinations of the packaging status 

of HCPCS codes for drugs, biologicals, 

and therapeutic radiopharmaceuticals 

for the OPPS/ASC final rule with 

comment period. We note that it is also 

our policy to make an annual packaging 

determination for a HCPCS code only 

when we develop the OPPS/ASC final 

rule with comment period for the 

update year. Only HCPCS codes that are 

identified as separately payable in the 

final rule with comment period are 

subject to quarterly updates. For our 

calculation of per day costs of HCPCS 

codes for drugs and biologicals in this 

CY 2015 OPPS/ASC final rule with 

comment period, we used ASP data 

from the first quarter of CY 2014, which 

is the basis for calculating payment rates 

for drugs and biologicals in the 

physician’s office setting using the ASP 

methodology, effective July 1, 2014, 

along with updated hospital claims data 

from CY 2013. We note that we also 

used these data for budget neutrality 

estimates and impact analyses for this 

CY 2015 OPPS/ASC final rule with 

comment period. 

Payment rates for HCPCS codes for 

separately payable drugs and biologicals 

included in Addenda A and B to this 

final rule with comment period are 

based on ASP data from the second 

quarter of CY 2014. These data are the 

basis for calculating payment rates for 

drugs and biologicals in the physician’s 

office setting using the ASP 

methodology, effective October 1, 2014. 

These payment rates will then be 

updated in the January 2015 OPPS 

update, based on the most recent ASP 

data to be used for physician’s office 

and OPPS payment as of January 1, 

2015. For items that do not currently 

have an ASP-based payment rate, we 

recalculated their mean unit cost from 

all of the CY 2013 claims data and 

updated cost report information 

available for this CY 2015 final rule 

with comment period to determine their 

final per day cost. 

Consequently, the packaging status of 

some HCPCS codes for drugs, 

biologicals, and therapeutic 

radiopharmaceuticals in the CY 2015 

OPPS/ASC proposed rule may be 

different from the same drug HCPCS 

code’s packaging status determined 

based on the data used for this CY 2015 

OPPS/ASC final rule with comment 

period. Under such circumstances, we 

proposed to continue to follow the 

established policies initially adopted for 

the CY 2005 OPPS (69 FR 65780) in 

order to more equitably pay for those 

drugs whose cost fluctuates relative to 

the proposed CY 2015 OPPS drug 

packaging threshold and the drug’s 

payment status (packaged or separately 

payable) in CY 2014. Specifically, for 

CY 2015, consistent with our historical 

practice, we proposed to apply the 

following policies to these HCPCS codes 

for drugs, biologicals, and therapeutic 

radiopharmaceuticals whose 

relationship to the drug packaging 

threshold changes based on the updated 

drug packaging threshold and on the 

final updated data: 

• HCPCS codes for drugs and 

biologicals that were paid separately in 

CY 2014 and that were proposed for 

separate payment in CY 2015, and that 

then have per day costs equal to or less 

than the CY 2015 final rule drug 

packaging threshold, based on the 

updated ASPs and hospital claims data 

used for the CY 2015 final rule, would 

continue to receive separate payment in 

CY 2015. 

• HCPCS codes for drugs and 

biologicals that were packaged in CY 

2014 and that were proposed for 

separate payment in CY 2015, and that 

then have per day costs equal to or less 

than the CY 2015 final rule drug 

packaging threshold, based on the 

updated ASPs and hospital claims data 

used for the CY 2015 final rule, would 

remain packaged in CY 2015. 

• HCPCS codes for drugs and 

biologicals for which we proposed 

packaged payment in CY 2015 but then 

have per day costs greater than the CY 

2015 final rule drug packaging 

threshold, based on the updated ASPs 

and hospital claims data used for the CY 

2015 final rule, would receive separate 

payment in CY 2015. 

We did not receive any public 

comments on our proposal to apply the 

established policies initially adopted for 

the CY 2005 OPPS (69 FR 65780) in 

order to more equitably pay for those 

drugs whose cost fluctuates relative to 

the CY 2015 OPPS drug packaging 

threshold and the drug’s payment status 

(packaged or separately payable) in CY 

2013. Therefore, we are finalizing our 

proposal, without modification, for CY 

2015. 

c. High Cost/Low Cost Threshold for 

Packaged Skin Substitutes 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 74938), we 

unconditionally packaged skin 

substitute products into their associated 

surgical procedures as part of a broader 

policy to package all drugs and 

biologicals that function as supplies 

when used in a surgical procedure. The 

adoption of this policy, to package all 

drugs and biologicals that function as 

supplies when used in a surgical 

procedure, followed these packaging 

policies: (1) Packaging of medical and 

surgical supplies into the related 

procedure under 42 CFR 419.2(b)(4) (68 

FR 18543); (2) packaging of implantable 

devices (68 FR 18444); and (3) 

packaging of implantable biologicals (73 

FR 68634). As noted in the CY 2014 

OPPS/ASC final rule with comment 

period, we believe these policies 

represented an example of a broader 

category of drugs and biologicals that 

should be packaged in the OPPS, that is, 

drugs and biologicals that function as 

supplies in a surgical procedure (78 FR 

74930). As part of the policy to finalize 

the packaging of skin substitutes, we 

also finalized a methodology that 

divides the skin substitutes into a high 

cost group and a low cost group, in 

order to ensure adequate resource 

homogeneity among APC assignments 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66883 

for the skin substitute application 

procedures (78 FR 74933). For the CY 

2014 update, assignment to the high 

cost or low cost skin substitute group 

depended upon a comparison of the July 

2013 ASP+6 percent payment amount 

for each skin substitute to the weighted 

average payment per unit for all skin 

substitutes. The weighted average was 

calculated using the skin substitute 

utilization from the CY 2012 claims data 

and the July 2013 ASP+6 percent 

payment amounts. The high cost/low 

cost skin substitute threshold for CY 

2014 is $32 per cm2. Skin substitutes 

that had a July 2013 ASP+6 percent 

amount above $32 per cm2 were 

classified in the high cost group, and 

skin substitutes that had a July 2013 

ASP+6 percent amount at or below $32 

per cm2 were classified in the low cost 

group. Any new skin substitutes 

without pricing information are 

assigned to the low cost category until 

pricing information is available to 

compare to the $32 per cm2 threshold 

for CY 2014. Skin substitutes with passthrough payment status are assigned to 

the high cost category, with an offset 

applied as described in section V.A.4.d. 

of the CY 2015 OPPS/ASC proposed 

rule (79 FR 40996). 

As discussed in the CY 2015 OPPS/ 

ASC proposed rule (79 FR 40998 

through 40999), after the effective date 

of the CY 2014 packaging policy, some 

skin substitute manufacturers brought 

the following issues to our attention 

regarding the CY 2014 methodology for 

determining the high cost/low cost 

threshold: 

• Using ASP to determine a product’s 

placement in the high or low cost 

category may unfairly disadvantage the 

limited number of skin substitute 

products that are sold in large sizes (that 

is, above 150 cm2). Large size skin 

substitute products are primarily used 

for burns that are treated on an inpatient 

basis. These manufacturers contend that 

nonlinear pricing for skin substitute 

products sold in both large and small 

sizes results in lower per cm2 prices for 

large sizes. Therefore, the use of ASP 

data to categorize products into high 

and low cost categories can result in 

placement of products that have 

significant inpatient use of the large, 

lower-priced (per cm2) sizes into the 

low cost category, even though these 

large size products are not often used in 

the hospital outpatient department. 

• Using a weighted average ASP to 

establish the high/low cost categories, 

combined with the drug pass-through 

policy, will lead to unstable high/low 

cost skin substitute categories in the 

future. According to one manufacturer, 

under our CY 2014 policy, 

manufacturers with products on passthrough payment status have an 

incentive to set a very high price 

because hospitals are price-insensitive 

to products paid with pass-through 

payments. As these new high priced 

pass-through skin substitutes capture 

more market share, the weighted 

average ASP high cost/low cost 

threshold could escalate rapidly, 

resulting in a shift in the assignment of 

many skin substitutes from the high cost 

category to the low cost category. 

As stated in the CY 2015 OPPS/ASC 

proposed rule (79 FR 40998), we agree 

with stakeholder concerns regarding the 

potential instability of the high/low cost 

categories associated with the drug passthrough policy, as well as stakeholder 

concerns about the inclusion of largesized products that are primarily used 

for inpatients in the ASP calculation, 

when ASP is used to establish the high 

cost/low cost categories. As an 

alternative to using ASP data, we 

believe that establishing the high cost/ 

low cost threshold using an alternative 

methodology (that is, the weighted 

average mean unit cost (MUC) for all 

skin substitute products from claims 

data) may provide more stable high/low 

cost categories and will resolve the issue 

associated with large sized products 

because the MUC will be derived from 

hospital outpatient claims only. The 

threshold would be based on costs from 

hospital outpatient claims data instead 

of manufacturer reported sales prices 

that would not include larger sizes 

primarily used for inpatient burn cases. 

Therefore, in the CY 2015 OPPS/ASC 

proposed rule (79 FR 40999), we 

proposed to maintain the high cost/low 

cost APC structure for skin substitute 

procedures in CY 2015. However, we 

proposed to revise the current 

methodology used to establish the high 

cost/low cost threshold, and to establish 

the high cost/low cost threshold based 

on the weighted average MUC for all 

skin substitutes using CY 2013 claims 

(which was proposed to be $27 per 

cm2). Skin substitutes with an MUC 

above $27 per cm2 using CY 2013 

claims were proposed to be classified in 

the high cost group and those with an 

MUC at or below $27 per cm2 were 

proposed to be classified in the low cost 

group. Table 39 of the CY 2015 OPPS/ 

ASC proposed rule (79 FR 40999) 

showed the CY 2014 high cost/low cost 

status for each skin substitute product 

and the proposed CY 2015 high cost/

low cost status based on the weighted 

average MUC threshold of $27. We 

proposed to continue the CY 2014 

policy that skin substitutes with passthrough payment status would be 

assigned to the high cost category for CY 

2015. Skin substitutes with pricing 

information but without claims data to 

calculate an MUC would be assigned to 

either the high or low cost category 

based on the product’s ASP+6 percent 

payment rate. If ASP is not available we 

would use WAC+6 percent or 95 

percent of AWP to assign a product to 

either the high cost or low cost category. 

We also proposed that any new skin 

substitute without pricing information 

be assigned to the low cost category 

until pricing information is available to 

compare to the CY 2015 threshold. 

Comment: Several commenters 

supported CMS’ proposal to revise the 

methodology used to establish the high 

cost/low cost threshold from an ASPbased methodology to a methodology 

based on the weighted average MUC for 

all skin substitutes using CY 2013 

claims data. The commenters agreed 

that the MUC methodology would 

promote stability of assignments to the 

high and low cost categories and not 

disadvantage certain skin substitutes 

that are sold in especially large sizes. 

Response: We appreciate the 

commenters’ support. 

Comment: Other commenters 

requested that CMS retain the ASPbased methodology for calculating the 

high cost/low cost threshold because, in 

their opinion, the ASP is a better metric 

for skin substitute costs than hospital 

outpatient claims data. 

Response: We disagree with the 

assertion that ASP better represents the 

hospital costs for skin substitutes than 

hospital claims data. ASP is a blend of 

sales prices from a variety of purchasers, 

including various nonhospital entities. 

ASP also excludes a significant number 

of hospital sales, for example sales to 

340B hospitals. Hospital claims data are 

specific to hospitals, and are used in 

assessing the costs of almost all other 

items and services in the OPPS, 

including other similar surgical 

supplies, such as implantable devices 

and implantable biologicals, which we 

package for payment purposes in the 

OPPS. Furthermore, as stated in the CY 

2015 OPPS/ASC proposed rule (79 FR 

40998), we believe that using MUC will 

better promote stability versus ASP for 

high and low cost category assignments 

for skin substitutes, because ASP can be 

set very high by skin substitute 

manufacturers and disproportionally 

impact the threshold calculation. 

Comment: Two commenters 

recommended an alternative high cost/ 

low cost threshold calculation 

methodology. Instead of basing the 

threshold on the unit cost the 

commenters urged CMS to calculate the 

high cost/low cost threshold based on 

the total skin substitute costs per 


tkelley on DSK3SPTVN1PROD with RULES2
66884 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

patient, per day, which is currently the 

mechanism used to set the general OPPS 

drug, biological, and 

radiopharmaceutical packaging 

threshold, which was proposed as $90 

for CY 2015. These commenters 

believed that calculating the threshold 

cost per cm2 does not accurately reflect 

the true cost of products as they are 

used clinically, and could result in 

displacing larger single-size skin 

substitutes approved through a 

Premarket Approval (PMA) into the 

low-cost skin substitute group beginning 

in CY 2016. They believed that this is 

partly a consequence of CMS’ broad 

categorization of products as skin 

substitutes that, according to the 

commenters, includes 510(k)-cleared 

wound dressings and human cell, 

tissue, and cellular and tissue-based 

products (HCT/Ps) under section 361 of 

the Public Health Service Act (PHSA) 

(for example, cadaver skin or placental 

tissue). According to these commenters, 

manufacturers of products regulated 

through these processes can market 

different sizes of their skin substitutes 

with greater ease than can 

manufacturers of skin substitutes 

approved through a PMA, who must 

reapply for an updated label through the 

FDA to change or add a different 

product size. The commenters are 

concerned that a unit cost threshold 

may result in large products with lower 

per cm2 costs, but with higher total costs 

per case, being assigned to the low cost 

category in the future. One of these 

commenters, although generally 

supportive of the change from an ASPbased methodology to an MUC-based 

methodology, also submitted a 

hypothetical predictive model 

comparing per unit high cost/low cost 

calculations with per day threshold 

calculations for the various skin 

substitutes and requested that CMS 

adopt a per day high cost/low cost 

calculation methodology beginning in 

CY 2016 to prevent their skin 

substitutes from moving from the high 

cost to the low cost group in CY 2016. 

Response: As we explained in the CY 

2014 OPPS/ASC final rule with 

comment period, the FDA treatment of 

the various skin substitutes does not 

affect how skin substitutes are treated 

under our policy of packaging drugs and 

biologicals that function as supplies in 

a surgical procedure (78 FR 74932 

through 74933). The 61 skin substitutes 

listed in Table 34 below are available in 

many different sizes. Product sizing, 

product packaging, quantity per 

package, and other such individual 

product attributes are manufacturer 

business decisions that do not concern 

the agency. We also believe that the 

commenters’ analogy between the 

general drug, biological, and 

radiopharmaceutical packaging 

threshold and the high cost/low cost 

skin substitute threshold is imperfect. 

Per day costs are used for the general 

drug, biological, and 

radiopharmaceutical packaging 

threshold because this threshold applies 

to the entire spectrum of drugs, 

biologicals, and radiopharmaceuticals, 

which have a wide variety of dosing 

units and dose descriptors, among 

others, such that per unit comparisons 

are not possible and therefore a total per 

day dollar amount is calculated. On the 

contrary, skin substitutes divided into 

the high and low cost categories are all 

dosed per cm2, which is also the 

standard measurement for sizing 

wounds. Therefore, notwithstanding the 

various sizes of the 61 skin substitutes 

listed in Table 34, meaningful unit cost 

comparisons can be made for skin 

substitutes. As discussed earlier, we 

believe that the MUC methodology will 

help mitigate or eliminate the effect of 

high skin substitute ASPs on the high 

cost/low cost threshold. However, using 

a per day cost methodology as suggested 

by the commenters could adversely 

affect the majority of products that are 

tailored to the wound size. We will 

evaluate the per day cost methodology 

and compare it to the MUC 

methodology next year once CY 2014 

claims data are available. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to maintain the 

high cost/low cost APC structure for 

skin substitute procedures in CY 2015, 

and our proposal to revise the current 

methodology used to establish the high/ 

low cost threshold with the alternative 

MUC methodology. We also are 

finalizing for CY 2015 the policy that 

skin substitutes with pass-through 

payment status would be assigned to the 

high cost category. Skin substitutes with 

pricing information but without claims 

data to calculate an MUC will be 

assigned to either the high cost or low 

cost category based on the product’s 

ASP+6 percent payment rate. If ASP is 

not available, we will use WAC+6 

percent or 95 percent of AWP to assign 

a product to either the high cost or low 

cost category. We also are finalizing our 

proposal that any new skin substitutes 

without pricing information will be 

assigned to the low cost category until 

pricing information is available to 

compare to the CY 2015 threshold. New 

skin substitute manufacturers must 

submit pricing information to CMS no 

later than the 15th of the third month 

prior to the effective date of the next 

OPPS quarterly update. For example, for 

a new skin substitute with new pricing 

information to be included in the July 

1 OPPS update and designated as 

included in the high cost group, 

verifiable pricing information must be 

provided to CMS no later than April 15. 

Table 34 below shows the CY 2014 high 

cost/low cost status for each skin 

substitute product and the final CY 2015 

high cost/low cost status based on the 

weighted average MUC threshold of $25, 

which decreased slightly from the 

proposed $27 threshold due to updated 

final rule claims data. Skin substitutes 

with an MUC above $25 are assigned to 

the high cost group for CY 2015. For 

2014 there are 16 high cost skin 

substitutes and 27 low cost skin 

substitutes. For CY 2015, there are 62 

skin substitute codes, which represent 

the following products: 30 high cost 

skin substitutes; 24 low cost skin 

substitutes; 7 powdered, liquid, or 

micronized skin substitutes; and 1 

miscellaneous skin substitute code. 

TABLE 34—SKIN SUBSTITUTE ASSIGNMENTS TO HIGH COST AND LOW COST GROUPS

CY 2015 HCPCS Code CY 2015 Short descriptor 

HCPCS 

Code 

dosage 

CY 

2015 

SI 

CY 2014 

High/low 

status 

based on 

weighted 

ASP 

CY 2015 

High/low 

status 

based on 

weighted 

MUC 

C9358 .......................................... SurgiMend, fetal ............................................................................... 0.5 cm2 N Low ........ Low. 

C9360 .......................................... SurgiMend, neonatal ........................................................................ 0.5 cm2 N Low ........ Low. 

C9363 .......................................... Integra Meshed Bil Wound Mat ....................................................... 1 cm2 .. N Low ........ High. 

Q4100 ......................................... Skin substitute, NOS ........................................................................ N/A ..... N Low ........ Low. 

Q4101 ......................................... Apligraf ............................................................................................. 1 cm2 .. N High ....... High. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66885 

TABLE 34—SKIN SUBSTITUTE ASSIGNMENTS TO HIGH COST AND LOW COST GROUPS—Continued 

CY 2015 HCPCS Code CY 2015 Short descriptor 

HCPCS 

Code 

dosage 

CY 

2015 

SI 

CY 2014 

High/low 

status 

based on 

weighted 

ASP 

CY 2015 

High/low 

status 

based on 

weighted 

MUC 

Q4102 ......................................... Oasis wound matrix .......................................................................... 1 cm2 .. N Low ........ Low. 

Q4103 ......................................... Oasis burn matrix ............................................................................. 1 cm2 .. N Low ........ Low. 

Q4104 ......................................... Integra BMWD .................................................................................. 1 cm2 .. N Low ........ High. 

Q4105 ......................................... Integra DRT ...................................................................................... 1 cm2 .. N Low ........ High. 

Q4106 ......................................... Dermagraft ........................................................................................ 1 cm2 .. N High ....... High. 

Q4107 ......................................... Graftjacket ........................................................................................ 1 cm2 .. N High ....... High. 

Q4108 ......................................... Integra Matrix ................................................................................... 1 cm2 .. N Low ........ High. 

Q4110 ......................................... Primatrix ........................................................................................... 1 cm2 .. N High ....... High. 

Q4111 ......................................... Gammagraft ...................................................................................... 1 cm2 .. N Low ........ Low. 

Q4112 ......................................... Cymetra injectable ............................................................................ 1 cc .... N N/A ......... N/A. 

Q4113 ......................................... GraftJacket Xpress ........................................................................... 1 cc .... N N/A ......... N/A. 

Q4114 ......................................... Integra Flowable Wound Matrix ....................................................... 1 cc .... N N/A ......... N/A. 

Q4115 ......................................... Alloskin ............................................................................................. 1 cm2 .. N Low ........ Low. 

Q4116 ......................................... Alloderm ........................................................................................... 1 cm2 .. N High ....... High. 

Q4117 ......................................... Hyalomatrix ....................................................................................... 1 cm2 .. N Low ........ Low. 

Q4118 ......................................... Matristem Micromatrix ...................................................................... 1 mg ... N N/A ......... N/A. 

Q4119 ......................................... Matristem Wound Matrix .................................................................. 1 cm2 .. N Low ........ Low. 

Q4120 ......................................... Matristem Burn Matrix ...................................................................... 1 cm2 .. N Low ........ Low. 

Q4121 ......................................... Theraskin .......................................................................................... 1 cm2 .. G High ....... High. 

Q4122 ......................................... Dermacell ......................................................................................... 1 cm2 .. G High ....... High. 

Q4123 ......................................... Alloskin ............................................................................................. 1 cm2 .. N Low ........ High. 

Q4124 ......................................... Oasis Tri-layer Wound Matrix .......................................................... 1 cm2 .. N Low ........ Low. 

Q4125 ......................................... Arthroflex .......................................................................................... 1 cm2 .. N High ....... High. 

Q4126 ......................................... Memoderm/derma/tranz/integup ...................................................... 1 cm2 .. N High ....... High. 

Q4127 ......................................... Talymed ............................................................................................ 1 cm2 .. G High ....... High. 

Q4128 ......................................... Flexhd/Allopatchhd/matrixhd ............................................................ 1 cm2 .. N Low ........ High. 

Q4129 ......................................... Unite Biomatrix ................................................................................. 1 cm2 .. N Low ........ High. 

Q4131 ......................................... Epifix ................................................................................................. 1 cm2 .. N High ....... High. 

Q4132 ......................................... Grafix core ........................................................................................ 1 cm2 .. N High ....... High. 

Q4133 ......................................... Grafix prime ...................................................................................... 1 cm2 .. N High ....... High. 

Q4134 ......................................... HMatrix ............................................................................................. 1 cm2 .. N High ....... High. 

Q4135 ......................................... Mediskin ........................................................................................... 1 cm2 .. N Low ........ Low. 

Q4136 ......................................... EZderm ............................................................................................. 1 cm2 .. N Low ........ Low. 

Q4137 ......................................... Amnioexcel or Biodexcel, 1cm ......................................................... 1 cm2 .. N Low ........ High. 

Q4138 ......................................... BioDfence DryFlex, 1cm .................................................................. 1 cm2 .. N Low ........ High. 

Q4139 ......................................... Amniomatrix or Biodmatrix, 1cc ....................................................... 1 cc .... N N/A ......... N/A. 

Q4140 ......................................... Biodfence 1cm .................................................................................. 1 cm2 .. N Low ........ High. 

Q4141 ......................................... Alloskin ac, 1 cm .............................................................................. 1 cm2 .. N Low ........ Low. 

Q4142 ......................................... Xcm biologic tiss matrix 1cm ........................................................... 1 cm2 .. N Low ........ Low. 

Q4143 ......................................... Repriza, 1cm .................................................................................... 1 cm2 .. N Low ........ Low. 

Q4145 ......................................... Epifix, 1mg ........................................................................................ 1 mg ... N N/A ......... N/A. 

Q4146 ......................................... Tensix, 1cm ...................................................................................... 1 cm2 .. N Low ........ Low. 

Q4147 ......................................... Architect ecm px fx 1 sq cm ............................................................ 1 cm2 .. N High ....... High. 

Q4148 ......................................... Neox 1k, 1cm ................................................................................... 1 cm2 .. N High ....... High. 

Q4149 ......................................... Excellagen, 0.1 cc ............................................................................ 0.1 cc N N/A ......... N/A. 

Q4150 ......................................... Allowrap DS or Dry 1 sq cm ............................................................ 1 cm2 .. N N/A ......... Low. 

Q4151 ......................................... AmnioBand, Guardian 1 sq cm ........................................................ 1 cm2 .. N N/A ......... Low. 

Q4152 ......................................... Dermapure 1 square cm .................................................................. 1 cm2 .. N N/A ......... Low. 

Q4153 ......................................... Dermavest 1 square cm ................................................................... 1 cm2 .. N N/A ......... Low. 

Q4154 ......................................... Biovance 1 square cm ..................................................................... 1 cm2 .. N N/A ......... High. 

Q4155 ......................................... NeoxFlo or ClarixFlo 1 mg ............................................................... 1 mg ... N N/A ......... N/A. 

Q4156 ......................................... Neox 100 1 square cm ..................................................................... 1 cm2 .. N N/A ......... High. 

Q4157 ......................................... Revitalon 1 square cm ..................................................................... 1 cm2 .. N N/A ......... Low. 

Q4158 ......................................... MariGen 1 square cm ...................................................................... 1 cm2 .. N N/A ......... Low. 

Q4159 ......................................... Affinity 1 square cm ......................................................................... 1 cm2 .. N N/A ......... Low. 

Q4160 ......................................... NuShield 1 square cm ...................................................................... 1 cm2 .. N N/A ......... High. 

C9349 .......................................... Fortaderm, fortaderm antimic ........................................................... 1 cm2 .. G N/A ......... High. 

d. Pass-Through Evaluation Process for 

Skin Substitutes 

At the beginning of the OPPS, skin 

substitutes were originally evaluated for 

pass-through status using the medical 

device pass-through process (65 FR 

67839). Since mid-2001, skin substitutes 

have been evaluated for pass-through 

payment status through the drug, 

biological, and radiopharmaceutical 

pass-through payment process. In 2001, 

there were two distinct HCPCS codes 

describing skin substitutes. For the CY 

2015 update, there are 61 distinct 

HCPCS codes describing skin 

substitutes (not including the not 

otherwise classified HCPCS code, 

Q4100), and of these 61 products, 18 


tkelley on DSK3SPTVN1PROD with RULES2
66886 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

products that are listed in Table 35 below have had, currently have, or will 

have pass-through payment status. 

TABLE 35—SKIN SUBSTITUTES THAT HAVE HAD, CURRENTLY HAVE, OR WILL HAVE PASS-THROUGH PAYMENT STATUS

CY 2015 

HCPCS code CY 2015 short descriptor Pass-through expiration date 

C9358 ............ SurgiMend, fetal ...................................................................................................................................................... 12/31/2010 

C9360 ............ SurgiMend, neonatal ............................................................................................................................................... 12/31/2011 

C9363 ............ Integra Meshed Bil Wound Mat .............................................................................................................................. 12/31/2011 

C9349 ............ FortaDerm, FortaDerm Antimic ............................................................................................................................... 12/31/2017 

Q4101 ............ Apligraf .................................................................................................................................................................... 12/31/2002 

Q4104 ............ Integra BMWD ......................................................................................................................................................... 12/31/2006 

Q4105 ............ Integra DRT ............................................................................................................................................................. 12/31/2006 

Q4106 ............ Dermagraft ............................................................................................................................................................... 03/31/2005 

Q4107 ............ Graftjacket ............................................................................................................................................................... 12/31/2006 

Q4108 ............ Integra matrix .......................................................................................................................................................... 12/31/2010 

Q4110 ............ Primatrix .................................................................................................................................................................. 12/31/2008 

Q4121 ............ Theraskin ................................................................................................................................................................. 12/31/2016 

Q4122 ............ Dermacell ................................................................................................................................................................ 12/31/2015 

Q4124 ............ Oasis tri-layer wound matrix ................................................................................................................................... 12/31/2013 

Q4127 ............ Talymed ................................................................................................................................................................... 12/31/2015 

Q4131 ............ Epifix ........................................................................................................................................................................ 12/31/2014 

Q4132 ............ Grafix core ............................................................................................................................................................... 12/31/2014 

Q4133 ............ Grafix prime ............................................................................................................................................................. 12/31/2014 

As discussed earlier, and as we stated 

in the CY 2015 OPPS/ASC proposed 

rule (79 FR 40999 through 41001) and 

in the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 74938), we 

packaged all skin substitutes not on 

pass-through payment status under the 

policy that packages all drugs and 

biologicals that function as supplies 

when used in a surgical procedure (78 

FR 74938), because we consider skin 

substitutes to be a type of surgical 

supply in the HOPD. The adoption of 

the policy to package all drugs and 

biologicals that function as supplies 

when used in a surgical procedure, 

followed the packaging policies for 

implantable biologicals, implantable 

devices, and more broadly, the policy to 

package medical and surgical supplies 

into the related procedure under 42 CFR 

419.2(b)(4). Further, as noted in the CY 

2014 OPPS/ASC final rule with 

comment period, we believe these 

policies represented an example of a 

broader category of drugs and 

biologicals that should be packaged in 

the OPPS, that is, drugs and biologicals 

that function as supplies in a surgical 

procedure (78 FR 74930). 

Separately, in the CY 2010 OPPS/ASC 

final rule with comment period, we 

finalized a policy to evaluate 

implantable biologicals that are 

surgically inserted or implanted 

(through a surgical incision or a natural 

orifice) for pass-through payment 

through the medical device passthrough evaluation process, because 

implantable biologicals function as 

implantable devices (74 FR 60473), 

which have historically been considered 

supplies in the OPPS (65 FR 18443), and 

have been evaluated for pass-through 

payment through the medical device 

pass-through evaluation process since 

CY 2010. As noted earlier, the finalized 

packaging policy in the CY 2014 OPPS/ 

ASC final rule with comment period to 

package all drugs and biologicals that 

function as supplies when used in a 

surgical procedure included skin 

substitutes as a type of surgical supply, 

and, notably, the similarities between 

implantable biologicals and skin 

substitutes were a key factor in 

packaging (like we did beginning in 

2009 with implantable biologicals) skin 

substitutes into the associated surgical 

procedure (78 FR 74932). We also note 

that many skin substitutes are FDAapproved or cleared as devices, even 

though skin substitutes have 

traditionally been treated as biologicals 

under the OPPS. The similarities 

between these classes of products 

(implantable devices, implantable 

biologicals, and skin substitutes) 

informed our proposal to similarly treat 

applications for pass-through payment 

for skin substitutes using the OPPS 

device pass-through process, described 

below. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41000), we proposed that 

applications for pass-through payment 

for skin substitutes be evaluated using 

the medical device pass-through process 

and payment methodology. As a result 

of this proposal, we proposed that the 

last skin substitute pass-through 

applications evaluated using the drug 

and biological pass-through payment 

evaluation process would be those with 

an application deadline of the first 

business date in September 2014, and 

an effective date of January 1, 2015. In 

light of this proposal, we would change 

the December 1, 2014 pass-through 

payment application deadline (for an 

effective date of April 1, 2015) for both 

drugs and biologicals and devices to 

January 15, 2015, in order to provide 

sufficient time for applicants to adjust to 

the new policies and procedures in 

effect as of January 1, 2015. Any 

applications submitted after the first 

business date in September 2014, 

through January 15, 2015, would be 

evaluated for the April 1, 2015 cycle. 

We believe that requiring skin 

substitutes seeking pass-through 

payment to use the OPPS device passthrough evaluation process is more 

appropriate because, although skin 

substitutes have characteristics of both 

surgical supplies and biologicals, we 

believe skin substitutes are best 

characterized as surgical supplies or 

devices because of their required 

surgical application and because they 

share significant clinical similarity with 

other surgical devices and supplies, 

including implantable biologicals. 

Therefore, we stated in the proposed 

rule that if this proposal is finalized, 

beginning with applications seeking 

pass-through payment effective April 1, 

2014, new skin substitutes would no 

longer be eligible to submit biological 

pass-through applications; rather, such 

applications for pass-through payment 

would be evaluated using the medical 

device pass-through payment evaluation 

process, for which payment is based on 

charges reduced to cost from claims. We 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66887 

refer readers to the CMS Web site at: 

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

Medicare-Fee-for-Service-Payment/

HospitalOutpatientPPS/ to view the 

device pass-through payment 

application requirements and review 

criteria that would apply to the 

evaluation of all skin substitute product 

applications for pass-through payment 

status beginning on or after January 1, 

2015. Those skin substitutes that are 

approved for pass-through payment 

status as biologicals effective on or 

before January 1, 2015, would continue 

to be paid as pass-through biologicals 

for the duration of their period of passthrough payment. 

We also proposed to revise our 

regulations at §§ 419.64 and 419.66 to 

reflect this proposed new policy. 

Specifically, we proposed to revise 

§ 419.64 by deleting the existing 

paragraph (a)(4)(iv) text because it is 

currently outdated and adding new text 

at paragraph (a)(4)(iv) to exclude skin 

substitutes from consideration for drug 

and biological pass-through payment. 

We proposed to modify the regulation at 

§ 419.66(b)(3) to add that a pass-through 

device may be applied in or on a wound 

or other skin lesion, and we proposed to 

simplify the language that ‘‘whether or 

not it remains with the patient when the 

patient is released from the hospital’’ to 

read ‘‘either permanently or 

temporarily.’’ We also proposed to 

delete the current example in 

§ 419.66(b)(4)(iii) of the regulations 

regarding the exclusion of materials, for 

example, biological or synthetic 

materials, that may be used to replace 

human skin from device pass-through 

payment eligibility. We invited public 

comment on these proposals. 

Comment: Several commenters 

supported CMS’ proposal to evaluate 

skin substitute pass-through 

applications through the medical device 

pass-through process and pay for passthrough skin substitutes according to 

the medical device pass-through 

payment methodology beginning 

January 1, 2015. The commenters 

believed that this policy change will 

limit instability in the high cost/low 

cost groups from pass-through skin 

substitutes with very high ASPs. The 

commenter stated that instability could 

occur because manufacturers set ASP 

and hospitals are relatively insensitive 

to price for separately paid pass-through 

skin substitutes. Therefore, the 

commenter added, a new high priced 

pass-through skin substitute could gain 

significant sales and move the high cost/ 

low cost threshold significantly higher 

from year to year. 

Response: We agree with the 

commenters and appreciate their 

support. 

Comment: Several commenters 

opposed CMS’ proposal to evaluate skin 

substitute pass-through applications 

through the medical device passthrough process. Some of these 

commenters argued that CMS lacks the 

authority to change the process for 

evaluating skin substitute pass-through 

applications. The commenters also 

believed that biologicals approved by 

the FDA under section 351 of the PHSA 

(those approved by the FDA under 

biologics license applications (BLAs)) 

cannot be treated as devices for passthrough payment evaluation purposes 

according to the Social Security Act and 

Congressional intent. The commenters 

also claimed that changing the passthrough payment process for skin 

substitutes will stifle innovation of new 

wound care products. 

Response: We disagree with the 

commenters’ assertion that the agency 

lacks the authority to change the process 

for evaluating skin substitutes for passthrough and that biologicals approved 

by the FDA under section 351 of the 

PHSA (BLA process) cannot be treated 

as devices for pass-through payment 

evaluation purposes according to the 

Social Security Act and Congressional 

intent. As we stated in the 2010 OPPS 

final rule in response to a similar 

comment on the proposal to change the 

pass-through evaluation process for 

implantable biologicals: ‘‘We do not 

agree with the commenters who asserted 

that Congress intended biologicals 

approved under BLAs to be paid under 

the specific OPPS statutory provisions 

that apply to SCODs, including the passthrough provisions’’ (74 FR 60476). 

Similarly, Congress did not specify that 

we must pay for skin substitutes as 

separately payable biologicals rather 

than devices or supplies, if they also 

meet our criteria for payment as a 

device. We believe that skin substitutes 

can satisfy the definitions applied under 

the OPPS of a device or supply and a 

biological and that, for OPPS payment 

purposes, it is appropriate for us to 

consider skin substitutes as devices or 

supplies under both pass-through and 

nonpass-through payment policies, and 

not as separately payable biologicals. 

For example, beginning in CY 2014, we 

package the costs of skin substitutes into 

the costs of the surgical procedures in 

which they are used, as we do for 

implantable biologicals and other 

implantable devices. Therefore, we do 

not believe that we must pay for skin 

substitutes under our OPPS payment 

methodologies for separately payable 

biologicals, rather than our device 

payment methodologies. 

In addition, for the skin substitute 

packaging policy, in the CY 2014 OPPS/ 

ASC final rule with comment period (78 

FR 74933), we stated the following: ‘‘We 

do not believe that the FDA approval 

process should exempt products from 

this packaging proposal or factor into 

the level of Medicare payment.’’ 

Similarly, regarding our proposal to 

change the pass-through payment 

evaluation process and payment 

methodology for skin substitutes from 

the drug and biological process to the 

device process, we also believe that any 

particular FDA approval process should 

not exempt such products that 

appropriately fall under the category of 

skin substitutes under the OPPS from 

the application of this pass-through 

payment proposal or direct which passthrough payment evaluation process 

must be used. 

Notably, none of the current 61 skin 

substitute products described by 

distinct HCPCS codes and listed in 

Table 35 above have been approved by 

FDA under section 351 of the PHSA. 

This fact is somewhat counterintuitive, 

as biologics or biologicals or biological 

products are most commonly 

understood to be products approved by 

the FDA under section 351 of the PHSA. 

Current skin substitute products’ FDA 

classifications include a variety of Class 

III medical devices, Class II medical 

devices, and HCT/Ps under section 361 

of the PHSA, which are tissue bank 

materials not subject to FDA approval 

requirements. We also note that whether 

a future wound healing product is 

described by the OPPS packaged 

category of products described in 42 

CFR 419.2(b)(16) as ‘‘skin substitutes 

and similar products that aid wound 

healing’’ will depend upon the 

particular characteristics of the future 

product. We do not intend for the 

category of products described as ‘‘skin 

substitutes and similar products that aid 

wound healing’’ to necessarily include 

all products with a wound healing 

indication. However, if a new wound 

healing product, regardless of FDA 

approval or clearance type, fits with the 

‘‘skin substitutes and similar products 

that aid wound healing’’ category of 

products, all of the applicable OPPS 

policies that apply to ‘‘skin substitutes 

and similar products that aid wound 

healing’’ would also apply to the new 

wound healing product. 

Finally, we do not believe that this 

policy will stifle innovation of new skin 

substitutes, as new skin substitutes that 

can demonstrate a substantial clinical 

improvement over current wound 

treatments could receive pass-through 


tkelley on DSK3SPTVN1PROD with RULES2
66888 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

status as a device. In addition, there are 

currently 61 distinct HCPCS codes for 

various skin substitutes. Of these 61 

products, only 18 (30 percent) have had, 

currently have, or will have passthrough payment status granted through 

the drug and biological pass-through 

payment process. Therefore, passthrough payment does not appear to be 

necessary for the commercialization of 

these products, which have (in terms of 

distinct HCPCS codes describing them) 

expanded significantly from 2 skin 

substitutes in CY 2001 to 61 skin 

substitutes in CY 2015. Furthermore, we 

have not restricted access to the high 

cost skin substitute group, and we have 

only required manufacturers of new 

skin substitutes to submit pricing 

information for assignment to the high 

cost group of skin substitutes. For these 

reasons, we do not believe that any CMS 

OPPS payment policies will stifle 

innovation or impede the development 

of new skin substitutes. 

Comment: One commenter was 

concerned that the substantial clinical 

improvement criterion for medical 

device pass-through places an unduly 

high burden on new skin substitute 

products. The commenter believed that 

this requirement is ‘‘incompatible with 

skin substitute products, which are not 

required to submit efficacy data to the 

Food and Drug Administration.’’ This 

commenter also disagreed with CMS’ 

proposal to not accept any skin 

substitute applications though the drug 

and biological pass-through payment 

process after September 1, 2014, and to 

move the final pass-through payment 

deadline for drug and biologicals and 

devices from December 1, 2014, to 

January 15, 2015. The commenter 

requested that additional guidance on 

substantial clinical improvement be 

provided specifically for application to 

skin substitute products, beyond that 

described in the November 2, 2001, 

interim final rule with comment period 

entitled ‘‘Medicare Program— 

Prospective Payment System for 

Hospital Outpatient Services: Criteria 

for Establishing Additional PassThrough Categories for Medical 

Devices’’ (66 FR 55850). 

Response: The comment that FDA 

does not require submission of efficacy 

data for skin substitute products is 

overly simplified. The different skin 

substitute products that have been 

identified in Table 35 above are subject 

to different FDA regulatory 

requirements (that is, based on review 

by CBER versus CDRH, regulatory 

classification and claims). 

FDA/CDRH draws a distinction 

between wound dressing devices 

intended only to serve as a wound 

covering versus products intended to 

promote wound healing. Those devices 

that are intended to promote wound 

healing are subject to Premarket 

Approval (PMA) and require clinical 

data to support safety and effectiveness 

of the device. Those devices that are 

intended to serve as a wound covering 

are subject to Premarket Notification 

(510(k)) and require demonstration of 

substantial equivalence (that is, the 

device demonstrates that it is as safe 

and effective as a legally marketed 

predicate device). Generally, substantial 

equivalence in safety and effectiveness 

is demonstrated through comparative 

bench and animal studies and leveraged 

with historical clinical effectiveness 

data for similar devices. The weakness 

of the evidence for many skin substitute 

products has been documented in two 

recent technology assessments by the 

Agency for Healthcare Research and 

Quality. However, different pre-market 

data requirements for skin substitute 

products regulated by FDA should not 

excuse these products from the 

substantial clinical improvement passthrough criterion for device passthrough payment. Pass-through payment 

status is not intended to be granted to 

every new product, but only to those 

that satisfy the pass-through payment 

requirements. As stated in the CY 2001 

OPPS interim final rule: ‘‘We believe it 

is important for hospitals to receive 

pass-through payments for devices that 

offer substantial clinical improvement 

in the treatment of Medicare 

beneficiaries to facilitate access by 

beneficiaries to the advantages of the 

new technology. Conversely, the need 

for additional payments for devices that 

offer little or no clinical improvement 

over a previously existing device is less 

apparent’’ (66 FR 55852). 

Regarding the requirements for 

satisfying the substantial clinical 

improvement criterion, we believe that 

the list on page 55852 of the CY 2001 

OPPS interim final rule suffices. For 

example, among the items listed is: 

‘‘More rapid beneficial resolution of the 

disease process treated because of the 

use of the device.’’ If a new skin 

substitute demonstrated improved 

wound healing compared to existing 

wound treatments, it could potentially 

qualify for pass-through as a medical 

device, assuming that the skin substitute 

is not described by an expired passthrough payment device category. 

Finally, we believe that sufficient 

notice was provided of this policy 

change in the CY 2015 OPPS/ASC 

proposed rule, and that accepting drug 

and biological applications through the 

first business date of September 2014 

deadline for a January 1, 2015 passthrough payment effective date is a fair 

application of a policy that takes effect 

on January 1, 2015. The regular 

December 1, 2014 application deadline, 

which is being extended to January 15, 

2015 for this cycle, was for pass-through 

payment applications with an earliest 

effective date of April 1, 2015, which is 

well past the effective date of this new 

policy. 

After consideration of the public 

comments we received, we are 

finalizing our proposal for applications 

seeking pass-through payment for skin 

substitute and similar wound healing 

products effective beginning April 1, 

2015, to apply using the medical device 

pass-through evaluation process. 

e. Packaging Determination for HCPCS 

Codes That Describe the Same Drug or 

Biological but Different Dosages 

In the CY 2008 OPPS/ASC final rule 

with comment period (72 FR 66776), we 

began recognizing, for OPPS payment 

purposes, multiple HCPCS codes 

reporting different dosages for the same 

covered Part B drugs or biologicals in 

order to reduce hospitals’ administrative 

burden by permitting them to report all 

HCPCS codes for drugs and biologicals. 

In general, prior to CY 2008, the OPPS 

recognized for payment only the HCPCS 

code that described the lowest dosage of 

a drug or biological. During CYs 2008 

and 2009, we applied a policy that 

assigned the status indicator of the 

previously recognized HCPCS code to 

the associated newly recognized code(s), 

reflecting the packaged or separately 

payable status of the new code(s). 

In the CY 2010 OPPS/ASC final rule 

with comment period (74 FR 60490 

through 60491), we finalized a policy to 

make a single packaging determination 

for a drug, rather than an individual 

HCPCS code, when a drug has multiple 

HCPCS codes describing different 

dosages because we believed that 

adopting the standard HCPCS 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 2015 OPPS/ASC proposed 

rule (79 FR 41001), we proposed to 

continue our policy to make packaging 

determinations on a drug-specific basis, 

rather than a HCPCS code-specific basis, 

for those HCPCS codes that describe the 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66889 

same drug or biological but different 

dosages in CY 2015. 

For CY 2015, in order to propose a 

packaging determination that is 

consistent across all HCPCS codes that 

describe different dosages of the same 

drug or biological, we aggregated both 

our CY 2013 claims data and our pricing 

information at ASP+6 percent across all 

of the HCPCS codes that describe each 

distinct drug or biological in order to 

determine the mean units per day of the 

drug or biological in terms of the HCPCS 

code with the lowest dosage descriptor. 

The following drugs did not have 

pricing information available for the 

ASP methodology for this CY 2015 

OPPS/ASC final rule with comment 

period and, as is our current policy for 

determining the packaging status of 

other drugs, we used the mean unit cost 

available from the fourth quarter CY 

2013 claims data to make the packaging 

determinations for these drugs: HCPCS 

code J3471 (Injection, hyaluronidase, 

ovine, preservative free, per 1 usp unit 

(up to 999 usp units)) and HCPCS code 

J3472 (Injection, hyaluronidase, ovine, 

preservative free, per 1000 usp units). 

For all other drugs and biologicals 

that have HCPCS codes describing 

different doses, we then multiplied the 

weighted average ASP+6 percent per 

unit payment amount across all dosage 

levels of a specific drug or biological by 

the estimated units per day for all 

HCPCS codes that describe each drug or 

biological from our claims data to 

determine the estimated per day cost of 

each drug or biological at less than or 

equal to $95 (so that all HCPCS codes 

for the same drug or biological would be 

packaged) or greater than $95 (so that all 

HCPCS codes for the same drug or 

biological would be separately payable). 

The proposed packaging status of 

each drug and biological HCPCS code to 

which this methodology would apply 

was displayed in Table 41 of the CY 

2015 OPPS/ASC proposed rule (79 FR 

41001 through 41002). 

We did not receive any public 

comments on this proposal. Therefore, 

we are finalizing our CY 2015 proposal, 

without modification, to continue to 

make packaging determinations on a 

drug-specific basis, rather than a HCPCS 

code-specific basis, for those HCPCS 

codes that describe the same drug or 

biological but different dosages. Table 

36 below displays the packaging status 

of each drug and biological HCPCS code 

to which the methodology applies for 

CY 2015. 

TABLE 36—HCPCS CODES TO WHICH THE CY 2015 DRUG–SPECIFIC PACKAGING DETERMINATION METHODOLOGY

APPLIES

CY 2015 

HCPCS code CY 2015 long descriptor CY 2015 SI 

C9257 ............ Injection, bevacizumab, 0.25 mg ............................................................................................................................ K 

J9035 ............. Injection, bevacizumab, 10 mg ............................................................................................................................... K 

J1020 ............. Injection, methylprednisolone acetate, 20 mg ........................................................................................................ N 

J1030 ............. Injection, methylprednisolone acetate, 40 mg ........................................................................................................ N 

J1040 ............. Injection, methylprednisolone acetate, 80 mg ........................................................................................................ N 

J1070 ............. Injection, testosterone cypionate, up to 100 mg ..................................................................................................... N 

J1080 ............. Injection, testosterone cypionate, 1 cc, 200 mg ..................................................................................................... N 

J1440 ............. Injection, filgrastim (g-csf), 300 mcg ....................................................................................................................... N 

J1441 ............. Injection, filgrastim (g-csf), 480 mcg ....................................................................................................................... N 

J1460 ............. Injection, gamma globulin, intramuscular, 1 cc ....................................................................................................... N 

J1560 ............. Injection, gamma globulin, intramuscular over 10 cc ............................................................................................. N 

J1642 ............. Injection, heparin sodium, (heparin lock flush), per 10 units .................................................................................. N 

J1644 ............. Injection, heparin sodium, per 1000 units ............................................................................................................... N 

J1850 ............. Injection, kanamycin sulfate, up to 75 mg .............................................................................................................. N 

J1840 ............. Injection, kanamycin sulfate, up to 500 mg ............................................................................................................ N 

J2270 ............. Injection, morphine sulfate, up to 10 mg ................................................................................................................ N 

J2271 ............. Injection, morphine sulfate, 100mg ......................................................................................................................... N 

J2788 ............. Injection, rho d immune globulin, human, minidose, 50 micrograms (250 i.u.) ..................................................... N 

J2790 ............. Injection, rho d immune globulin, human, full dose, 300 micrograms (1500 i.u.) .................................................. N 

J2920 ............. Injection, methylprednisolone sodium succinate, up to 40 mg ............................................................................... N 

J2930 ............. Injection, methylprednisolone sodium succinate, up to 125 mg ............................................................................. N 

J3120 ............. Injection, testosterone enanthate, up to 100 mg .................................................................................................... N 

J3130 ............. Injection, testosterone enanthate, up to 200 mg .................................................................................................... N 

J3471 ............. Injection, hyaluronidase, ovine, preservative free, per 1 usp unit (up to 999 usp units) ....................................... N 

J3472 ............. Injection, hyaluronidase, ovine, preservative free, per 1000 usp units .................................................................. N 

J7050 ............. Infusion, normal saline solution , 250 cc ................................................................................................................ N 

J7040 ............. Infusion, normal saline solution, sterile (500 ml = 1 unit) ....................................................................................... N 

J7030 ............. Infusion, normal saline solution, 1000 cc ................................................................................................................ N 

J7515 ............. Cyclosporine, oral, 25 mg ....................................................................................................................................... N 

J7502 ............. Cyclosporine, oral, 100 mg ..................................................................................................................................... N 

J8520 ............. Capecitabine, oral, 150 mg ..................................................................................................................................... K 

J8521 ............. Capecitabine, oral, 500 mg ..................................................................................................................................... K 

J9250 ............. Methotrexate sodium, 5 mg .................................................................................................................................... N 

J9260 ............. Methotrexate sodium, 50 mg .................................................................................................................................. N 


tkelley on DSK3SPTVN1PROD with RULES2
66890 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

3. Payment for Drugs and Biologicals 

Without Pass-Through Status That Are 

Not Packaged 

a. Payment for Specified Covered 

Outpatient Drugs (SCODs) and Other 

Separately Payable and Packaged Drugs 

and Biologicals 

Section 1833(t)(14) of the Act defines 

certain separately payable 

radiopharmaceuticals, drugs, and 

biologicals and mandates specific 

payments for these items. Under section 

1833(t)(14)(B)(i) of the Act, a ‘‘specified 

covered outpatient drug’’ (known as a 

SCOD) is defined as a covered 

outpatient drug, as defined in section 

1927(k)(2) of the Act, for which a 

separate APC has been established and 

that either is a radiopharmaceutical 

agent or is a drug or biological for which 

payment was made on a pass-through 

basis on or before December 31, 2002. 

Under section 1833(t)(14)(B)(ii) of the 

Act, certain drugs and biologicals are 

designated as exceptions and are not 

included in the definition of SCODs. 

These exceptions are— 

• A drug or biological for which 

payment is first made on or after 

January 1, 2003, under the transitional 

pass-through payment provision in 

section 1833(t)(6) of the Act. 

• A drug or biological for which a 

temporary HCPCS code has not been 

assigned. 

• During CYs 2004 and 2005, an 

orphan drug (as designated by the 

Secretary). 

Section 1833(t)(14)(A)(iii) of the Act 

requires that payment for SCODs in CY 

2006 and subsequent years be equal to 

the average acquisition cost for the drug 

for that year as determined by the 

Secretary, subject to any adjustment for 

overhead costs and taking into account 

the hospital acquisition cost survey data 

collected by the Government 

Accountability Office (GAO) in CYs 

2004 and 2005, and later periodic 

surveys conducted by the Secretary as 

set forth in the statute. If hospital 

acquisition cost data are not available, 

the law requires that payment be equal 

to payment rates established under the 

methodology described in section 

1842(o), section 1847A, or section 

1847B of the Act, as calculated and 

adjusted by the Secretary as necessary. 

Most physician Part B drugs are paid at 

ASP+6 percent pursuant to section 

1842(o) and section 1847A of the Act. 

Section 1833(t)(14)(E)(ii) of the Act 

provides for an adjustment in OPPS 

payment rates for SCODs to take into 

account overhead and related expenses, 

such as pharmacy services and handling 

costs. Section 1833(t)(14)(E)(i) of the Act 

required MedPAC to study pharmacy 

overhead and related expenses and to 

make recommendations to the Secretary 

regarding whether, and if so how, a 

payment adjustment should be made to 

compensate hospitals for overhead and 

related expenses. Section 

1833(t)(14)(E)(ii) of the Act authorizes 

the Secretary to adjust the weights for 

ambulatory procedure classifications for 

SCODs to take into account the findings 

of the MedPAC study. 

It has been our longstanding policy to 

apply the same treatment to all 

separately payable drugs and 

biologicals, which include SCODs, and 

drugs and biologicals that are not 

SCODs. Therefore, we apply the 

payment methodology in section 

1833(t)(14)(A)(iii) of the Act to SCODs, 

as required by statute, but we also apply 

it to separately payable drugs and 

biologicals that are not SCODs, which is 

a policy determination rather than a 

statutory requirement. In the CY 2015 

OPPS/ASC proposed rule (79 FR 41002), 

we proposed to apply section 

1833(t)(14)(A)(iii)(II) of the Act to all 

separately payable drugs and 

biologicals, including SCODs. Although 

we do not distinguish SCODs in this 

discussion, we note that we are required 

to apply section 1833(t)(14)(A)(iii)(II) of 

the Act to SCODs, but we also are 

applying this provision to other 

separately payable drugs and 

biologicals, consistent with our history 

of using the same payment methodology 

for all separately payable drugs and 

biologicals. 

Since CY 2006, we have attempted to 

establish a drug payment methodology 

that reflects hospitals’ acquisition costs 

for drugs and biologicals while taking 

into account relevant pharmacy 

overhead and related handling 

expenses. We have attempted to collect 

more data on hospital overhead charges 

for drugs and biologicals by making 

several proposals that would require 

hospitals to change the way they report 

the cost and charges for drugs. None of 

these proposals were adopted due to 

significant stakeholder concern, 

including that hospitals stated that it 

would be administratively burdensome 

to report hospital overhead charges. We 

established a payment policy for 

separately payable drugs and 

biologicals, authorized by section 

1833(t)(14)(A)(iii)(I) of the Act, based on 

an ASP+X amount that is calculated by 

comparing the estimated aggregate cost 

of separately payable drugs and 

biologicals in our claims data to the 

estimated aggregate ASP dollars for 

separately payable drugs and 

biologicals, using the ASP as a proxy for 

average acquisition cost (70 FR 68642 

through 68643). We referred to this 

methodology as our standard drug 

payment methodology. Taking into 

consideration comments made by the 

pharmacy stakeholders and 

acknowledging the limitations of the 

reported data due to charge compression 

and hospitals’ reporting practices, we 

added an ‘‘overhead adjustment’’ in CY 

2010 (an internal adjustment of the data) 

by redistributing cost from coded and 

uncoded packaged drugs and biologicals 

to separately payable drugs in order to 

provide more appropriate payments for 

drugs and biologicals in the HOPD. We 

continued this methodology, and we 

further refined it in CY 2012 by 

finalizing a policy to update the 

redistribution amount for inflation and 

to keep the redistribution ratio constant 

between the proposed rule and the final 

rule. For a detailed discussion of our 

OPPS drug payment policies from CY 

2006 to CY 2012, we refer readers to the 

CY 2013 OPPS/ASC final rule with 

comment period (77 FR 68383 through 

68385). 

Because of continuing uncertainty 

about the full cost of pharmacy 

overhead and acquisition cost, based in 

large part on the limitations of the 

submitted hospital charge and claims 

data for drugs, in the CY 2013 OPPS/

ASC final rule with comment period (77 

FR 68386), we indicated our concern 

that the continued use of the standard 

drug payment methodology (including 

the overhead adjustment) still may not 

appropriately account for average 

acquisition and pharmacy overhead cost 

and, therefore, may result in payment 

rates that are not as predictable, 

accurate, or appropriate as they could 

be. Section 1833(t)(14)(A)(iii)(II) of the 

Act requires an alternative methodology 

for determining payment rates for 

SCODS wherein, if hospital acquisition 

cost data are not available, payment 

shall be equal (subject to any adjustment 

for overhead costs) to payment rates 

established under the methodology 

described in section 1842(o), 1847A, or 

1847B of the Act. We refer to this 

alternative methodology as the 

‘‘statutory default.’’ In the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68386), we noted that 

section 1833(t)(14)(A)(iii)(II) of the Act 

authorizes the Secretary to calculate and 

adjust, as necessary, the average price 

for a drug in the year established under 

section 1842(o), 1847A, or 1847B of the 

Act, as the case may be, in determining 

payment for SCODs. Pursuant to 

sections 1842(o) and 1847A of the Act, 

Part B drugs are paid at ASP+6 percent 

when furnished in physicians’ offices. 

We indicated that we believe that 

establishing the payment rates based on 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66891 

the statutory default of ASP+6 percent 

is appropriate as it yields increased 

predictability in payment for separately 

payable drugs and biologicals under the 

OPPS and, therefore, we finalized our 

proposal for CY 2013 to pay for 

separately payable drugs and biologicals 

at ASP+6 percent based on section 

1833(t)(14)(A)(iii)(II) of the Act (the 

statutory default). We also finalized our 

proposal that the ASP+6 percent 

payment amount for separately payable 

drugs and biologicals requires no further 

adjustment and represents the combined 

acquisition and pharmacy overhead 

payment for drugs and biologicals, that 

payments for separately payable drugs 

and biologicals are included in the 

budget neutrality adjustments under the 

requirements in section 1833(t)(9)(B) of 

the Act, and that the budget neutral 

weight scaler is not applied in 

determining payments for these 

separately paid drugs and biologicals for 

CY 2013 (77 FR 68389). 

b. CY 2015 Payment Policy 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41003), we proposed to 

continue our CY 2014 policy and pay 

for separately payable drugs and 

biologicals at ASP+6 percent pursuant 

to section 1833(t)(14)(A)(iii)(II) of the 

Act (the statutory default). We proposed 

that the ASP+6 percent payment 

amount for separately payable drugs and 

biologicals requires no further 

adjustment and represents the combined 

acquisition and pharmacy overhead 

payment for drugs and biologicals. We 

also proposed that payments for 

separately payable drugs and biologicals 

are included in the budget neutrality 

adjustments, under the requirements in 

section 1833(t)(9)(B) of the Act, and that 

the budget neutral weight scaler is not 

applied in determining payments for 

these separately paid drugs and 

biologicals. 

Comment: Commenters supported 

CMS’ proposal to pay for separately 

payable drugs and biologicals based on 

the statutory default rate of ASP+6 

percent. A few commenters supported 

CMS’ proposal, but recommended that 

CMS examine ways to compensate 

hospitals for the unique, higher 

overhead and handling costs associated 

with therapeutic radiopharmaceuticals. 

Response: We appreciate the 

commenters’ support of our proposal. 

We continue to believe that ASP+6 

percent based on the statutory default is 

appropriate for hospitals for CY 2015 

and that this percentage amount 

includes payment for acquisition and 

overhead cost. We see no evidence that 

an additional overhead adjustment is 

required for separately payable drugs, 

biologicals, and therapeutic 

radiopharmaceuticals for CY 2015. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to pay for separately 

payable drugs and biologicals at ASP+6 

percent based on section 

1833(t)(14)(A)(iii)(II) of the Act (the 

statutory default). The ASP+6 percent 

payment amount for separately payable 

drugs and biologicals requires no further 

adjustment and represents the combined 

acquisition and pharmacy overhead 

payment for drugs and biologicals for 

CY 2015. In addition, we are finalizing 

our proposal which states that payment 

for separately payable drugs and 

biologicals be included in the budget 

neutrality adjustments, under the 

requirements of section 1833(t)(9)(B) of 

the Act, and that the budget neutral 

weight scaler is not applied in 

determining payment of these separately 

paid drugs and biologicals. We note that 

separately payable drug and biological 

payment rates listed in Addenda A and 

B to this final rule with comment period 

(available via the Internet on the CMS 

Web site), which illustrate the final CY 

2015 payment of ASP+6 percent for 

separately payable nonpass-through 

drugs and biologicals and ASP+6 

percent for pass-through drugs and 

biologicals, reflect either ASP 

information that is the basis for 

calculating payment rates for drugs and 

biologicals in the physician’s office 

setting effective October 1, 2014, or 

WAC, AWP, or mean unit cost from CY 

2013 claims data and updated cost 

report information available for this 

final rule with comment period. In 

general, these published payment rates 

are not reflective of actual January 2015 

payment rates. This is because payment 

rates for drugs and biologicals with ASP 

information for January 2015 will be 

determined through the standard 

quarterly process where ASP data 

submitted by manufacturers for the 

third quarter of 2014 (July 1, 2014 

through September 30, 2014) are used to 

set the payment rates that are released 

for the quarter beginning in January 

2015 near the end of December 2014. In 

addition, payment rates for drugs and 

biologicals in Addenda A and B to this 

final rule with comment period for 

which there was no ASP information 

available for October 2014 are based on 

mean unit cost in the available CY 2013 

claims data. If ASP information becomes 

available for payment for the quarter 

beginning in January 2015, we will price 

payment for these drugs and biologicals 

based on their newly available ASP 

information. Finally, there may be drugs 

and biologicals that have ASP 

information available for this final rule 

with comment period (reflecting 

October 2014 ASP data) that do not have 

ASP information available for the 

quarter beginning in January 2015. 

These drugs and biologicals will then be 

paid based on mean unit cost data 

derived from CY 2013 hospital claims. 

Therefore, the payment rates listed in 

Addenda A and B to this final rule with 

comment period are not for January 

2015 payment purposes and are only 

illustrative of the CY 2015 OPPS 

payment methodology using the most 

recently available information at the 

time of issuance of this final rule with 

comment period. 

4. Payment Policy for Therapeutic 

Radiopharmaceuticals 

Beginning in CY 2010 and continuing 

for CY 2014, we established a policy to 

pay for separately paid therapeutic 

radiopharmaceuticals under the ASP 

methodology adopted for separately 

payable drugs and biologicals. If ASP 

information is unavailable for a 

therapeutic radiopharmaceutical, we 

base therapeutic radiopharmaceutical 

payment on mean unit cost data derived 

from hospital claims. We believe that 

the rationale outlined in the CY 2010 

OPPS/ASC final rule with comment 

period (74 FR 60524 through 60525) for 

applying the principles of separately 

payable drug pricing to therapeutic 

radiopharmaceuticals continues to be 

appropriate for nonpass-through 

separately payable therapeutic 

radiopharmaceuticals in CY 2015. 

Therefore, in the CY 2015 OPPS/ASC 

proposed rule (79 FR 41003), we 

proposed for CY 2015 to pay all 

nonpass-through, separately payable 

therapeutic radiopharmaceuticals at 

ASP+6 percent, based on the statutory 

default described in section 

1833(t)(14)(A)(iii)(II) of the Act. For a 

full discussion of ASP-based payment 

for therapeutic radiopharmaceuticals, 

we refer readers to the CY 2010 OPPS/ 

ASC final rule with comment period (74 

FR 60520 through 60521). We also 

proposed to rely on CY 2013 mean unit 

cost data derived from hospital claims 

data for payment rates for therapeutic 

radiopharmaceuticals for which ASP 

data are unavailable and to update the 

payment rates for separately payable 

therapeutic radiopharmaceuticals 

according to our usual process for 

updating the payment rates for 

separately payable drugs and 

biologicals, on a quarterly basis if 

updated ASP information is available. 

For a complete history of the OPPS 

payment policy for therapeutic 

radiopharmaceuticals, we refer readers 


tkelley on DSK3SPTVN1PROD with RULES2
66892 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

to the CY 2005 OPPS final rule with 

comment period (69 FR 65811), the CY 

2006 OPPS final rule with comment 

period (70 FR 68655), and the CY 2010 

OPPS/ASC final rule with comment 

period (74 FR 60524). 

The proposed CY 2015 payment rates 

for nonpass-through separately payable 

therapeutic radiopharmaceuticals were 

included in Addenda A and B to the 

proposed rule (which are available via 

the Internet on the CMS Web site). 

Comment: Several commenters 

supported CMS’ proposal to pay for 

separately payable therapeutic 

radiopharmaceuticals under the 

statutory default payment rate of ASP+6 

percent, if ASP data are submitted to 

CMS. 

Response: We appreciate the 

commenters’ support. We continue to 

believe that providing payment for 

therapeutic radiopharmaceuticals based 

on ASP or mean unit cost if ASP 

information is not available would 

provide appropriate payment for these 

products. When ASP data are not 

available, we believe that paying for 

therapeutic radiopharmaceuticals using 

mean unit cost will appropriately pay 

for the average hospital acquisition and 

associated handling costs of nonpassthrough separately payable therapeutic 

radiopharmaceuticals. As we stated in 

the CY 2010 OPPS/ASC final rule with 

comment period (74 FR 60523), 

although using mean unit cost for 

payment for therapeutic 

radiopharmaceuticals when ASP data 

are not available is not the usual OPPS 

process (the usual process relies on 

alternative data sources such as WAC or 

AWP when ASP information is 

temporarily unavailable, prior to 

defaulting to the mean unit cost from 

hospital claims data), we continue to 

believe that WAC or AWP is not an 

appropriate proxy to provide OPPS 

payment for average therapeutic 

radiopharmaceutical acquisition cost 

and associated handling costs when 

manufacturers are not required to 

submit ASP data. Payment based on 

WAC or AWP under the established 

OPPS methodology for payment of 

separately payable drugs and biologicals 

is usually temporary for a calendar 

quarter until a manufacturer is able to 

submit the required ASP data in 

accordance with the quarterly ASP 

submission timeframes for reporting 

under section 1847A of the Act. Because 

ASP reporting for OPPS payment of 

separately payable therapeutic 

radiopharmaceuticals is not required, a 

manufacturer’s choice to not submit 

ASP could result in payment for a 

separately payable therapeutic 

radiopharmaceutical based on WAC or 

AWP for a full year, a result that we 

believe would be inappropriate. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to continue to pay all 

nonpass-through, separately payable 

therapeutic radiopharmaceuticals at 

ASP+6 percent. We also are finalizing 

our proposal to continue to rely on CY 

2013 mean unit cost data derived from 

hospital claims data for payment rates 

for therapeutic radiopharmaceuticals for 

which ASP data are unavailable. The CY 

2015 final rule payment rates for 

nonpass-through separately payable 

therapeutic radiopharmaceuticals are 

included in Addenda A and B to this 

final rule with comment period (which 

are available via the Internet on the 

CMS Web site). 

5. Payment Adjustment Policy for 

Radioisotopes Derived From NonHighly Enriched Uranium Sources 

Radioisotopes are widely used in 

modern medical imaging, particularly 

for cardiac imaging and predominantly 

for the Medicare population. 

Technetium-99 (Tc-99m), the 

radioisotope used in the majority of 

such diagnostic imaging services, is 

currently produced in legacy reactors 

outside of the United States using 

highly enriched uranium (HEU). 

The United States would like to 

eliminate domestic reliance on these 

reactors, and is promoting the 

conversion of all medical radioisotope 

production to non-HEU sources. 

Alternative methods for producing Tc99m without HEU are technologically 

and economically viable, and 

conversion to such production has 

begun and is expected to be completed 

within a 3-year time period. We expect 

this change in the supply source for the 

radioisotope used for modern medical 

imaging will introduce new costs into 

the payment system that are not 

accounted for in the historical claims 

data. 

Therefore, for CY 2013, we finalized 

a policy to provide an additional 

payment of $10 for the marginal cost for 

radioisotopes produced by non-HEU 

sources (77 FR 68323). Under this 

policy, hospitals report HCPCS code 

Q9969 (Tc-99m from non-highly 

enriched uranium source, full cost 

recovery add-on per study dose) once 

per dose along with any diagnostic scan 

or scans furnished using Tc-99m as long 

as the Tc-99m doses used can be 

certified by the hospital to be at least 95 

percent derived from non-HEU sources. 

The time period for this additional 

payment was not to exceed 5 years from 

January 1, 2013 (77 FR 68321). 

Comment: A few commenters 

requested that CMS extend payment for 

HCPCS code Q9969 an additional 3 to 

5 years to ensure adequate data are 

collected and provide a longer ramp up 

period for more widespread use of nonHEU materials since they are not yet 

widely available. One commenter 

believed that the $10 payment is not 

sufficient and requested that CMS 

increase the payment rate. This 

commenter also requested that CMS 

eliminate the copayment. 

Response: We stated in our CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68316) that our 

expectation was that the transition to 

non-HEU sourced Mo-99 would be 

completed within 4 to 5 years and that 

there might be a need to make 

differential payments for a period of 4 

to 5 years. We further stated that we 

would reassess, and propose if 

necessary, on an annual basis whether 

such an adjustment continued to be 

necessary and whether any changes to 

the adjustment were warranted. We 

have reassessed this payment for CY 

2015 and have not identified any new 

information that would cause us to 

modify payment at this time. We do not 

agree with the commenter’s suggestion 

to eliminate the beneficiary’s copayment 

because section 1833(t)(8) of the Act and 

§§ 419.41 through 419.45 of the 

regulations require a beneficiary 

copayment. We are continuing the 

policy of providing an additional $10 

payment for radioisotopes produced by 

non-HEU sources for CY 2015. Although 

we will reassess this policy annually, 

consistent with the original policy in 

the CY 2013 OPPS/ASC final rule with 

comment period (77 FR 68321), we do 

not anticipate that this additional 

payment would extend beyond CY 

2017. 

6. Payment for Blood Clotting Factors 

For CY 2014, we provided payment 

for blood clotting factors under the same 

methodology as other nonpass-through 

separately payable drugs and biologicals 

under the OPPS and continued paying 

an updated furnishing fee. That is, for 

CY 2014, we provided payment for 

blood clotting factors under the OPPS at 

ASP+6 percent, plus an additional 

payment for the furnishing fee. We note 

that when blood clotting factors are 

provided in physicians’ offices under 

Medicare Part B and in other Medicare 

settings, a furnishing fee is also applied 

to the payment. The CY 2014 updated 

furnishing fee was $0.192 per unit. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41003), for CY 2015, we 

proposed to pay for blood clotting 

factors at ASP+6 percent, consistent 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66893 

with our proposed payment policy for 

other nonpass-through separately 

payable drugs and biologicals, and to 

continue our policy for payment of the 

furnishing fee using an updated amount. 

Our policy to pay for a furnishing fee for 

blood clotting factors under the OPPS is 

consistent with the methodology 

applied in the physician office and 

inpatient hospital setting, and first 

articulated in the CY 2006 OPPS final 

rule with comment period (70 FR 

68661) and later discussed in the CY 

2008 OPPS/ASC final rule with 

comment period (72 FR 66765). The 

proposed furnishing fee update was 

based on the percentage increase in the 

Consumer Price Index (CPI) for medical 

care for the 12-month period ending in 

June of the previous year. Because the 

Bureau of Labor Statistics releases the 

applicable CPI data after the MPFS and 

OPPS/ASC proposed rules are 

published, we were not able to include 

the actual updated furnishing fee in the 

proposed rules. Therefore, in 

accordance with our policy, as finalized 

in the CY 2008 OPPS/ASC final rule 

with comment period (72 FR 66765), we 

proposed to announce the actual figure 

for the percent change in the applicable 

CPI and the updated furnishing fee 

calculated based on that figure through 

applicable program instructions and 

posting on the CMS Web site at: 

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

Medicare-Fee-for-Service-Part-B-Drugs/

McrPartBDrugAvgSalesPrice/

index.html. 

Comment: Commenters supported 

CMS’ proposal to continue to apply the 

furnishing fee for blood clotting factors 

provided in the OPD. The commenters 

also supported CMS’ proposal to pay for 

separately payable drugs at ASP+6 

percent based on the statutory default 

for CY 2015. 

Response: We appreciate the 

commenters’ support. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to provide payment for 

blood clotting factors under the same 

methodology as other separately payable 

drugs and biologicals under the OPPS 

and to continue payment of an updated 

furnishing fee. We will announce the 

actual figure of the percent change in 

the applicable CPI and the updated 

furnishing fee calculation based on that 

figure through the applicable program 

instructions and posting on the CMS 

Web site. 

7. Payment for Nonpass-Through Drugs, 

Biologicals, and Radiopharmaceuticals 

With HCPCS Codes but Without OPPS 

Hospital Claims Data 

The Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 (Pub. L. 108–173) did not address 

the OPPS payment in CY 2005 and 

subsequent years for drugs, biologicals, 

and radiopharmaceuticals that have 

assigned HCPCS codes, but that do not 

have a reference AWP or approval for 

payment as pass-through drugs or 

biologicals. Because there was no 

statutory provision that dictated 

payment for such drugs, biologicals, and 

radiopharmaceuticals in CY 2005, and 

because we had no hospital claims data 

to use in establishing a payment rate for 

them, we investigated several payment 

options for CY 2005 and discussed them 

in detail in the CY 2005 OPPS final rule 

with comment period (69 FR 65797 

through 65799). 

For CYs 2005 to 2007, we 

implemented a policy to provide 

separate payment for new drugs, 

biologicals, and radiopharmaceuticals 

with HCPCS codes (specifically those 

new drug, biological, and 

radiopharmaceutical HCPCS codes in 

each of those calendar years that did not 

crosswalk to predecessor HCPCS codes) 

but which did not have pass-through 

status, at a rate that was equivalent to 

the payment they received in the 

physician’s office setting, established in 

accordance with the ASP methodology 

for drugs and biologicals, and based on 

charges adjusted to cost for 

radiopharmaceuticals. Beginning in CY 

2008 and continuing through CY 2014, 

we implemented a policy to provide 

payment for new drugs and biologicals 

with HCPCS codes (except those that are 

policy-packaged), but which did not 

have pass-through status and were 

without OPPS hospital claims data, at 

an amount consistent with the final 

OPPS payment methodology for other 

separately payable nonpass-through 

drugs and biologicals for the given year. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41004), for CY 2015, we 

proposed to continue this policy and 

provide payment for new drugs, 

biologicals, and therapeutic 

radiopharmaceuticals that do not have 

pass-through status at ASP+6 percent, 

consistent with the proposed CY 2015 

payment methodology for other 

separately payable nonpass-through 

drugs, biologicals, and therapeutic 

radiopharmaceuticals, which was 

proposed to be ASP+6 percent. We 

believe this proposed policy would 

ensure that new nonpass-through drugs, 

biologicals, and therapeutic 

radiopharmaceuticals would be treated 

like other drugs, biologicals, and 

therapeutic radiopharmaceuticals under 

the OPPS. 

For CY 2015, we are also continuing 

to package payment for all new 

nonpass-through policy-packaged 

products (diagnostic 

radiopharmaceuticals, contrast agents, 

anesthesia drugs, drugs, biologicals, and 

radiopharmaceuticals that function as 

supplies when used in a diagnostic test 

or procedure, and drugs and biologicals 

that function as supplies when used in 

a surgical procedure) with HCPCS codes 

but without claims data (those new CY 

2015 HCPCS codes that do not 

crosswalk to predecessor HCPCS codes). 

This is consistent with the CY 2014 

finalized policy packaging proposal of 

all existing nonpass-through diagnostic 

radiopharmaceuticals, contrast agents, 

anesthesia drugs, drugs, biologicals, and 

radiopharmaceuticals that function as 

supplies when used in a diagnostic test 

or procedure, and drugs and biologicals 

that function as supplies when used in 

a surgical procedure, as discussed in 

more detail in section II.A.3. of this final 

rule with comment period. 

In accordance with the OPPS ASP 

methodology, in the absence of ASP 

data, for CY 2015, we proposed to 

continue our policy of using the WAC 

for the product to establish the initial 

payment rate for new nonpass-through 

drugs and biologicals with HCPCS 

codes, but which are without OPPS 

claims data. However, we note that if 

the WAC is also unavailable, we would 

make payment at 95 percent of the 

product’s most recent AWP. We also 

proposed to assign status indicator ‘‘K’’ 

(Separately paid nonpass-through drugs 

and biologicals, including therapeutic 

radiopharmaceuticals) to HCPCS codes 

for new drugs and biologicals without 

OPPS claims data and for which we 

have not granted pass-through status. 

With respect to new nonpass-through 

drugs and biologicals for which we do 

not have ASP data, we proposed that 

once their ASP data become available in 

later quarterly submissions, their 

payment rates under the OPPS would be 

adjusted so that the rates would be 

based on the ASP methodology and set 

to the proposed ASP-based amount 

(proposed for CY 2015 at ASP+6 

percent) for items that have not been 

granted pass-through status. This 

proposed policy, which utilizes the ASP 

methodology for new nonpass-through 

drugs and biologicals with an ASP, is 

consistent with prior years’ policies for 

these items and would ensure that new 

nonpass-through drugs and biologicals 

would be treated like other drugs and 


tkelley on DSK3SPTVN1PROD with RULES2
66894 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

biologicals under the OPPS, unless they 

are granted pass-through status. 

Similarly, we proposed to continue to 

base the initial payment for new 

therapeutic radiopharmaceuticals with 

HCPCS codes, but which do not have 

pass-through status and are without 

claims data, on the WACs for these 

products if ASP data for these 

therapeutic radiopharmaceuticals are 

not available. If the WACs also are 

unavailable, we proposed to make 

payment for new therapeutic 

radiopharmaceuticals at 95 percent of 

the products’ most recent AWP because 

we would not have mean costs from 

hospital claims data upon which to base 

payment. As we proposed with new 

drugs and biologicals, we proposed to 

continue our policy of assigning status 

indicator ‘‘K’’ to HCPCS codes for new 

therapeutic radiopharmaceuticals 

without OPPS claims data for which we 

have not granted pass-through status. 

Consistent with other ASP-based 

payment, for CY 2015, we proposed to 

announce any changes to the payment 

amounts for new drugs and biologicals 

in this CY 2015 OPPS/ASC final rule 

with comment period and also on a 

quarterly basis on the CMS Web site 

during CY 2015 if later quarter ASP 

submissions (or more recent WACs or 

AWPs) indicate that changes to the 

payment rates for these drugs and 

biologicals are necessary. The payment 

rates for new therapeutic 

radiopharmaceuticals also would be 

changed accordingly based on later 

quarter ASP submissions. We note that 

the new CY 2015 HCPCS codes for 

drugs, biologicals, and therapeutic 

radiopharmaceuticals were not available 

at the time of development of the 

proposed rule. However, these agents 

are included in Addendum B to this CY 

2015 OPPS/ASC final rule with 

comment period (which is available via 

the Internet on the CMS Web site), 

where they are assigned comment 

indicator ‘‘NI.’’ This comment indicator 

reflects that their interim final OPPS 

treatment is open to public comment in 

this CY 2015 OPPS/ASC final rule with 

comment period. 

There are several nonpass-through 

drugs and biologicals that were payable 

in CY 2013 and/or CY 2014 for which 

we did not have CY 2013 hospital 

claims data available for the proposed 

rule and for which there are no other 

HCPCS codes that describe different 

doses of the same drug, but which have 

pricing information available for the 

ASP methodology. In order to determine 

the packaging status of these products 

for CY 2015, we proposed to continue 

our policy to calculate an estimate of the 

per day cost of each of these items by 

multiplying the payment rate of each 

product based on ASP+6 percent, 

similar to other nonpass-through drugs 

and biologicals paid separately under 

the OPPS, by an estimated average 

number of units of each product that 

would typically be furnished to a 

patient during one day in the hospital 

outpatient setting. This rationale was 

first adopted in the CY 2006 OPPS/ASC 

final rule with comment period (70 FR 

68666 through 68667). 

We proposed to package items for 

which we estimated the per day 

administration cost to be less than or 

equal to $90 (although, as mentioned in 

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

comment period, we are finalizing a 

packaging threshold of $95 for CY 2015) 

and to pay separately for items for 

which we estimated the per day 

administration cost to be greater than 

$90 (with the exception of diagnostic 

radiopharmaceuticals, contrast agents, 

anesthesia drugs, drugs, biologicals, and 

radiopharmaceuticals that function as 

supplies when used in a diagnostic test 

or procedure, and drugs and biologicals 

that function as supplies when used in 

a surgical procedure, which we 

proposed to continue to package 

regardless of cost) in CY 2015. We also 

proposed that the CY 2015 payment for 

separately payable items without CY 

2013 claims data would be ASP+6 

percent, similar to payment for other 

separately payable nonpass-through 

drugs and biologicals under the OPPS. 

In accordance with the ASP 

methodology paid in the physician’s 

office setting, in the absence of ASP 

data, we proposed to use the WAC for 

the product to establish the initial 

payment rate and, if the WAC is also 

unavailable, we would make payment at 

95 percent of the most recent AWP 

available. The proposed estimated units 

per day and status indicators for these 

items were displayed in Table 42 of the 

proposed rule (79 FR 41005). 

Finally, there were 35 drugs and 

biologicals, shown in Table 43 of the 

proposed rule (79 FR 41005 through 

41006), that were payable in CY 2013 

but for which we lacked CY 2013 claims 

data and any other pricing information 

for the ASP methodology for the CY 

2015 OPPS/ASC proposed rule. For CY 

2010, we finalized a policy to assign 

status indicator ‘‘E’’ (Not paid by 

Medicare when submitted on outpatient 

claims [any outpatient bill type]) 

whenever we lacked claims data and 

pricing information and were unable to 

determine the per day cost of a drug or 

biological. In addition, we noted that we 

would provide separate payment for 

these drugs and biologicals if pricing 

information reflecting recent sales 

became available mid-year for the ASP 

methodology. 

For CY 2015, as we finalized in CY 

2014 (78 FR 75031), we proposed to 

continue to assign status indicator ‘‘E’’ 

to drugs and biologicals that lack CY 

2013 claims data and pricing 

information for the ASP methodology. 

All drugs and biologicals without CY 

2013 hospital claims data or data based 

on the ASP methodology that were 

assigned status indicator ‘‘E’’ on this 

basis at the time of the proposed rule for 

CY 2015 were displayed in Table 43 of 

the proposed rule (79 FR 41005 through 

41006). We also proposed to continue 

our policy to assign the products status 

indicator ‘‘K’’ and pay for them 

separately for the remainder of CY 2015 

if pricing information becomes 

available. 

We did not receive any specific public 

comments regarding our proposed 

payment for nonpass-through drugs, 

biologicals, and radiopharmaceuticals 

with HCPCS codes, but without OPPS 

hospital claims data. Many commenters 

supported our proposal to pay for 

separately payable drugs at ASP+6 

percent under the statutory default. 

However, these comments were not 

specific to new drugs and biologicals 

with HCPCS codes but without OPPS 

claims data. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2015 proposal without 

modification, including our proposal to 

assign drug or biological products status 

indicator ‘‘K’’ and pay for them 

separately for the remainder of CY 2015 

if pricing information becomes 

available. The final estimated units per 

day and status indicators for drugs and 

biologicals without CY 2013 claims data 

are displayed in Table 37 below. 

We did not receive any public 

comments on our proposal to continue 

to assign status indicator ‘‘E’’ to drugs 

and biologicals that lack CY 2013 claims 

data and pricing information for the 

ASP methodology and, therefore, we are 

finalizing this proposal without 

modification. All drugs and biologicals 

without CY 2013 hospital claims data 

and without pricing information for the 

ASP methodology that are assigned 

status indicator ‘‘E’’ on this basis at the 

time of this final rule with comment 

period for CY 2015 are displayed in 

Table 38 below. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66895 

TABLE 37—DRUGS AND BIOLOGICALS WITHOUT CY 2013 CLAIMS DATA

CY 2015 

HCPCS code CY 2015 long descriptor 

Estimated average number 

of units per 

day 

CY 2015 SI CY 2015 APC 

90581 ........... Anthrax vaccine, for subcutaneous or intramuscular use ................................. 1 K 1422 

J0215 ........... Injection, alefacept, 0.5 mg ............................................................................... 29 K 1633 

J0365 ........... Injection, aprotonin, 10,000 kiu ......................................................................... 1 N 1439 

J0630 ........... Injection, calcitonin salmon, up to 400 units ..................................................... 2 K 1433 

J2670 ........... Injection, tolazoline hcl, up to 25 mg ................................................................ 1 N 1457 

J3355 ........... Injection, urofollitropin, 75 iu ............................................................................. 2 K 1741 

J7196 ........... Injection, antithrombin recombinant, 50 IU ....................................................... 268 K 1332 

J7505 ........... Muromonab-cd3, parenteral, 5 mg .................................................................... 1 N 7038 

J7513 ........... Daclizumab, parenteral, 25 mg ......................................................................... 1 N 1612 

J8650 ........... Nabilone, oral, 1 mg .......................................................................................... 4 K 1424 

J9151 ........... Injection, daunorubicin citrate, liposomal formulation, 10 mg ........................... 10 K 0821 

J9215 ........... Injection, interferon, alfa-n3, (human leukocyte derived), 250,000 iu .............. 1 N 1473 

J9300 ........... Injection, gemtuzumab ozogamicin, 5 mg ........................................................ 1 K 9004 

TABLE 38—DRUGS AND BIOLOGICALS WITHOUT CY 2013 CLAIMS DATA AND WITHOUT PRICING INFORMATION FOR THE

ASP METHODOLOGY

CY 2015 

HCPCS code CY 2015 long descriptor CY 2015 SI 

90296 ............. Diphtheria antitoxin, equine, any route ................................................................................................................... E 

90393 ............. Vaccina immune globulin, human, for intramuscular use ....................................................................................... E 

90477 ............. Adenovirus vaccine, type 7, live, for oral use ......................................................................................................... E 

90644 ............. Meningococcal conjugate vaccine, serogroups c & y and hemophilus influenza b vaccine (hib-mency), 4 dose 

schedule, when administered to children 2–15 months of age, for intramuscular use.

E 

90681 ............. Rotavirus vaccine, human, attenuated, 2 dose schedule, live, for oral use ........................................................... E 

90727 ............. Plague vaccine, for intramuscular use .................................................................................................................... E 

J0190 ............. Injection, biperiden lactate, per 5 mg ...................................................................................................................... E 

J0205 ............. Injection, alglucerase, per 10 units ......................................................................................................................... E 

J0350 ............. Injection, anistreplase, per 30 units ........................................................................................................................ E 

J0364 ............. Injection, apomorphine hydrochloride, 1 mg ........................................................................................................... E 

J0395 ............. Injection, arbutamine hcl, 1 mg ............................................................................................................................... E 

J0710 ............. Injection, cephapirin sodium, up to 1 gm ................................................................................................................ E 

J1180 ............. Injection, dyphylline, up to 500 mg ......................................................................................................................... E 

J1435 ............. Injection estrone per 1 mg ...................................................................................................................................... E 

J1562 ............. Injection, immune globulin (vivaglobin), 100 mg ..................................................................................................... E 

J1620 ............. Injection, gonadorelin hydrochloride, per 100 mcg ................................................................................................. E 

J1655 ............. Injection, tinzaparin sodium, 1000 iu ...................................................................................................................... E 

J1730 ............. Injection, diazoxide, up to 300 mg .......................................................................................................................... E 

J1835 ............. Injection, itraconazole, 50 mg ................................................................................................................................. E 

J2460 ............. Injection, oxytetracycline hcl, up to 50 mg .............................................................................................................. E 

J2513 ............. Injection, pentastarch, 10% solution, 100 ml .......................................................................................................... E 

J2725 ............. Injection, protirelin, per 250 mcg ............................................................................................................................. E 

J2670 ............. Injection, tolazoline hcl, up to 25 mg ...................................................................................................................... E 

J2725 ............. Injection, protirelin, per 250 mcg ............................................................................................................................. E 

J2940 ............. Injection, somatrem, 1 mg ....................................................................................................................................... E 

J3305 ............. Injection, trimetrexate glucuronate, per 25 mg ....................................................................................................... E 

J3365 ............. Injection, iv, urokinase, 250,000 i.u. vial ................................................................................................................. E 

J3400 ............. Injection, triflupromazine hcl, up to 20 mg .............................................................................................................. E 

J8562 ............. Fludarabine phosphate, oral, 10 mg ....................................................................................................................... E 

J9165 ............. Injection, diethylstilbestrol diphosphate, 250 mg .................................................................................................... E 

J9212 ............. Injection, interferon alfacon-1, recombinant, 1 microgram ..................................................................................... E 

J9219 ............. Leuprolide acetate implant, 65 mg .......................................................................................................................... E 

Q0174 ............ Thiethylperazine maleate, 10 mg, oral, fda approved prescription anti-emetic, for use as a complete therapeutic substitute for an iv anti-emetic at the time of chemotherapy treatment, not to exceed a 48 hour dosage regimen.E 

Q0515 ............ Injection, sermorelin acetate, 1 microgram ............................................................................................................. E 


tkelley on DSK3SPTVN1PROD with RULES2
66896 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

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 2015 

entails estimating spending for two 

groups of items. The first group of items 

consists of device categories that are 

currently eligible for pass-through 

payment and that will continue to be 

eligible for pass-through payment in CY 

2015. The CY 2008 OPPS/ASC final rule 

with comment period (72 FR 66778) 

describes the methodology we have 

used in previous years to develop the 

pass-through spending estimate for 

known device categories continuing into 

the applicable update year. The second 

group of items consists of items that we 

know are newly eligible, or project may 

be newly eligible, for device passthrough payment beginning in CY 2015. 

The sum of the CY 2015 pass-through 

estimates for these two groups of device 

categories equals the total CY 2015 passthrough spending estimate for device 

categories with pass-through status. We 

base the device pass-through estimated 

payments for each device category on 

the amount of payment as established in 

section 1833(t)(6)(D)(ii) of the Act, and 

as outlined in previous rules, including 

the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75034 through 

75036). We note that, beginning in CY 

2010, the pass-through evaluation 

process and pass-through payment for 

implantable biologicals newly approved 

for pass-through payment beginning on 

or after January 1, 2010 that are 

surgically inserted or implanted 

(through a surgical incision or a natural 

orifice) is the device pass-through 

process and payment methodology (74 

FR 60476). As has been our past practice 

(76 FR 74335), in the CY 2015 OPPS/

ASC proposed rule (79 FR 41007), for 

CY 2015, we proposed to include an 

estimate of any implantable biologicals 

eligible for pass-through payment in our 

estimate of pass-through spending for 

devices. We also proposed that, 

beginning in CY 2015, applications for 

pass-through payment for skin 

substitutes and similar products be 

evaluated using the medical device 

pass-through process and payment 

methodology. We proposed that the last 

skin substitute pass-through 

applications evaluated using the drugs 

and biologicals pass-through evaluation 

process would be those with an 

application deadline of September 1, 

2014, and an earliest effective date of 

January 1, 2015. Therefore, in light of 

this proposal, we proposed to change 

the December 1, 2014 pass-through 

application deadline (for an earliest 

effective date of April 1, 2015) for both 

drugs and biologicals and devices to 

January 15, 2015, in order to provide 

sufficient time for applicants to adjust to 

the new policies and procedures that 

will be in effect as of January 1, 2015. 

We discuss our proposal to change the 

pass-through evaluation process for skin 

substitutes and address comments to 

this proposal and the proposal to change 

the April 1, 2015 pass-through effective 

date application deadline in section 

V.B.2.d. of this final rule with comment 

period, where we explain that we are 

finalizing this proposal. Therefore, 

beginning in CY 2015, we will include 

an estimate of any skin substitutes 

eligible for pass-through payment in our 

estimate of pass-through spending for 

devices. 

We did not receive any public 

comments on our proposed 

methodology or proposed estimate for 

pass-through spending for devices. 

Therefore, we are finalizing our 

proposal to base the pass-through 

estimate for devices on our established 

methodology, as described above. 

Moreover, we are finalizing our 

proposal, beginning in CY 2015 and in 

future years, to include an estimate of 

any skin substitutes eligible for passthrough payment in our estimate of 

pass-through spending for devices. 

For drugs and biologicals eligible for 

pass-through payment, section 

1833(t)(6)(D)(i) of the Act establishes the 

pass-through payment amount as the 

amount by which the amount 

authorized under section 1842(o) of the 

Act (or, if the drug or biological is 

covered under a competitive acquisition 

contract under section 1847B of the Act, 

an amount determined by the Secretary 

equal to the average price for the drug 

or biological for all competitive 

acquisition areas and year established 

under such section as calculated and 

adjusted by the Secretary) exceeds the 

portion of the otherwise applicable fee 

schedule amount that the Secretary 

determines is associated with the drug 

or biological. We note that the Part B 

drug CAP program has been postponed 

since CY 2009, and such a program has 

not been reinstated for CY 2015. 

Because, as we proposed, we will pay 

for most nonpass-through separately 

payable drugs and biologicals under the 

CY 2015 OPPS at ASP+6 percent, as we 

discuss in section V.B.3. of the proposed 

rule and this final rule with comment 

period, which represents the otherwise 

applicable fee schedule amount 

associated with most pass-through drugs 

and biologicals, and because, as we 

proposed, we will pay for CY 2015 passthrough drugs and biologicals at ASP+6 

percent, as we discuss in section V.A. of 

the proposed rule and this final rule 

with comment period, our estimate of 

drug and biological pass-through 

payment for CY 2015 for this group of 

items is $0, as discussed below. 

Furthermore, payment for certain 

drugs, specifically diagnostic 

radiopharmaceuticals and contrast 

agents, without pass-through status will 

always be packaged into payment for 

the associated procedures and these 

products will not be separately paid. In 

addition, we policy-package all 

nonpass-through drugs, biologicals, and 

radiopharmaceuticals that function as 

supplies when used in a diagnostic test 

or procedure and drugs and biologicals 

that function as supplies when used in 

a surgical procedure, as discussed in 

section II.A.3. of this final rule with 

comment period. In the CY 2015 OPPS/ 

ASC proposed rule (79 FR 41007), we 

proposed that all of these policypackaged drugs and biologicals with 

pass-through status would be paid at 

ASP+6 percent, like other pass-through 

drugs and biologicals, for CY 2015. 

Therefore, our estimate of pass-through 

payment for policy-packaged drugs and 

biologicals with pass-through status 

approved prior to CY 2015 is not $0. In 

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

comment period, we discuss our 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66897 

proposed and finalized policy to 

determine if the costs of certain policypackaged drugs or biologicals are 

already packaged into the existing APC 

structure. If we determine that a policypackaged drug or biological approved 

for pass-through payment resembles 

predecessor drugs or biologicals already 

included in the costs of the APCs that 

are associated with the drug receiving 

pass-through payment, we proposed to 

offset the amount of pass-through 

payment for the policy-packaged drug or 

biological. For these drugs or 

biologicals, the APC offset amount is the 

portion of the APC payment for the 

specific procedure performed with the 

pass-through drug or biological, which 

we refer to as the policy-packaged drug 

APC offset amount. If we determine that 

an offset is appropriate for a specific 

policy-packaged drug or biological 

receiving pass-through payment, we 

reduce our estimate of pass-through 

payments for these drugs or biologicals 

by this amount. 

Similar to pass-through estimates for 

devices, the first group of drugs and 

biologicals requiring a pass-through 

payment estimate consists of those 

products that were recently made 

eligible for pass-through payment and 

that will continue to be eligible for passthrough payment in CY 2015. The 

second group contains drugs and 

biologicals that we know are newly 

eligible, or project will be newly 

eligible, beginning in CY 2015. The sum 

of the CY 2015 pass-through estimates 

for these two groups of drugs and 

biologicals equals the total CY 2015 

pass-through spending estimate for 

drugs and biologicals with pass-through 

status. 

B. Estimate of Pass-Through Spending 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41007), we proposed to set 

the applicable pass-through payment 

percentage limit at 2.0 percent of the 

total projected OPPS payments for CY 

2015, consistent with section 

1833(t)(6)(E)(ii)(II) of the Act, and our 

OPPS policy from CY 2004 through CY 

2014 (78 FR 75034 through 75036). 

For the first group of devices for passthrough payment estimation purposes, 

there is one device category, HCPCS 

code C1841 (Retinal prosthesis, includes 

all internal and external components), 

eligible for pass-through payment as of 

October 1, 2013, continuing to be 

eligible for CY 2014, and that will 

continue to be eligible for pass-through 

payment for CY 2015. Based on the one 

device category, HCPCS code C1841, we 

are finalizing our proposed rule estimate 

for the first group of devices of $0.5 

million. 

In estimating our CY 2015 passthrough spending for device categories 

in the second group, we include: Device 

categories that we knew at the time of 

the development of the final rule will be 

newly eligible for pass-through payment 

in CY 2015; additional device categories 

that we estimate could be approved for 

pass-through status subsequent to the 

development of the final rule and before 

January 1, 2015; and contingent 

projections for new device categories 

established in the second through fourth 

quarters of CY 2015. We proposed to use 

the general methodology described in 

the CY 2008 OPPS/ASC final rule with 

comment period (72 FR 66778), while 

also taking into account recent OPPS 

experience in approving new passthrough device categories. For the 

proposed rule, the estimate of CY 2015 

pass-through spending for this second 

group of device categories was $10.0 

million. We did not receive any public 

comments regarding our proposed passthrough estimate for devices. We are 

establishing one new device category 

subsequent to the publication of the 

proposed rule, HCPCS code C2624 

(Implantable wireless pulmonary artery 

pressure sensor with delivery catheter, 

including all system components), that 

will be effective January 1, 2015. We 

estimate that HCPCS code C2624 will 

cost $50.5 million in pass-through 

expenditures in CY 2015. Therefore, for 

this CY 2015 OPPS/ASC final rule with 

comment period, the estimate of CY 

2015 pass-through spending for this 

second group of device categories is 

$60.5 million. 

To estimate CY 2015 pass-through 

spending for drugs and biologicals in 

the first group, specifically those drugs 

and biologicals recently made eligible 

for pass-through payment and 

continuing on pass-through payment 

status for CY 2015, we proposed to 

utilize the most recent Medicare 

physician claims data regarding their 

utilization, information provided in the 

respective pass-through applications, 

historical hospital claims data, 

pharmaceutical industry information, 

and clinical information regarding those 

drugs or biologicals to project the CY 

2015 OPPS utilization of the products. 

For the known drugs and biologicals 

(excluding policy-packaged diagnostic 

radiopharmaceuticals, contrast agents, 

drugs, biologicals, and 

radiopharmaceuticals that function as 

supplies when used in a diagnostic test 

or procedure, and drugs and biologicals 

that function as supplies when used in 

a surgical procedure) that will be 

continuing on pass-through payment 

status in CY 2015, we estimate the passthrough payment amount as the 

difference between ASP+6 percent and 

the payment rate for nonpass-through 

drugs and biologicals that will be 

separately paid at ASP+6 percent, 

which is zero for this group of drugs. 

Because payment for policy-packaged 

drugs and biologicals is packaged if the 

product was not paid separately due to 

its pass-through status, we proposed to 

include in the CY 2015 pass-through 

estimate the difference between 

payment for the policy-packaged drug or 

biological at ASP+6 percent (or WAC+6 

percent, or 95 percent of AWP, if ASP 

or WAC information is not available) 

and the policy-packaged drug APC 

offset amount, if we determine that the 

policy-packaged drug or biological 

approved for pass-through payment 

resembles a predecessor drug or 

biological already included in the costs 

of the APCs that are associated with the 

drug receiving pass-through payment. 

For the proposed rule, using the 

methodology described above, we 

calculated a CY 2015 proposed 

spending estimate for this first group of 

drugs and biologicals of approximately 

$2.8 million. 

We did not receive any public 

comments on our proposed 

methodology for calculating for 

calculating the spending estimate for the 

first group of drugs and biologicals. 

For this final rule with comment 

period, using the methodology 

described above, we calculated a final 

CY 2015 spending estimate for this first 

group of drugs and biologicals of 

approximately $11.7 million. 

To estimate proposed CY 2015 passthrough spending for drugs and 

biologicals in the second group (that is, 

drugs and biologicals that we know are 

newly eligible, or project will be newly 

eligible, beginning in CY 2015), in the 

CY 2015 OPPS/ASC proposed rule (79 

FR 41008), we proposed to use 

utilization estimates from pass-through 

applicants, pharmaceutical industry 

data, clinical information, recent trends 

in the per unit ASPs of hospital 

outpatient drugs, and projected annual 

changes in service volume and intensity 

as our basis for making the CY 2015 

pass-through payment estimate. We also 

proposed to consider the most recent 

OPPS experience in approving new 

pass-through drugs and biologicals. 

Using our proposed methodology for 

estimating CY 2015 pass-through 

payments for this second group of 

drugs, we calculated a proposed 

spending estimate for this second group 

of drugs and biologicals of 

approximately $2.2 million. 

We did not receive any public 

comments on our proposed 

methodology for calculating for 


tkelley on DSK3SPTVN1PROD with RULES2
66898 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

calculating the spending estimate for the 

second group of drugs and 

nonimplantable biologicals. 

For this final rule with comment 

period, using our finalized methodology 

for estimating CY 2015 pass-through 

payments for this second group of 

drugs, we calculated a spending 

estimate for this second group of drugs 

and biologicals of approximately $10.1 

million. Our CY 2015 estimate for total 

pass-through spending for drugs and 

biologicals (spending for the first group 

of drugs and biologicals ($11.7 million) 

plus spending for the second group of 

drugs and biologicals ($10.1 million)) 

equals $21.8 million. 

In summary, in accordance with the 

methodology described above in this 

section, for this final rule with comment 

period, we estimate that total passthrough spending for the device 

categories and the drugs and biologicals 

that are continuing to receive passthrough payment in CY 2015 and those 

device categories, drugs, and biologicals 

that first become eligible for passthrough payment during CY 2015 will 

be approximately $82.8 million 

(approximately $61.0 million for device 

categories and approximately $21.8 

million for drugs and biologicals), 

which represents 0.15 percent of total 

projected OPPS payments for CY 2015. 

Therefore, we estimate that passthrough spending in CY 2015 will not 

amount to 2.0 percent of total projected 

OPPS CY 2015 program spending. 

VII. OPPS Payment for Hospital 

Outpatient Visits 

A. Payment for Hospital Outpatient 

Clinic and Emergency Department Visits 

Since April 7, 2000, we have 

instructed hospitals to report facility 

resources for clinic and ED hospital 

outpatient visits using the CPT E/M 

codes and to develop internal hospital 

guidelines for reporting the appropriate 

visit level (65 FR 18451). Because a 

national set of hospital-specific codes 

and guidelines do not currently exist, 

we have advised hospitals that each 

hospital’s internal guidelines that 

determine the levels of clinic and ED 

visits to be reported should follow the 

intent of the CPT code descriptors, in 

that the guidelines should be designed 

to reasonably relate the intensity of 

hospital resources to the different levels 

of effort represented by the codes. 

While many hospitals have advocated 

for hospital-specific national guidelines 

for visit billing since the OPPS started 

in 2000, and we have signaled in past 

rulemaking our intent to develop 

guidelines, this complex undertaking 

has proven challenging. Our work with 

interested stakeholders, such as hospital 

associations, along with a contractor, 

has confirmed that no single approach 

could consistently and accurately 

capture hospitals’ relative costs. Public 

comments received on this issue, as 

well as our own knowledge of how 

clinics operate, have led us to conclude 

that it is not feasible to adopt a set of 

national guidelines for reporting 

hospital clinic visits that can 

accommodate the enormous variety of 

patient populations and service-mix 

provided by hospitals of all types and 

sizes throughout the country. Moreover, 

no single approach has been broadly 

endorsed by the stakeholder 

community. 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75036 

through 75045), we finalized a new 

policy which created an alphanumeric 

HCPCS code, G0463 (Hospital 

outpatient clinic visit for assessment 

and management of a patient), for 

hospital use only representing any and 

all clinic visits under the OPPS and 

assigned HCPCS code G0463 to new 

APC 0634. We also finalized a policy to 

use CY 2012 claims data to develop the 

CY 2014 OPPS payment rates for HCPCS 

code G0463 based on the total geometric 

mean cost of the levels one through five 

CPT E/M codes for clinic visits 

previously recognized under the OPPS 

(CPT codes 99201 through 99205 and 

99211 through 99215). In addition, we 

finalized a policy to no longer recognize 

a distinction between new and 

established patient clinic visits. 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75036 

through 75043), we also stated our 

policy that we would continue to use 

our existing methodology to recognize 

the existing CPT codes for Type A ED 

visits as well as the five HCPCS codes 

that apply to Type B ED visits, and to 

establish the OPPS payment under our 

established standard process. We refer 

readers to the CY 2014 OPPS/ASC final 

rule with comment period for a detailed 

discussion of the public comments and 

our rationale for the CY 2014 policies. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41008 through 41009), for 

CY 2015, we proposed to continue the 

current policy, adopted in CY 2014, for 

clinic and ED visits. HCPCS code G0463 

(for hospital use only) will represent 

any and all clinic visits under the OPPS. 

We proposed to continue to assign 

HCPCS code G0463 to APC 0634. We 

proposed to use CY 2013 claims data to 

develop the CY 2015 OPPS payment 

rates for HCPCS code G0463 based on 

the total geometric mean cost of the 

levels one through five CPT E/M codes 

for clinic visits currently recognized 

under the OPPS (CPT codes 99201 

through 99205 and 99211 through 

99215). Finally, as we established in the 

CY 2014 OPPS/ASC final rule with 

comment period, there is no longer a 

policy to recognize a distinction 

between new and established patient 

clinic visits. 

Comment: Commenters requested that 

CMS discontinue the single HCPCS Gcode for reporting clinic visits and 

return to a reporting structure that 

recognizes differences in clinical acuity 

and resource utilization. The 

commenters expressed concern that 

CMS’ clinic visit coding proposal 

creates a payment bias that unfairly 

penalizes certain providers, such as 

trauma centers, cancer hospitals, and 

major teaching hospitals, which provide 

care for more severely ill Medicare 

beneficiaries. One commenter urged 

CMS to carefully review its ratesetting 

process for HCPCS code G0463 to 

ensure that claims containing packaged 

services that are intended to be part of 

the hospital clinic rates are not being 

excluded from the payment 

computations, thereby creating 

artificially low rates. Another 

commenter recommended that CMS 

work with the American Medical 

Association (AMA) to develop facilityspecific CPT codes for E/M clinic visits 

(with no distinction between new and 

established patients) and seek input 

from industry stakeholders to develop 

descriptions for these new codes that 

allow for their consistent application by 

hospital outpatient clinics/facilities. 

Response: We believe that the 

spectrum of hospital resources provided 

during an outpatient hospital clinic visit 

is appropriately captured and reflected 

in the single level payment for clinic 

visits. We also believe that the single 

visit code is consistent with a 

prospective payment system, where 

payment is based on an average 

estimated relative cost for the service, 

although the cost of individual cases 

may be more or less costly than the 

average. We believe the proposed 

payment rate for APC 0634 represents 

an appropriate payment for clinic visits, 

as it is based on the geometric mean 

costs of all visits. Although the cost for 

any given clinic visit may be higher or 

lower than the geometric mean cost of 

APC 0634, the payment remains 

appropriate to the hospital delivering a 

variety of clinic visits. The high volume 

of claims from every level of clinic CPT 

code that we used for ratesetting for 

HCPCS code G0463 allows us to have 

accurate data upon which to develop 

appropriate payment rates. 

With regard to specific concerns for 

hospitals that treat patients with a more 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66899 

complex case-mix, we note that the 

relatively low estimated cost of clinic 

visits overall would result in much less 

underpayment or overpayment for 

hospitals that may serve a population 

with a more complex case-mix. As we 

stated in the CY 2015 OPPS/ASC 

proposed rule (79 FR 41008), we 

proposed to use CY 2013 claims data to 

develop the CY 2015 OPPS payment 

rates for HCPCS code G0463 based on 

the total geometric mean cost of the 

levels one through five CPT E/M codes 

for clinic visits currently recognized 

under the OPPS (CPT codes 99201 

through 99205 and 99211 through 

99215). We note that claims containing 

packaged services that are intended to 

be part of the hospital clinic rates are 

not excluded from payment 

computations for HCPCS code G0463, 

consistent with our application of our 

line-item trim as described in section 

II.A.2.a. of this final rule with comment 

period. The line-item trim described in 

section II.A.2.a. of this final rule with 

comment period requires the lines to be 

eligible for payment in both the claims 

year and the prospective years. 

Therefore, the lines that would be 

packaged when modeling clinic visits 

would not be subject to this trim. For a 

more detailed discussion of the OPPS 

data process, we refer readers to section 

II.A. of this final rule with comment 

period. 

With regard to the potential for 

facility-specific CPT codes, as we have 

stated in the past (76 FR 74346), if the 

AMA were to create facility-specific 

CPT codes for reporting visits provided 

in HOPDs (based on internally 

developed guidelines), we would 

consider such codes for OPPS use. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2015 proposal, 

without modification, to continue to use 

HCPCS code G0463 (for hospital use 

only) to represent any and all clinic 

visits under the OPPS for CY 2015. In 

addition, for CY 2015 we are finalizing 

our proposals, without modification, to 

continue to assign HCPCS code G0463 

to APC 0634 and to use CY 2013 claims 

data to develop the CY 2015 OPPS 

payment rates for HCPCS code G0463 

based on the total geometric mean cost 

of the levels one through five CPT E/M 

codes for clinic visits currently 

recognized under the OPPS (CPT codes 

99201 through 99205 and 99211 through 

99215). 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75040), we 

stated that additional study was needed 

to fully assess the most suitable 

payment structure for ED visits, 

including the particular number of visit 

levels that would not underrepresent 

resources required to treat the most 

complex patients, such as trauma 

patients and that we believed it was best 

to delay any change in ED visit coding 

while we reevaluate the most 

appropriate payment structure for Type 

A and Type B ED visits. At this time, we 

continue to believe that additional study 

is needed to assess the most suitable 

payment structure for ED visits. In the 

CY 2015 OPPS/ASC proposed rule, we 

did not propose any change in ED visit 

coding. Rather, for CY 2015, we 

proposed to continue to use our existing 

methodology to recognize the existing 

CPT codes for Type A ED visits as well 

as the five HCPCS codes that apply to 

Type B ED visits, and to establish the 

CY 2015 proposed OPPS payment rates 

using our established standard process. 

We stated that we intend to further 

explore the issues described above 

related to ED visits, including concerns 

about excessively costly patients, such 

as trauma patients. We also stated that 

we may propose changes to the coding 

and APC assignments for ED visits in 

future rulemaking. 

Comment: Commenters supported 

CMS’ proposal to continue its current 

methodology to recognize the existing 

five CPT codes for Type A ED visits, as 

well as the five HCPCS codes for Type 

B ED visits, and to establish the 

associated CY 2015 OPPS payment rates 

using its standard process. Commenters 

commended CMS for proceeding with 

caution and agreed that additional study 

is needed on the appropriate payment 

structure for ED visits. Commenters also 

expressed their desire to work with 

CMS on a future policy proposal to 

create an appropriate payment structure 

for ED visits. Some commenters stated 

that one level of hospital ED payment is 

not appropriate for the various levels of 

resources required in ED visits, 

especially at major teaching hospitals, 

and expressed concern that a single 

level of ED visit payment would create 

a payment bias that would unfairly 

penalize certain providers, such as 

trauma centers and major teaching 

hospitals, which provide care for more 

severely ill Medicare beneficiaries. One 

commenter requested that CMS 

continue with its current ED visit 

payment policy for the foreseeable 

future and no longer attempt to make 

future changes to the policy in the 

coming years. Another commenter 

recommended that CMS work with the 

AMA to develop facility-specific CPT 

codes for Type A ED visits and Type B 

ED visits and seek input from industry 

stakeholders to develop descriptions for 

these new codes that allow for their 

consistent application by hospital 

outpatient clinics/facilities. 

Response: We appreciate the 

commenters’ support of our proposal to 

continue the current coding structure 

for ED visits while we continue to study 

the most appropriate payment structure 

for Type A and Type B ED visits. As 

discussed above, we received multiple 

comments that a single payment for an 

ED visit might underrepresent resources 

required to treat the most complex 

patients, such as trauma patients. As we 

have stated before (78 FR 75040), 

considering this issue requires 

additional study. As we continue to give 

additional study to this issue, we 

continue to welcome stakeholder input 

on the particular number of visit levels 

that would not underrepresent resources 

required to treat the most complex 

patients, such as trauma patients. 

With regard to the potential for 

facility-specific CPT codes, as we have 

also stated in the past (76 FR 74346), if 

the AMA were to create facility-specific 

CPT codes for reporting visits provided 

in HOPDs (based on internally 

developed guidelines), we would 

consider such codes for OPPS use. 

Comment: One commenter 

recommended, on a short-term basis, 

that CMS develop a set of three 

trauma-specific HCPCS codes for all 

trauma patients, for whom a trauma 

team is activated. 

Response: We appreciate the 

alternative presented by the commenter. 

We will take this recommendation into 

consideration as we continue to study 

and fully consider the most appropriate 

payment structure for Type A and Type 

B ED visits. 

After consideration of the public 

comments we received, we are 

finalizing our proposals, without 

modification, to continue to use our 

existing methodology to recognize the 

existing CPT codes for Type A ED visits 

as well as the five HCPCS codes that 

apply to Type B ED visits, and to 

establish the CY 2015 OPPS payment 

rates using our established standard 

process. We intend to further explore 

the issues described above related to ED 

visits, including concerns about 

excessively costly patients, such as 

trauma patients. We note that we may 

propose changes to the coding and APC 

assignments for ED visits in the future 

rulemaking. 

B. Payment for Critical Care Services 

For the history of the payment policy 

for critical care services, we refer 

readers to the CY 2014 OPPS/ASC final 

rule with comment period (78 FR 

75043). In the CY 2014 OPPS/ASC final 

rule with comment period, we 


tkelley on DSK3SPTVN1PROD with RULES2
66900 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

continued to use the methodology 

established in the CY 2011 OPPS/ASC 

final rule with comment period for 

calculating a payment rate for critical 

care services that includes packaged 

payment of ancillary services, for 

example electrocardiograms, chest Xrays, and pulse oximetry. Critical care 

services are described by CPT codes 

99291 (Critical care, evaluation and 

management of the critically ill or 

critically injured patient; first 30–74 

minutes) and 99292 (Critical care, 

evaluation and management of the 

critically ill or critically injured patient; 

each additional 30 minutes (List 

separately in addition to code for 

primary service)). 

As we discussed in the CY 2015 

OPPS/ASC proposed rule (79 FR 41009), 

compared to the CY 2012 hospital 

claims data used for the CY 2014 OPPS 

ratesetting, the CY 2013 hospital claims 

data used for the CY 2015 OPPS 

ratesetting again show increases in the 

geometric mean line item costs as well 

as the geometric mean line item charges 

for CPT code 99291, which continue to 

suggest that hospitals’ billing practices 

for CPT code 99291 have remained the 

same. Because the CY 2013 claims data 

do not support any significant change in 

hospital billing practices for critical care 

services, we stated in the proposed rule 

that we continue to believe that it would 

be inappropriate to pay separately for 

the ancillary services that hospitals 

typically report in addition to CPT 

codes for critical care services. 

Therefore, for CY 2015, we proposed to 

continue our policy (that has been in 

place since CY 2011) to recognize the 

existing CPT codes for critical care 

services and establish a payment rate 

based on historical claims data. We also 

proposed to continue to implement 

claims processing edits that 

conditionally package payment for the 

ancillary services that are reported on 

the same date of service as critical care 

services in order to avoid overpayment. 

We stated that we will continue to 

monitor the hospital claims data for CPT 

code 99291 in order to determine 

whether revisions to this policy are 

warranted based on changes in 

hospitals’ billing practices. 

We did not receive any public 

comments on this issue. Accordingly, 

we are finalizing our proposals, without 

modification, to continue our policy to 

recognize the existing CPT codes for 

critical care services and establish a 

payment rate based on historical claims 

data, and to continue to implement 

claims processing edits that 

conditionally package payment for the 

ancillary services that are reported on 

the same date of service as critical care 

services in order to avoid overpayment. 

VIII. Payment for Partial 

Hospitalization Services 

A. Background 

Partial hospitalization is an intensive 

outpatient program of psychiatric 

services provided to patients as an 

alternative to inpatient psychiatric care 

for individuals who have an acute 

mental illness. Section 1861(ff)(1) of the 

Act defines partial hospitalization 

services as ‘‘the items and services 

described in paragraph (2) prescribed by 

a physician and provided under a 

program described in paragraph (3) 

under the supervision of a physician 

pursuant to an individualized, written 

plan of treatment established and 

periodically reviewed by a physician (in 

consultation with appropriate staff 

participating in such program), which 

sets forth the physician’s diagnosis, the 

type, amount, frequency, and duration 

of the items and services provided 

under the plan, and the goals for 

treatment under the plan.’’ Section 

1861(ff)(2) of the Act describes the items 

and services included in partial 

hospitalization services. Section 

1861(ff)(3)(A) of the Act specifies that a 

partial hospitalization program (PHP) is 

a program furnished by a hospital to its 

outpatients or by a community mental 

health center (CMHC) (as defined in 

subparagraph (B)), and ‘‘which is a 

distinct and organized intensive 

ambulatory treatment service offering 

less than 24-hour-daily care other than 

in an individual’s home or in an 

inpatient or residential setting.’’ Section 

1861(ff)(3)(B) of the Act defines a 

community mental health center for 

purposes of this benefit. 

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

provides the Secretary with the 

authority to designate the OPD services 

to be covered under the OPPS. The 

Medicare regulations that implement 

this provision specify, under 42 CFR 

419.21, that payments under the OPPS 

will be made for partial hospitalization 

services furnished by CMHCs as well as 

Medicare Part B services furnished to 

hospital outpatients designated by the 

Secretary, which include partial 

hospitalization services (65 FR 18444 

through 18445). 

Section 1833(t)(2)(C) of the Act, in 

pertinent part, requires the Secretary to 

‘‘establish relative payment weights for 

covered OPD services (and any groups 

of such services described in 

subparagraph (B)) based on median (or, 

at the election of the Secretary, mean) 

hospital costs’’ using data on claims 

from 1996 and data from the most recent 

available cost reports. In pertinent part, 

subparagraph (B) provides that the 

Secretary may establish groups of 

covered OPD services, within a 

classification system developed by the 

Secretary for covered OPD services, so 

that services classified within each 

group are comparable clinically and 

with respect to the use of resources. In 

accordance with these provisions, we 

have developed the PHP APCs. Section 

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

Secretary to ‘‘review not less often than 

annually and revise the groups, the 

relative payment weights, and the wage 

and other adjustments described in 

paragraph (2) to take into account 

changes in medical practice, changes in 

technology, the addition of new 

services, new cost data, and other 

relevant information and factors.’’ 

Because a day of care is the unit that 

defines the structure and scheduling of 

partial hospitalization services, we 

established a per diem payment 

methodology for the PHP APCs, 

effective for services furnished on or 

after July 1, 2000 (65 FR 18452 through 

18455). Under this methodology, the 

median per diem costs have been used 

to calculate the relative payment 

weights for PHP APCs. 

From CY 2003 through CY 2006, the 

median per diem costs for CMHCs 

fluctuated significantly from year to 

year, while the median per diem costs 

for hospital-based PHPs remained 

relatively constant. We were concerned 

that CMHCs may have increased and 

decreased their charges in response to 

Medicare payment policies. Therefore, 

we began efforts to strengthen the PHP 

benefit through extensive data analysis 

and policy and payment changes 

finalized in the CY 2008 OPPS/ASC 

final rule with comment period (72 FR 

66670 through 66676). We made two 

refinements to the methodology for 

computing the PHP median: The first 

remapped 10 revenue codes that are 

common among hospital-based PHP 

claims to the most appropriate cost 

centers; and the second refined our 

methodology for computing the PHP 

median per diem cost by computing a 

separate per diem cost for each day 

rather than for each bill. We refer 

readers to a complete discussion of 

these refinements in the CY 2008 OPPS/ 

ASC final rule with comment period (72 

FR 66670 through 66676). 

In CY 2009, we implemented several 

regulatory, policy, and payment 

changes, including a two-tiered 

payment approach for PHP services 

under which we paid one amount for 

days with 3 services (APC 0172 Level I 

Partial Hospitalization) and a higher 

amount for days with 4 or more services 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66901 

(APC 0173 Level II Partial 

Hospitalization). We refer readers to 

section X.B. of the CY 2009 OPPS/ASC 

final rule with comment period (73 FR 

68688 through 68693) for a full 

discussion of the two-tiered payment 

system. In addition, for CY 2009, we 

finalized our policy to deny payment for 

any PHP claims submitted for days 

when fewer than 3 units of therapeutic 

services are provided (73 FR 68694). 

Furthermore, for CY 2009, we revised 

the regulations at 42 CFR 410.43 to 

codify existing basic PHP patient 

eligibility criteria and to add a reference 

to current physician certification 

requirements under 42 CFR 424.24 to 

conform our regulations to our 

longstanding policy (73 FR 68694 

through 68695). These changes have 

helped to strengthen the PHP benefit. 

We also revised the partial 

hospitalization benefit to include 

several coding updates. We refer readers 

to section X.C.3. of the CY 2009 OPPS/ 

ASC final rule with comment period (73 

FR 68695 through 68697) for a full 

discussion of these requirements. 

For CY 2010, we retained the twotiered payment approach for PHP 

services and used only hospital-based 

PHP data in computing the APC per 

diem payment rates. We used only 

hospital-based PHP data because we 

were concerned about further reducing 

both PHP APC per diem payment rates 

without knowing the impact of the 

policy and payment changes we made 

in CY 2009. Because of the 2-year lag 

between data collection and rulemaking, 

the changes we made in CY 2009 were 

reflected for the first time in the claims 

data that we used to determine payment 

rates for the CY 2011 rulemaking (74 FR 

60556 through 60559). 

In CY 2011, in accordance with 

section 1301(b) of the Health Care and 

Education Reconciliation Act of 2010 

(HCERA 2010), we amended the 

description of a PHP in our regulations 

to specify that a PHP must be a distinct 

and organized intensive ambulatory 

treatment program offering less than 24- 

hour daily care ‘‘other than in an 

individual’s home or in an inpatient or 

residential setting.’’ In addition, in 

accordance with section 1301(a) of 

HCERA 2010, we revised the definition 

of a CMHC in the regulations to conform 

to the revised definition now set forth 

under section 1861(ff)(3)(B) of the Act. 

We discussed our finalized policies for 

these two provisions of HCERA 2010 in 

section X.C. of the CY 2011 OPPS/ASC 

final rule with comment period (75 FR 

71990). 

In the CY 2011 OPPS/ASC final rule 

with comment period (75 FR 71994), we 

also established four separate PHP APC 

per diem payment rates, two for CMHCs 

(for Level I and Level II services) and 

two for hospital-based PHPs (for Level 

I and Level II services), based on each 

provider’s own unique data. As stated in 

the CY 2011 OPPS/ASC proposed rule 

(75 FR 46300) and the final rule with 

comment period (75 FR 71991), for CY 

2011, using CY 2009 claims data, CMHC 

costs had significantly decreased again. 

We attributed the decrease to the lower 

cost structure of CMHCs compared to 

hospital-based PHP providers, and not 

the impact of the CY 2009 policies. 

CMHCs have a lower cost structure than 

hospital-based PHP providers, in part, 

because the data showed that CMHCs 

generally provide fewer PHP services in 

a day and use less costly staff than 

hospital-based PHPs. Therefore, it was 

inappropriate to continue to treat 

CMHCs and hospital-based providers in 

the same manner regarding payment, 

particularly in light of such disparate 

differences in costs. We also were 

concerned that paying hospital-based 

PHPs at a lower rate than their cost 

structure reflects could lead to hospitalbased PHP closures and possible access 

problems for Medicare beneficiaries 

because hospital-based PHPs are located 

throughout the country and, therefore, 

offer the widest access to PHP services. 

Creating the four payment rates (two for 

CMHCs and two for hospital-based 

PHPs) based on each provider’s data 

supported continued access to the PHP 

benefit, while also providing 

appropriate payment based on the 

unique cost structures of CMHCs and 

hospital-based PHPs. In addition, 

separation of data by provider type was 

supported by several hospital-based 

PHP commenters who responded to the 

CY 2011 OPPS/ASC proposed rule (75 

FR 71992). 

For CY 2011, we instituted a 2-year 

transition period for CMHCs to the 

CMHC APC per diem payment rates 

based solely on CMHC data. For CY 

2011, under the transition methodology, 

CMHC PHP APCs Level I and Level II 

per diem costs were calculated by taking 

50 percent of the difference between the 

CY 2010 final hospital-based PHP 

median costs and the CY 2011 final 

CMHC median costs and then adding 

that number to the CY 2011 final CMHC 

median costs. A 2-year transition under 

this methodology moved us in the 

direction of our goal, which is to pay 

appropriately for PHP services based on 

each provider type’s data, while at the 

same time allowing providers time to 

adjust their business operations and 

protect access to care for beneficiaries. 

We also stated that we would review 

and analyze the data during the CY 2012 

rulemaking cycle and, based on these 

analyses, we might further refine the 

payment mechanism. We refer readers 

to section X.B. of the CY 2011 OPPS/

ASC final rule with comment period (75 

FR 71991 through 71994) for a full 

discussion. 

After publication of the CY 2011 

OPPS/ASC final rule with comment 

period, a CMHC and one of its patients 

filed an application for a preliminary 

injunction, challenging the OPPS 

payment rates for PHP services provided 

by CMHCs in CY 2011 as adopted in the 

CY 2011 OPPS/ASC final rule with 

comment period (75 FR 71995). We refer 

readers to the court case, Paladin Cmty. 

Mental Health Ctr. v. Sebelius, 2011 WL 

3102049 (W.D.Tex. 2011), aff’d, 684 

F.3d 527 (5th Cir. 2012) (Paladin). The 

plaintiffs in the Paladin case challenged 

the agency’s use of cost data derived 

from both hospitals and CMHCs in 

determining the relative payment 

weights for the OPPS payment rates for 

PHP services furnished by CMHCs, 

alleging that section 1833(t)(2)(C) of the 

Act requires that such relative payment 

weights be based on cost data derived 

solely from hospitals. As discussed 

above, section 1833(t)(2)(C) of the Act 

requires CMS to ‘‘establish relative 

payment weights for covered OPD 

services (and any groups of such 

services . . .) . . . based on . . . hospital 

costs.’’ Numerous courts have held that 

‘‘based on’’ does not mean ‘‘based 

exclusively on.’’ On July 25, 2011, the 

District Court dismissed the plaintiffs’ 

complaint and application for a 

preliminary injunction for lack of 

subject-matter jurisdiction, which the 

plaintiffs appealed to the United States 

Court of Appeals for the Fifth Circuit. 

On June 15, 2012, the Court of Appeals 

affirmed the District Court’s dismissal 

for lack of subject-matter jurisdiction 

and found that the Secretary’s payment 

rate determinations for PHP services are 

not a facial violation of a clear statutory 

mandate (Paladin, 684 F.3d at 533). 

For CY 2012, as discussed in the CY 

2012 OPPS/ASC final rule with 

comment period (76 FR 74348 through 

74352), we determined the relative 

payment weights for PHP services 

provided by CMHCs based on data 

derived solely from CMHCs and the 

relative payment weights for hospitalbased PHP services based exclusively on 

hospital data. The statute is reasonably 

interpreted to allow the relative 

payment weights for the OPPS payment 

rates for PHP services provided by 

CMHCs to be based solely on CMHC 

data and relative payment weights for 

hospital-based PHP services to be based 

exclusively on hospital data. Section 

1833(t)(2)(C) of the Act requires the 


tkelley on DSK3SPTVN1PROD with RULES2
66902 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

Secretary to ‘‘establish relative payment 

weights for covered OPD services (and 

any groups of such services described in 

subparagraph (B)) based on . . . 

hospital costs.’’ In pertinent part, 

subparagraph (B) provides that ‘‘the 

Secretary may establish groups of 

covered OPD services . . . so that 

services classified within each group are 

comparable clinically and with respect 

to the use of resources.’’ In accordance 

with subparagraph (B), we developed 

the PHP APCs, as set forth in § 419.31 

of the regulations (65 FR 18446 and 

18447; 63 FR 47559 through 47562 and 

47567 through 47569). As discussed 

above, PHP services are grouped into 

APCs. 

Based on section 1833(t)(2)(C) of the 

Act, we believe that the word 

‘‘establish’’ can be interpreted as 

applying to APCs at the inception of the 

OPPS in 2000 or whenever a new APC 

is added to the OPPS. In creating the 

original APC for PHP services (APC 

0033), we did ‘‘establish’’ the initial 

relative payment weight for PHP 

services, provided in both hospitalbased and CMHC-based settings, only 

on the basis of hospital data. 

Subsequently, from CY 2003 through CY 

2008, the relative payment weights for 

PHP services were based on a 

combination of hospital and CMHC 

data. For CY 2009, we established new 

APCs for PHP services based exclusively 

on hospital data. Specifically, we 

adopted a two-tiered APC methodology 

(in lieu of the original APC 0033) under 

which CMS paid one rate for days with 

3 services (APC 0172) and a different 

payment rate for days with 4 or more 

services (APC 0173). These two new 

APCs were established using only 

hospital data. For CY 2011, we added 

two new APCs (APCs 0175 and 0176) 

for PHP services provided by hospitals 

and based the relative payment weights 

for these APCs solely on hospital data. 

APCs 0172 and 0173 were designated 

for PHP services provided by CMHCs 

and were based on a mixture of hospital 

and CMHC data. As the Secretary 

argued in the Paladin case, the courts 

have consistently held that the phrase 

‘‘based on’’ does not mean ‘‘based 

exclusively on.’’ Thus, the relative 

payment weights for the two APCs for 

PHP services provided by CMHCs in CY 

2011 were ‘‘based on’’ hospital data, no 

less than the relative payment weights 

for the two APCs for hospital-based PHP 

services. 

Although we used hospital data to 

establish the relative payment weights 

for APCs 0033, 0172, 0173, 0175, and 

0176 for PHP services, we believe that 

we have the authority to discontinue the 

use of hospital data in determining the 

OPPS relative payment weights for PHP 

services provided by CMHCs. Other 

parts of section 1833(t)(2)(C) of the Act 

make plain that the data source for the 

relative payment weights is subject to 

change from one period to another. 

Section 1833(t)(2)(C) of the Act provides 

that, in establishing the relative 

payment weights, ‘‘the Secretary shall 

. . . us[e] data on claims from 1996 and 

us[e] data from the most recent available 

cost reports.’’ We used 1996 data (in 

addition to 1997 data) in determining 

only the original relative payment 

weights for 2000. In the ensuing 

calendar year updates, we continually 

used more recent cost report data. 

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

Act requires the Secretary to ‘‘review 

not less often than annually and revise 

the groups, the relative payment 

weights, and the wage and other 

adjustments described in paragraph (2) 

to take into account changes in medical 

practice, changes in technology, the 

addition of new services, new cost data, 

and other relevant information and 

factors.’’ For purposes of the CY 2012 

update, we exercised our authority 

under section 1833(t)(9)(A) of the Act to 

change the data source for the relative 

payment weights for PHP services 

provided by CMHCs based on ‘‘new cost 

data, and other relevant information and 

factors.’’ 

In the CY 2014 OPPS/ASC final rule 

with comment period, we finalized our 

proposal to base the relative payment 

weights that underpin the OPPS APCs, 

including the four PHP APCs, on 

geometric mean costs rather than on the 

median costs. For CY 2014, we 

established the four PHP APC per diem 

payment rates based on geometric mean 

cost levels calculated using the most 

recent claims and cost data for each 

provider type. We refer readers to the 

CY 2014 OPPS/ASC final rule with 

comment period for a more detailed 

discussion (78 FR 75047 through 

75050). 

B. PHP APC Update for CY 2015 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41009 through 41012), for 

CY 2015, we proposed to continue to 

apply our established policies to 

calculate the four PHP APC per diem 

payment rates based on geometric mean 

per diem costs using the most recent 

claims and cost data for each provider 

type. We computed proposed CMHC 

PHP APC geometric mean per diem 

costs for Level I (3 services per day) and 

Level II (4 or more services per day) 

PHP services using only CY 2013 CMHC 

claims data and the most recent cost 

data, and proposed hospital-based PHP 

APC geometric mean per diem costs for 

Level I and Level II PHP services using 

only CY 2013 hospital-based PHP 

claims data and the most recent cost 

report data. These proposed geometric 

mean per diem costs were shown in 

Table 44 of the CY 2015 OPPS/ASC 

proposed rule (79 FR 41011). To prevent 

confusion, we will refer to the per diem 

information listed in Table 44 of the 

proposed rule and Tables 39 and 40 of 

this final rule with comment period as 

the PHP APC per diem costs or the PHP 

APC geometric mean per diem costs, 

and the per diem information listed in 

Addendum A as the PHP APC per diem 

payment rates or the PHP APC 

geometric mean per diem rates. The 

PHP APC per diem costs are the 

provider-specific costs derived from the 

most recent claims and cost data. The 

PHP APC per diem payment rates are 

the national unadjusted payment rates 

calculated after applying the OPPS 

budget neutrality adjustments described 

in sections II.A.4. and II.B of this final 

rule with comment period. 

For CY 2015, the proposed geometric 

mean per diem costs for days with 3 

services (Level I) were approximately 

$97 for CMHCs and approximately $177 

for hospital-based PHPs. The proposed 

geometric mean per diem costs for days 

with 4 or more services (Level II) were 

approximately $115 for CMHCs and 

approximately $190 for hospital-based 

PHPs. 

The CY 2015 proposed geometric 

mean per diem costs for CMHCs 

calculated under the proposed CY 2015 

methodology using CY 2013 claims data 

and the most recent cost data remained 

relatively constant when compared to 

the CY 2014 final geometric mean per 

diem costs for CMHCs established in the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75050), with 

geometric mean per diem costs for Level 

I CMHC PHP services decreasing from 

approximately $99 to approximately $97 

for CY 2015, and geometric mean per 

diem costs for Level II CMHC PHP 

services increasing from approximately 

$112 to approximately $115 for CY 

2015. 

The CY 2015 proposed geometric 

mean per diem costs for hospital-based 

PHPs calculated under the proposed CY 

2015 methodology using CY 2013 

claims data and the most recent cost 

report data showed more variation when 

compared to the CY 2014 final 

geometric mean per diem costs for 

hospital-based PHPs, with geometric 

mean per diem costs for Level I 

hospital-based PHP services decreasing 

from approximately $191 to 

approximately $177 for CY 2015, and 

geometric mean per diem costs for Level 

II hospital-based PHP services 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66903 

decreasing from approximately $214 to 

approximately $190 for CY 2015. 

We understand that having little 

variation in the PHP per diem payment 

rates from one year to the next allows 

providers to more easily plan their fiscal 

needs. However, we believe that it is 

important to base the PHP payment 

rates on the claims and cost reports 

submitted by each provider type so 

these rates accurately reflect the cost 

information for these providers. We 

recognize that several factors may cause 

a fluctuation in the per diem payment 

rates, including direct changes to the 

PHP APC per diem costs (for example, 

establishing separate APCs and 

associated per diem payment rates for 

CMHCs and hospital-based providers 

based on the provider type’s costs), 

changes to the OPPS (for example, 

basing the relative payment weights on 

geometric mean costs), and providerdriven changes (for example, a 

provider’s decision to change its mix of 

services or to change its charges and 

clinical practice for some services). We 

refer readers to a more complete 

discussion of this issue in the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75049). We invited public 

comments on what causes PHP costs to 

fluctuate from year to year and on these 

proposals. 

The proposed CY 2015 geometric 

mean per diem costs for the CMHC and 

hospital-based PHP APCs were shown 

in Table 44 of the proposed rule. We 

invited public comments on these 

proposals. 

Comment: Several commenters 

opposed the proposed CY 2015 PHP 

APC per diem payment rates and raised 

concerns about a continued decline in 

payments for these services. 

Commenters stated that the proposed 

per diem payment rates were inadequate 

to pay providers for furnishing these 

services, and were below most program 

costs for providing PHP services. Other 

commenters suggested that CMS 

continue to use the CY 2014 payment 

rates for CY 2015. A few commenters 

expressed concerns that the 15-percent 

reduction in payment rates for Level II 

services in hospitals dropped the 

payment rates too far below providers’ 

costs. Another commenter asked that 

CMS provide documentation to support 

the proposed payment rates for PHP 

services. 

Response: We acknowledge the 

concerns raised by the commenters who 

believe that reduced payment rates for 

CY 2015 will not adequately pay their 

costs to provide PHP services. However, 

the per diem payment rates reflect the 

cost of what each provider type expends 

to maintain such programs. Therefore, 

we do not believe that the final payment 

rates would be inadequate to cover the 

costs of providing these services. 

Based on the final geometric mean per 

diem costs derived from CY 2013 claims 

data and the most recent cost data, 

CMHCs’ geometric mean per diem costs 

increased from CY 2014 to CY 2015 for 

APC 0172 Level I (3 services per day) 

from approximately $99 to 

approximately $100, and for APC 0173 

Level II (4 or more services per day) 

from approximately $112 to 

approximately $119. These per diem 

cost increases for CMHC APCs 0172 and 

0173 are 0.76 percent and 5.7 percent, 

respectively. Final hospital-based PHP 

per diem costs decreased by 

significantly smaller amounts than the 

per diem costs that were proposed, but 

still declined when compared to CY 

2014 geometric mean per diem costs. 

The PHP APC geometric mean per diem 

costs decreased for hospital-based PHPs 

from CY 2014 to CY 2015 for APC 0175 

Level I (3 services per day) from 

approximately $191 to approximately 

$186, and for APC 0176 Level II (4 or 

more service per day) from 

approximately $214 to approximately 

$203. These final hospital-based PHP 

APC geometric mean per diem cost 

decreases are 2.6 percent for APC 0175 

(instead of the proposed decrease of 7.1 

percent) and 5.3 percent for APC 0176 

(instead of the proposed decrease of 

11.3 percent). We believe that the PHP 

APC per diem payment rates for both 

providers accurately reflect the claims 

and cost data of each provider type. 

Again, the resulting PHP APC per diem 

payment rates and the APC payment 

structures reflect the cost of what 

providers expend to maintain such 

programs. At this time, we cannot 

establish payment rates that do not 

accurately reflect the current claims and 

cost data. For these reasons, we are not 

suspending implementation of the CY 

2015 PHP APC per diem payment rates 

for CMHCs and hospital-based PHPs. 

The PHP APC per diem payment rates 

are directly related to the accuracy of 

the claims and cost data submitted by 

providers. Therefore, it is imperative 

that providers submit accurate claims 

and cost data in order for the payment 

rates to accurately reflect the providers’ 

costs. 

Regarding the documentation 

supporting the proposed PHP per diem 

payment rates, for each calendar year 

update, we explain how the PHP APC 

per diem payment rates are calculated 

in a proposed rule and a final rule. The 

industry is welcome to comment during 

the rulemaking process. We also make 

available to the public the OPPS PHP 

limited data set (LDS) and the OPPS 

LDS, which we discussed in the CY 

2015 OPPS/ASC proposed rule (79 FR 

40931). The OPPS PHP LDS can be used 

to recreate the PHP cost estimates and, 

when used in conjunction with the 

OPPS LDS, can be used to recreate the 

PHP APC payment rates. Both of these 

files are available twice a year, once for 

the proposed rule and again for the final 

rule. The LDSs are available for 

purchase under a CMS data use 

agreement through the CMS Web sites 

at: http://www.cms.gov/researchstatistics-data-and-systems/files-fororder/limiteddatasets/

HospitalOPPSPHPLDS.html and http://

www.cms.gov/research-statistics-dataand-systems/files-for-order/

limiteddatasets/HospitalOPPS.html. 

Comment: A number of commenters 

noted the difficulty in planning and 

budgeting when payment rates for these 

services fluctuate and asked that CMS 

establish consistent and stable 

payments. Several commenters stated 

that they are committed to working with 

CMS to better understand and stabilize 

the payment rates for the PHP benefit, 

and to determine the factors driving the 

fluctuation in rates. One commenter 

asserted that the wide variability in PHP 

APC payment rates from year-to-year 

does not allow quality providers to plan 

for and to maintain services in a 

predictable way. Another commenter 

believed that the erratic payment rate 

structure could diminish access to care 

because providers may be unable to 

forecast statistical and financial 

parameters based on the proposed PHP 

APC payment rates. 

In response to our solicitation for 

public comments in the proposed rule 

on what the industry believed was 

causing the fluctuation in payment 

rates, a few commenters stated that 

other types of hospitals (rehabilitation, 

long-term acute care, and inpatient 

psychiatric facilities) are now providing 

PHP-like services, and questioned 

whether the cost structure of these 

facilities could be distorting PHP APC 

payment rates. Another commenter 

stated that as providers move away from 

PHPs and toward other mental health 

care options, the sample size used in 

calculating payment rates is smaller. 

The commenter further stated that 

volumes of services in a few areas could 

take on greater influence in the 

calculations and affect costs, creating 

instability in the PHP APC payment 

rates and difficulty in planning. 

A few commenters mentioned that 

their PHPs had not experienced 

significant operational or clinical 

protocol changes, and no changes in the 

personnel delivering the mix of services 

that would support a reduction in the 


tkelley on DSK3SPTVN1PROD with RULES2
66904 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

geometric mean per diem costs. Several 

commenters stated that almost one-third 

of the proposed PHP APC payment rate 

reduction could be explained by the 

budget neutrality adjustment, which 

disproportionately affects PHPs, and 

which, for CY 2015, may have led to 

payment rates that are less than the 

geometric mean per diem costs. 

A few commenters cited a study that 

they had a contractor conduct to 

investigate the fluctuations. The 

commenters stated that the study results 

did not suggest that the tiered payments, 

the use of a geometric mean versus a 

median methodology, the different 

payments by site of service, or providerdriver factors, such as service-mix or 

patient-mix, were the source of the 

problem. The commenters noted that 

the study found a dramatic decrease in 

the total volume of PHP services 

provided, but an increase in hospitalbased PHP days, particularly for Level II 

services. The commenters believed that 

this shift to providing more hospitalbased PHP services has partially offset 

the decline in CMHC PHP days and may 

have caused PHP costs to fluctuate. The 

commenters suggested several areas for 

potential future study, including the 

shift of services from CMHCs to 

hospital-based PHPs, a different of mix 

of providers within the hospital 

category, other types of hospitals newly 

offering PHP services, volume, and the 

size of hospitals and of PHPs. 

Response: We acknowledge the 

difficulties in planning and budgeting 

that can occur when payments fluctuate, 

or when payment rates decline. 

However, we are continuing to pay for 

PHP services based on provider data. 

We also believe that changes in payment 

rates from one year to the next are 

appropriate in a payment system that is 

annually updated to more accurately 

estimate the cost of a service upon 

which the relative payment weights are 

based. We continue to believe that 

payment rates for PHP services have 

fluctuated from year to year based on a 

variety of factors, including direct 

changes to the PHP APC per diem 

payment rate, and changes to the OPPS. 

Over the past several years, we have 

made changes to the OPPS methodology 

for calculating PHP APC per diem 

payment rates to more accurately align 

the payments with costs. The changes 

have included establishing two PHP 

APC payment tiers, establishing 

separate APCs and associated per diem 

payment rates for CMHCs and hospitalbased providers based on each 

provider’s costs, and basing payments 

on the geometric mean costs rather than 

on median costs. 

In addition, the OPPS is a budget 

neutral payment system and, as a result, 

changes in the relative payment weights 

associated with certain services may 

affect those of other services in the 

payment system. Furthermore, providerdriven changes, such as a provider’s 

decision to change its mix of services or 

to change its charges and clinical 

practice for some services, may cause 

fluctuations in the per diem payment 

rates. We provided a detailed discussion 

of possible reasons for the fluctuation in 

the rates in the CY 2015 OPPS/ASC 

proposed rule (79 FR 41012) and in 

section VIII.B. of this final rule with 

comment period. 

We appreciate the commenters’ 

providing possible reasons for 

fluctuations or declines in the payment 

rates. While several providers noted that 

their operations have not changed to 

support a decline in payments, we 

reiterate that our payment rates are 

based upon claims and cost data 

submitted to us by providers and, 

therefore, reflect the cost of what 

providers expend to maintain such 

programs. We also acknowledge the 

variables raised by the commenters that 

could cause the payment rate 

fluctuations and the study that several 

commenters had commissioned to look 

into PHP payments. We are unable to 

comment directly on the study results 

because we are not certain of the 

detailed methods used for this study. 

However, we appreciate the areas of 

potential future study suggested by 

commenters, and will take them into 

consideration in future analyses. 

Comment: Many commenters stated 

that the methodology for calculating 

payment rates was ‘‘flawed and 

illogical’’ and asked CMS to reexamine 

the methodology to determine why 

payment rates are declining. The 

commenters suggested that CMS 

consider other methods for paying for 

PHP services, such as removing PHP 

services from APC group assignments 

and creating PHPs under an 

independent payment status, such as is 

done under the home health benefit. 

The commenters suggested that CMS 

establish a base payment rate for PHP 

services at a higher level than the 

current mean cost, and annually adjust 

the base rate by an inflation factor. 

A few commenters supported the twotiered payment methodology. However, 

the commenters suggested using only 

hospital-based data, which was 

implemented in CY 2009. Some 

commenters disagreed with CMS paying 

PHPs differently by site of service. One 

commenter disputed CMS’ assertion 

that CMHCs generally provide fewer 

PHP services in a day. The commenter 

stated that claims information indicates 

that CMHCs submit a greater percentage 

of their claims for 4 or more services per 

day. The commenter added that CMS 

does not collect wage data on CMHCs in 

its costs reports. Several commenters 

did not support continued use of the CY 

2014 policy, which uses the geometric 

mean per diem costs to calculate PHP 

payment rates. 

Many commenters suggested other 

alternatives to the current payment 

system, such as developing oversight 

strategies for poorly performing CMHCs 

if their performance suggests a high risk 

of fraud, and allowing top performing 

CMHCs to admit patients into intensive 

outpatient programs similarly structured 

as PHPs. One commenter noted that 

some hospital-based providers are 

moving away from PHPs and providing 

programs that are structured similarly to 

a PHP, but are not Medicare-certified 

PHPs (that is, providing several 

individual mental health services in a 

day that would be similar to a PHP, but 

providers are not enrolled as a PHP). 

The commenter stated that the programs 

similar to PHPs would require fewer 

services and be subject to fewer 

regulatory requirements (for example, 

no certification or recertification, no 

physical examination requirement, and 

no minimum attendance mandate), and 

yet have similar payment rates as those 

established for PHPs. The commenter 

suggested that CMS require that these 

programs bill for furnishing these 

services under the mental health 

services composite APC under the 

OPPS, with payment aligned with how 

commercial insurers pay for these 

services. The commenter also suggested 

that CMS consider policy levers to ease 

regulatory requirements for 

administering PHPs. 

Response: The OPPS successfully 

pays for outpatient services provided, 

such as and including partial 

hospitalization services, and we 

disagree that the system is flawed and 

illogical. This system bases payment on 

the geometric mean costs of providing 

the service or services using provider 

data from claims and cost reports. As 

discussed above, we believe this system 

provides appropriate payment for 

partial hospitalization services based on 

provider costs. 

Sections 1833(t)(2) and 1833(t)(9) of 

the Act set forth the requirements for 

establishing and adjusting the OPPS 

payment rates, including the PHP 

payment rates. As such, we are directed 

to pay for these services under the OPPS 

(which uses APCs) and may not remove 

these PHP services from the OPPS and 

pay for them separately (such as by 

establishing a base rate and annually 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66905 

adjusting it for inflation). The estimated 

costs of the PHP APCs are based on the 

most updated cost and claims data. The 

OPPS conversion factor used to 

calculate payments for those PHP APCs 

is updated by a market basket each year. 

While we continuously examine ways 

in which the data process could be 

improved, we also welcome and 

appreciate public comment with regard 

to potential improvements. Similarly, 

we appreciate the meaningful comments 

that stakeholders provided regarding 

ways that the cost modeling process 

could be more accurate or methods to 

extract more appropriate data from the 

claims available for OPPS cost 

modeling. For a more detailed 

discussion of the OPPS ratesetting 

process, including PHP payments, we 

refer readers to the CY 2015 OPPS Final 

Rule Claims Accounting document, 

available on the CMS Web site at: http:// 

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

HospitalOutpatientPPS/index.html. 

Click on the link for ‘‘Hospital 

Outpatient Regulations and Notices’’, 

then on the link to the CY 2015 OPPS 

final rule, and then on the CY2015 

OPPS Claims Accounting document. 

With respect to the commenters’ 

request to return to the two-tiered 

payment methodology calculated using 

only hospital-based data that was 

implemented in the CY 2009 OPPS/ASC 

final rule with comment period (73 FR 

68688 through 68693), we refer 

commenters to the CY 2011 OPPS/ASC 

final rule with comment period (75 FR 

71991 through 71994). Because the cost 

of providing PHP services differs 

significantly by site of service, in CY 

2011, we implemented differing PHP 

payment rates for hospital-based PHPs 

and CMHCs. We added two new APCs 

(APCs 0175 and 0176) for PHP services 

provided by hospitals, and based the 

relative payment weights for these APCs 

solely on hospital data. APCs 0172 and 

0173 were designated for PHP services 

provided by CMHCs and were based on 

a blend of CMHC and hospital data. We 

calculate the PHP APC per diem 

payment rates based on the data 

provided for each type of provider in 

order to pay for services. The resulting 

PHP APC per diem payment rates reflect 

the cost of what providers expend to 

maintain such programs based on data 

provided by these types of providers, 

which we believe is an improvement 

over the two-tiered payment 

methodology calculated using only 

hospital-based data. 

In regard to the commenters’ concerns 

regarding the use of geometric mean 

rather than the median, in the CY 2013 

OPPS/ASC final rule with comment 

period, we established the geometric 

mean rather than the median as the 

measure upon which to base the relative 

payment weights that underpin the 

OPPS APCs, including the four PHP 

APCs (77 FR 68406 to 68412). The CY 

2015 PHP APC per diem payment rates 

are based on geometric mean costs. 

While a few commenters disagreed with 

our use of geometric mean costs, we 

believe that the use of geometric mean 

costs rather than median costs 

represents an improvement to our cost 

estimation process. As we stated in the 

CY 2013 OPPS/ASC final rule with 

comment period (77 FR 68409), we 

believe that including outlier 

observations in developing the relative 

payment weights and capturing the full 

range of service costs lead to more 

accurate relative payment weights. In 

addition to better incorporating those 

cost values that surround the median 

and, therefore, describing a broader 

range of cost patterns, basing the 

relative payment weight on geometric 

mean costs also may promote better 

stability in the payment system by 

making OPPS payments more reflective 

of the range of costs associated with 

providing services. Further, applying 

the geometric mean to the PHP APCs 

helps ensure that the relativity of the 

OPPS payment weights is properly 

aligned. We do not believe that paying 

for some services based on median 

costs, while using geometric mean costs 

for other services is appropriate or 

equitable. 

We believe that paying providers 

using the four PHP APC per diem 

payment rates based on the 

methodologies described above supports 

continued access to the PHP benefit, 

while also providing appropriate 

payment based on the unique cost 

structures of CMHCs and hospital-based 

PHPs. We also believe that each of these 

policies enables us to continue our 

responsible stewardship of the Medicare 

Trust Fund by more accurately 

matching payments with costs. For a 

full discussion of each of these policies 

implemented in prior rulemaking, 

including details on the rationales, we 

refer readers to the above-mentioned 

final rules with comment period, which 

are available on the CMS OPPS Web site 

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

Medicare-Fee-for-Service-Payment/

HospitalOutpatientPPS/HospitalOutpatient-Regulations-andNotices.html. 

In response to the commenters’ 

concerns regarding CMS’ statement that 

CMHCs provide fewer services in a day, 

as stated in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

75047 through 75050), we are 

calculating the payment rates for PHP 

services based on the claims and cost 

data submitted by providers. The 

updated data used for calculating 

payments for this CY 2015 OPPS/ASC 

final rule with comment period indicate 

that CMHCs do indeed have a greater 

percentage of PHP days with 4 or more 

services, compared to hospital-based 

PHPs (94.6 percent of days compared to 

88.3 percent of days, respectively). 

However, in spite of their providing a 

greater percentage of days with 4 or 

more services, our updated cost data 

continue to show that CMHC costs per 

day are lower than those of hospitalbased PHPs. 

In response to the question about 

wage data, CMHCs are required to 

include wage data for their staff on their 

cost reports, with certain exceptions. 

We direct readers to Medicare’s cost 

reporting instructions for CMHCs that 

are available online in the Provider 

Reimbursement Manual, Part 2, Chapter 

18 on the CMS Web site at: http://

www.cms.gov/Regulations-andGuidance/Guidance/Manuals/PaperBased-Manuals-Items/CMS0

21935.html?DLPage=1&DLSort=0&DL

SortDir=ascending. 

With respect to the suggestion that 

CMS develop oversight strategies for 

poor performing CMHCs with conduct 

that suggests potential fraud, we already 

have oversight strategies in place for 

providers that operate in a questionable 

manner. For example, MACs perform 

medical reviews of certain PHP claims, 

and PHP providers with claims that 

present ongoing concerns may have 

their claims placed on prepayment 

review. In some cases, CMHC and 

hospital-based PHP payments may be 

suspended or a CMHC’s or hospital’s 

billing privileges may be revoked. Our 

Office of Financial Management (OFM) 

has Recovery Audit Contractors (RACs), 

which regularly identify and collect 

overpayments from Medicare providers. 

Additionally, the Center for Program 

Integrity (CPI) and Zone Program 

Integrity Contractors (ZPICs) investigate 

potential fraud, waste, and abuse across 

the Medicare program, including 

potential concerns within CMHCs. 

Finally, the Office of Inspector General 

(OIG) and other law enforcement 

agencies continue in their efforts to 

address fraud and abuse throughout the 

Medicare program, including 

questionable billing for partial 

hospitalization services. 

With respect to the commenters’ 

request to allow top performing CMHCs 

to admit beneficiaries who require 

partial hospitalization services into 

outpatient programs that are structured 

similarly to PHPs, Medicare covers and 


tkelley on DSK3SPTVN1PROD with RULES2
66906 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

pays for reasonable and necessary PHP 

services provided by hospitals and 

CMHCs under the OPPS. While some 

private insurers and some State 

Medicaid programs recognize other 

types of intensive outpatient mental 

health programs as a distinct benefit like 

PHP services, the Medicare program 

does not. However, hospitals may 

provide and bill for individual services 

that make up various other mental 

health programs. 

Because all Medicare outpatient 

mental health services are capped at the 

hospital-based Level II PHP per diem 

payment rate, from a payment 

standpoint, it does not matter how many 

of these individual services are billed to 

Medicare because payment will never 

exceed the hospital-based Level II PHP 

per diem payment rate. However, 

CMHCs may only be paid for partial 

hospitalization services under the 

OPPS. 

We are constantly monitoring the 

OPPS in search of potential refinements 

that would improve the accuracy and 

stability of the payment system. We are 

unclear about the policy changes that 

the commenters suggested that we make 

regarding easing the regulatory 

requirements for administering PHPs. 

Some of the PHP requirements are set 

forth in the statute. For example, 

physician certification and 

recertification requirements for PHP 

services are set forth in section 

1835(a)(2)(F) of the Act and would 

require Congressional legislation to 

change. However, if providers have 

suggestions for specific policy changes 

to improve PHP operations while 

safeguarding access to PHP services and 

paying accurately for these services, we 

welcome those suggestions during 

rulemaking or through other dialogue 

with the industry. 

Comment: Many commenters 

described the key role that PHPs play in 

the continuum of care for patients with 

mental health issues. A number of 

commenters stated that if CMS moved 

forward with the proposed payment 

rates, much-needed PHP programs 

would struggle to remain financially 

viable. Multiple commenters believed 

that additional reductions in payments 

for CY 2015 would limit the ability of 

hospitals and CMHCs to provide these 

vital psychiatric services, reducing 

capacity or leading to closures, 

especially in rural areas, and thereby 

reducing access to care for Medicare 

patients. Several commenters noted 

that, as access to PHP services 

decreases, the decreases could lead to 

patients not receiving any services or to 

patients receiving services that are not 

appropriate for their needs; to use of 

more expensive inpatient psychiatric 

services; or to use of already stressed 

emergency departments. One 

commenter believed that CMS was 

concerned about the potential for 

hospital-based PHP closures, but not 

about CMHC closures. 

Response: In response to commenters’ 

concern about reduced PHP payment 

rates leading to decreased capacity and 

PHP closures, thereby reducing access 

to care and further eroding the viability 

of the safety net system, we emphasize 

again that the resulting PHP APC per 

diem payment rates for CY 2015 reflect 

the costs of what providers expend to 

maintain PHP programs. Therefore, it 

continues to be unclear to us why 

reduced PHP payment rates would lead 

to reduced capacity or program or 

business closures. As noted previously, 

the final CY 2015 per diem costs 

increased for CMHCs compared to CY 

2014, and decreased less than proposed 

for hospital-based PHPs. As we stated in 

the CY 2012 OPPS/ASC final rule with 

comment period (76 FR 74350), the 

closure of PHPs may be due to any 

number of reasons, such as poor 

business management or marketing 

decisions, competition, oversaturation 

of certain geographic areas, and Federal 

and State fraud and abuse efforts, among 

others. It does not directly follow that 

closure could be due to reduced per 

diem payment rates alone, especially 

when these per diem payment rates 

reflect the costs of PHP providers as 

stated in claims and cost data. 

In response to the commenters’ 

concerns that further reduction in the 

CMHC and hospital-based PHP APC per 

diem payment amounts could further 

erode the viability of the safety net 

system and make it more difficult for 

patients to receive needed mental health 

services, we take such concerns 

seriously for both CMHCs and hospitalbased PHPs. We will continue to 

monitor facility closings and openings 

for both rural and urban areas to make 

sure that access issues do not exist. We 

also remain steadfast in our concern 

regarding access to care for all 

beneficiaries, while also providing 

appropriate payments for such care. 

A PHP is not the only program in 

which a Medicare beneficiary is able to 

receive needed mental health care. 

Access to other forms of mental health 

services is also available. Although not 

equivalent to a PHP, Medicare provides 

payment for outpatient mental health 

services in addition to PHP services. 

Many beneficiaries in need of mental 

health treatment receive other 

outpatient services generally from 

hospital programs that are available 

nationwide. 

Comment: Many commenters 

suggested that future payment rates be 

tied to quality criteria. One commenter 

recommended a payment system that 

rewards individual providers for 

outstanding quality and outcomes while 

keeping costs under control, and 

suggested that CMS use value-based 

purchasing rather than ‘‘antiquated cost 

reimbursement-based purchasing.’’ One 

commenter suggested that CMS conduct 

an analysis to determine what quality 

PHP care entails in terms of costs and 

staffing, rather than basing payment 

rates on reported costs. 

Response: We responded to a similar 

public comment in the CY 2013 OPPS/ 

ASC final rule with comment period (77 

FR 68410 through 68411) and refer 

readers to a summary of that comment 

and our response. Sections 1833(t)(2) 

and 1833(t)(9) of the Act set forth the 

requirements for establishing and 

adjusting OPPS rates, which include 

PHP rates. Section 1833(t)(17) of the Act 

authorizes the Hospital OQR Program, 

which applies a payment reduction to 

subsection (d) hospitals that fail to meet 

program requirements. In the CY 2015 

OPPS/ASC proposed rule (79 FR 41040), 

we considered future inclusion of, and 

requested comments on, the following 

quality measures addressing PHP issues 

that would apply in the hospital 

outpatient setting: (1) 30-Day 

Readmissions; (2) Group Therapy; and 

(3) No Individual Therapy. We refer 

readers to section XIII. of this final rule 

with comment period for a more 

detailed discussion of PHP measures 

considered for inclusion in the Hospital 

OQR Program in future years. The 

Hospital OQR Program does not apply 

to CMHCs. Further, currently, there is 

no statutory language explicitly 

authorizing a value-based purchasing 

program for PHPs. With respect to the 

suggestion of conducting an analysis to 

determine what quality PHP care entails 

in terms of costs and staffing, we will 

take the suggestion into consideration in 

future analyses. 

We do not consider the OPPS, the 

system under which PHPs are paid, to 

be ‘‘antiquated.’’ Rather, we find the 

OPPS to be a robust system, which 

aligns payments with provider costs. As 

noted previously, we regularly monitor 

the OPPS and, in recent years, have 

made changes to further improve the 

system’s ability to pay accurately for 

services provided. 

Comment: Many commenters noted 

that they provide services to Medicare 

beneficiaries which they cannot bill for 

on their claims. The services cited by 

the commenters included, for example: 

Assisting patients in finding appropriate 

housing; accessing other health care 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66907 

services; obtaining medications; 

working through issues with family 

members; accessing transportation to 

medical and other appointments; 

assisting with information and 

appointments with Social Security; 

answering Medicare questions; 

accessing food banks and food stamps; 

obtaining eye and dental services; and 

integrating highly volatile and anxious 

patients into the milieu without 

upsetting the environment. Commenters 

stated that, currently, there is no way to 

show through the billing process that 

these events take place because there are 

no billing codes that capture these 

activities. 

Response: Section 1861(ff) of the Act 

and 42 CFR 410.43 describe the items 

and services included in partial 

hospitalization services. As set forth in 

these sections, partial hospitalization 

services generally consist of a variety of 

group, individual, and family 

psychotherapy sessions, supplemented 

with occupational therapy, the services 

of social workers, trained psychiatric 

nurses, and other staff trained to work 

with psychiatric patients, drugs and 

biologicals furnished for therapeutic 

purposes that cannot be selfadministered, diagnostic services, 

education and training, and certain 

activity therapies designed to stabilize 

an acute episode of mental illness. 

Section 1861(ff)(2)(I) of the Act 

explicitly excludes meals and 

transportation from the items and 

services included in partial 

hospitalization services. The PHP APC 

per diem payment rate is the bundled 

payment for partial hospitalization 

services. Only the items and services 

specifically identified in the statute and 

regulations are considered partial 

hospitalization services. All other items 

and services are not paid as part of 

partial hospitalization services. 

Comment: A number of commenters 

asked that CMS have a dialogue with 

the PHP industry, and that the public 

comments on the proposed rule be 

directly addressed by CMS in an open 

forum where ideas could be 

cooperatively shared. 

Response: We maintain positive 

working relationships with various 

industry leaders representing both 

CMHCs and hospital-based PHP 

providers with whom we have 

consistently met over the years to 

discuss industry concerns and ideas. 

These relationships have provided 

significant and valuable input regarding 

PHP ratesetting. We also hold Hospital 

Outpatient Open Door Forum calls 

monthly, in which all individuals are 

welcome to participate and/or submit 

questions regarding specific issues, 

including questions related to PHPs. 

Furthermore, we initiate rulemaking 

annually, through which we receive 

public comments on proposals set forth 

in a proposed rule, and we respond to 

those comments in a final rule. All 

individuals are provided an opportunity 

to comment, and we give consideration 

to each comment that we receive. Given 

the relationships that we have 

established with various industry 

leaders and the various means for us to 

receive comments and 

recommendations, we believe that we 

receive adequate input regarding PHP 

ratesetting and take that input into 

consideration when establishing the 

PHP per diem payment amounts. We 

continue to welcome any input and 

information that the industry is willing 

to provide. 

Comment: Several commenters 

requested a better understanding of the 

Program for Evaluating Payment 

Patterns Electronic Report (PEPPER), the 

areas of risk it has identified, how the 

PEPPER fits into fraud and abuse efforts, 

and how the PEPPER fits into the 

benefit in general, and indicated that 

this information might be helpful to 

providers. The commenters expressed 

concern regarding various areas of risk 

cited by the PEPPER, including ‘‘No 

individual therapy.’’ The commenter 

stated that although most providers 

furnish individual therapy, it is often 

not documented or billed as it is not 

included in the local coverage 

determinations (LCDs). 

Response: The PEPPER is a data 

report that contains statistics for each 

PHP area identified nationally to be at 

risk for improper payment (referred to 

in the report as ‘‘target areas’’). Each 

PEPPER contains a single PHP 

provider’s claims data statistics, 

obtained from claims submitted to the 

MAC for these target areas. PEPPER 

does not identify the presence of 

improper payments, but it can be used 

by the provider as a guide for auditing 

and monitoring efforts. A provider can 

use the PEPPER to compare its claims 

data over time to identify areas of 

potential concern and to identify 

changes in billing practices. When a 

provider is sent a PEPPER, the report 

includes a user’s guide, which describes 

the PEPPER and the target areas, among 

other things, and provides contact 

information for additional questions or 

information. Additional information on 

the PEPPER, including training and 

resources, is available at the PEPPER 

Web site at: http://pepper 

resources.org/. 

Regarding ‘‘individual therapy,’’ 

which is one area of risk that the 

PEPPER is assessing, individual therapy 

is a partial hospitalization service. For 

a review of the partial hospitalization 

services, we refer readers to section 

1861(ff)(2)(A) of the Act and our 

regulations at 42 CFR 410.43(a)(4)(i). We 

expect that providers would furnish 

individual therapy services as one of the 

services provided within a PHP. 

Comment: One commenter noted that 

new Medicare conditions of 

participation (CoPs) are about to become 

effective for CMHCs, and stated that 

most CMHCs are unaware of them. One 

commenter noted that complying with 

the new CoPs would increase its costs. 

The commenter also stated that, under 

a provision of the Affordable Care Act 

that became effective October 1, 2014, 

providers need to be aware that a CMHC 

must provide at least 40 percent of its 

items and services to individuals who 

are not eligible for benefits under 

Medicare. 

Response: The Conditions of 

Participation for Community Mental 

Health Centers final rule (78 FR 64604, 

October 29, 2013) established, for the 

first time, CoPs that CMHCs must meet 

in order to participate in the Medicare 

program. The CMHC CoPs are codified 

in 42 CFR Part 485, Subpart J, and 

became effective on October 29, 2014. 

Prior to the issuance of this final rule, 

on June 17, 2011, CMS issued a 

proposed rule (76 FR 35684) outlining 

the CoPs for Medicare-certified CMHCs. 

The proposed rule was open to public 

comment until August 16, 2011. Also, 

CMS issued press releases and fact 

sheets on the CoPs. CMS also has been 

working with trade organizations and 

the States to inform providers about the 

CoPs and the implementation date. 

Therefore, we believe that all CMHCs 

should be aware of these new 

requirements. More information on the 

CoPs for CMHCs can be found at 42 CFR 

Part 485, and through the link to the 

final rule at: http://www.gpo.gov/fdsys/ 

pkg/FR-2013-10-29/pdf/2013-24056.pdf. 

The proposed rule can be accessed 

through the following link on the Web 

site found at: http://www.gpo.gov/fdsys/ 

pkg/FR-2011-06-17/pdf/2011-14673.pdf. 

The final rule fact sheets can be 

accessed through the following link to 

the Web site found at: https://

www.cms.gov/Newsroom/

MediaReleaseDatabase/Fact-sheets/

2013-Fact-sheets-items/2013-10- 

28.html. The proposed rule press release 

can be accessed through the following 

link to the Web site found at: http://

www.cms.gov/Newsroom/

MediaReleaseDatabase/Press-releases/

2011-Press-releases-items/2011-06- 

16.html. We believe that the cost 

associated with the CoPs is a reasonable 

and necessary business expense to 


tkelley on DSK3SPTVN1PROD with RULES2
66908 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

ensure the health and safety of all 

CMHC clients. In addition, effective 

October 29, 2014, under 42 CFR 

485.918(b)(1)(v), pursuant to section 

1861(ff)(3)(B) of the Act, a CMHC must 

provide at least 40 percent of its items 

and services to individuals who are not 

eligible for benefits under title XVIII of 

the Social Security Act, as measured by 

the total number of CMHC clients 

treated by the CMHC for whom services 

are not paid by Medicare, divided by the 

total number of clients treated by the 

CMHC in the applicable timeframe. 

Under this requirement, a newly 

enrolling or revalidating CMHC must 

submit to CMS a certification statement 

provided by an independent entity 

(such as an accounting technician). The 

document must indicate that (1) the 

entity has reviewed the CMHC’s client 

care data, and (2) the CMHC meets the 

applicable 40 percent requirement. (We 

refer readers to 78 FR 64620). CMS has 

issued a change request that instructs 

MACs on the processing of such CMHC 

certifications. This requirement 

implements the provision of the 

Affordable Care Act noted by the 

commenter. For more detailed 

information, we refer readers to the 

Conditions of Participation for 

Community Mental Health Centers final 

rule (78 FR 64604). 

Comment: A number of commenters 

noted the complexities of abiding by the 

LCDs on PHPs and believed that such 

LCDs are making it difficult for hospitalbased PHP providers to continue to 

provide PHP services. Some 

commenters questioned whether the 

LCDs should be clarified or updated. 

Response: LCDs issued by MACs 

specify under what clinical 

circumstances an item or service is 

considered to be reasonable and 

necessary. They are administrative and 

educational tools to assist providers in 

submitting correct claims for payment. 

The MACs publish LCDs to provide 

guidance to the public and medical 

community within their jurisdictions. 

The MACs develop LCDs by considering 

medical literature, the advice of local 

medical societies and medical 

consultants, public comments, and 

comments from the provider 

community. LCDs must be consistent 

with the statutory requirements for the 

Medicare program and with Medicare 

regulations and guidance. More 

information about LCDs can be found in 

the CMS Program Integrity Manual 

(Internet only manual) 100–08, Chapter 

13, available at: http://www.cms.gov/

Regulations-and-Guidance/Guidance/

Manuals/Downloads/pim83c13.pdf. 

Providers with questions about LCDs 

should contact their MAC for 

clarification or assistance. Inquiries of a 

clinical nature, such as the rationale 

behind coverage or noncoverage of 

certain items or services, are handled 

within the Medical Review (MR) 

department under the MAC responsible 

for the development of the LCD. 

Comment: One commenter 

recommended that the annual payment 

update for PHP APCs reflect the market 

basket update that is applied to all other 

OPPS APCs. 

Response: The PHP APC payment 

rates are based on the OPPS conversion 

factor, to which the market basket 

update is applied. Therefore, the market 

basket update is applied to the PHP APC 

payment rates. The OPPS conversion 

factor is discussed in further detail in 

section II.B. of this final rule with 

comment period. 

Comment: One commenter stated that 

physicians are billing inpatient codes 

rather than PHP codes. The commenter 

believed that the change in physician 

reporting may have altered what 

facilities reported, which would have 

reduced the number of facility fees 

reported, and skewed the APC data 

downward. The commenter 

recommended that CMS conduct an 

analysis of the frequency and type of 

CPT codes that have been submitted for 

PHP over the last 3 years. 

Response: As stated in section 

1861(ff) of the Act and 42 CFR 410.43, 

payment for partial hospitalization 

services generally represents the 

provider’s overhead costs, support staff, 

some drugs and the services of some 

nurses, clinical social workers, and 

occupational therapists, whose 

professional services are considered to 

be partial hospitalization services for 

which payment is made to the provider. 

Physician services that meet the 

requirements of 42 CFR 415.102(a) are 

separately covered and not paid as part 

of partial hospitalization services. 

Therefore, we do not use physician 

claims in developing the PHP APC 

geometric mean per diem costs and it is 

unclear to us how physician billing 

would impact PHP APC payment rates. 

Regarding the recommendation that 

CMS conduct an analysis of the 

frequency and type of CPT codes that 

have been submitted for PHP services 

over the last 3 years, we will take the 

suggestion under consideration for 

future rulemaking, as we strengthen the 

PHP payment structure. 

In summary, after consideration of the 

public comments we received, we are 

finalizing our CY 2015 proposal, 

without modification, to update the four 

PHP APC per diem costs based on 

geometric mean cost levels calculated 

using the most recent claims and cost 

data for each provider type. The 

updated PHP APCs geometric mean per 

diem costs for PHP services that we are 

finalizing for CY 2015 are shown in 

Table 39 and 40 below. As noted earlier 

in this section, we refer readers to 

Addendum A to this final rule with 

comment for the final PHP APC 

payment rates. 

TABLE 39—CY 2015 GEOMETRIC MEAN PER DIEM COSTS FOR CMHC PHP SERVICES

APC Group title 

Geometric 

mean per 

diem costs 

0172 .................. Level I Partial Hospitalization (3 services) for CMHCs ........................................................................................ $100.15 

0173 .................. Level II Partial Hospitalization (4 or more services) for CMHCs ......................................................................... 118.54 

TABLE 40—CY 2015 GEOMETRIC MEAN PER DIEM COSTS FOR HOSPITAL-BASED PHP SERVICES

APC Group title 

Geometric 

mean per 

diem costs 

0175 .................. Level I Partial Hospitalization (3 services) for hospital-based PHPs ................................................................... $185.87 

0176 .................. Level II Partial Hospitalization (4 or more services) for hospital-based PHPs .................................................... 203.01 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66909 

C. Separate Threshold for Outlier 

Payments to CMHCs 

As discussed in the CY 2004 OPPS 

final rule with comment period (68 FR 

63469 through 63470), after examining 

the costs, charges, and outlier payments 

for CMHCs, we believed that 

establishing a separate OPPS outlier 

policy for CMHCs would be appropriate. 

A CMHC-specific outlier policy would 

direct OPPS outlier payments towards 

genuine cost of outlier cases, and 

address situations where charges were 

being artificially increased to enhance 

outlier payments. We created a separate 

outlier policy that would be specific to 

the estimated costs and OPPS payments 

provided to CMHCs. We note that, in 

the CY 2009 OPPS/ASC final rule with 

comment period, we established an 

outlier reconciliation policy to 

comprehensively address charging 

aberrations related to OPPS outlier 

payments (73 FR 68594 through 68599). 

Therefore, beginning in CY 2004, we 

designated a portion of the estimated 

OPPS outlier target amount specifically 

for CMHCs, consistent with the 

percentage of projected payments to 

CMHCs under the OPPS each year, 

excluding outlier payments, and 

established a separate outlier threshold 

for CMHCs. 

The separate outlier threshold for 

CMHCs resulted in $1.8 million in 

outlier payments to CMHCs in CY 2004, 

and $0.5 million in outlier payments to 

CMHCs in CY 2005. In contrast, in CY 

2003, more than $30 million was paid 

to CMHCs in outlier payments. We 

believe that this difference in outlier 

payments indicates that the separate 

outlier threshold for CMHCs has been 

successful in keeping outlier payments 

to CMHCs in line with the percentage of 

OPPS payments made to CMHCs. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41012), we proposed to 

continue designating a portion of the 

estimated 1.0 percent outlier target 

amount specifically for CMHCs, 

consistent with the percentage of 

projected payments to CMHCs under the 

OPPS in CY 2015, excluding outlier 

payments. CMHCs are projected to 

receive 0.03 percent of total OPPS 

payments in CY 2015, excluding outlier 

payments. Therefore, we proposed to 

designate 0.47 percent of the estimated 

1.0 percent outlier target amount for 

CMHCs, and establish a threshold to 

achieve that level of outlier payments. 

Based on our simulations of CMHC 

payments for CY 2015, in the CY 2015 

OPPS/ASC proposed rule, we proposed 

to continue to set the threshold for CY 

2015 at 3.40 times the highest CMHC 

PHP APC payment rate (that is, APC 

0173 (Level II Partial Hospitalization)) 

(79 FR 41012). We stated that we 

continue to believe that this approach 

would neutralize the impact of inflated 

CMHC charges on outlier payments and 

better target outlier payments to those 

truly exceptionally high-cost cases that 

might otherwise limit beneficiary 

access. In addition, we proposed to 

continue to apply the same outlier 

payment percentage that applies to 

hospitals. Therefore, for CY 2015, we 

proposed to continue to pay 50 percent 

of CMHC per diem costs over the 

threshold. In section II.G. of the CY 

2015 OPPS/ASC proposed rule (79 FR 

41012), for the hospital outpatient 

outlier payment policy, we proposed to 

set a dollar threshold in addition to an 

APC multiplier threshold. Because the 

PHP APCs are the only APCs for which 

CMHCs may receive payment under the 

OPPS, we would not expect to redirect 

outlier payments by imposing a dollar 

threshold. Therefore, we did not 

propose to set a dollar threshold for 

CMHC outlier payments. 

In summary, in the CY 2015 OPPS/

ASC proposed rule, we proposed to 

establish that if a CMHC’s cost for 

partial hospitalization services, paid 

under either APC 0172 or APC 0173, 

exceeds 3.40 times the payment rate for 

APC 0173, the outlier payment would 

be calculated as 50 percent of the 

amount by which the cost exceeds 3.40 

times the APC 0173 payment rate. We 

invited public comments on these 

proposals. 

We did not receive any public 

comments regarding our proposed 

outlier policy. Therefore, we are 

finalizing our CY 2015 proposal to set 

a separate outlier threshold for CMHCs. 

As discussed in section II.G. of this final 

rule with comment period, using more 

recent data for this final rule with 

comment period, we set the target for 

hospital outpatient outlier payments at 

1.00 percent of total estimated OPPS 

payments. We allocated a portion of the 

1.00 percent, an amount equal to 0.65 

percent of outlier payments, or 0.0065 

percent of total estimated OPPS 

payments, to CMHCs for PHP outlier 

payments. For CY 2015, as proposed, we 

are setting the CMHC outlier threshold 

at 3.40 multiplied by the APC 0173 

payment rate and the CY 2015 outlier 

percentage applicable to costs in excess 

of the threshold at 50 percent. In other 

words, if a CMHC’s cost for partial 

hospitalization services paid under 

either APC 0172 or APC 0173 exceeds 

3.40 times the payment rate for APC 

0173, the outlier payment will be 

calculated as 50 percent of the amount 

by which the cost exceeds 3.40 times 

the APC 0173 payment rate. 

IX. Procedures That Will Be Paid Only 

as Inpatient Procedures 

A. Background 

We refer readers to the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74352 through 74353) for 

a full historical discussion of our 

longstanding policies on how we 

identify procedures that are typically 

provided only in an inpatient setting 

(referred to as the inpatient list) and, 

therefore, will not be paid by Medicare 

under the OPPS; and on the criteria that 

we use to review the inpatient list each 

year to determine whether or not any 

procedures should be removed from the 

list. 

B. Changes to the Inpatient List 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41012 through 41013), for 

the CY 2015 OPPS, we proposed to use 

the same methodology (described in the 

November 15, 2004 final rule with 

comment period (69 FR 65835)) of 

reviewing the current list of procedures 

on the inpatient list to identify any 

procedures that may be removed from 

the list. The established criteria upon 

which we make such a determination 

are as follows: 

1. Most outpatient departments are 

equipped to provide the services to the 

Medicare population. 

2. The simplest procedure described 

by the code may be performed in most 

outpatient departments. 

3. The procedure is related to codes 

that we have already removed from the 

inpatient-only list. 

4. A determination is made that the 

procedure is being performed in 

numerous hospitals on an outpatient 

basis. 

5. A determination is made that the 

procedure can be appropriately and 

safely performed in an ASC, and is on 

the list of approved ASC procedures or 

has been proposed by us for addition to 

the ASC list. 

Using this methodology, we did not 

identify any procedures that potentially 

could be removed from the inpatient list 

for CY 2015. Therefore, we proposed to 

not remove any procedures from the 

inpatient list for CY 2015. 

After our annual review of APCs and 

code assignments as required by section 

1833(t)(9) of the Act and further clinical 

review performed by CMS medical 

officers, we proposed to add CPT code 

22222 (Osteotomy of spine, including 

discectomy, anterior approach, single 

vertebral segment; thoracic) to the CY 

2015 inpatient list. 

The complete list of codes that we 

proposed to be paid by Medicare in CY 

2015 only as inpatient procedures was 


tkelley on DSK3SPTVN1PROD with RULES2
66910 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

included as Addendum E to the 

proposed rule (which is available via 

the Internet on the CMS Web site). 

Comment: Several commenters 

supported CMS’ proposal to add CPT 

code 22222 to the inpatient list. 

Response: We appreciate the 

commenters’ support. 

Comment: Several commenters 

requested that CMS remove CPT codes 

0312T (Vagus nerve blocking therapy 

(morbid obesity); laparoscopic 

implantation of neurostimulator 

electrode array, anterior and posterior 

vagal trunks adjacent to esophagogastric 

junction (EGJ), with implantation of 

pulse generator, includes programming); 

43771 (Laparoscopy, surgical, gastric 

restrictive procedure; revision of 

adjustable gastric restrictive device 

component only); 43772 (Laparoscopy, 

surgical, gastric restrictive procedure; 

removal of adjustable gastric restrictive 

device component only); 43773 

(Laparoscopy, surgical, gastric 

restrictive procedure; removal and 

revision of adjustable gastric restrictive 

device component only); 43774 

(Laparoscopy, surgical, gastric 

restrictive procedure; removal of 

adjustable gastric restrictive device and 

subcutaneous port components); 54411 

(Removal and replacement of a multicomponent inflatable penile prosthesis 

through an infected field at the same 

operative session); and 54417 (Removal 

and replacement of a non-inflatable 

(semi-rigid) or inflatable (self-contained) 

penile prosthesis through an infected 

field at the same operative session) from 

the CY 2015 inpatient list based on their 

own experience, specialty society 

recommendation, or designation of a 

procedure as safe in the outpatient 

setting under one of the many clinical 

guidelines available. 

Response: We reevaluated data on 

CPT codes 0312T, 43771, 43772, 43773, 

43774, 54411, and 54417 using recent 

utilization data and further clinical 

review performed by CMS’ medical 

advisors. As a result of the reevaluation, 

we have determined that these 

procedures can be safely performed only 

in the inpatient setting. We are not 

removing them from the inpatient list 

for CY 2015. 

Comment: Some commenters 

requested that CPT code 63044 

(Laminotomy (hemilaminectomy), with 

decompression of nerve root(s), 

including partial facetectomy, 

foraminotomy and/or excision of 

herniated intervertebral disc, 

reexploration, single interspace; each 

additional lumbar interspace) be 

removed from the inpatient list. 

Response: We reevaluated data on 

CPT code 63044 using recent utilization 

data and further clinical review 

performed by CMS medical advisors. As 

a result of the reevaluation, we agree 

with the commenters that this 

procedure can be safely performed in 

the outpatient setting. In addition, as a 

result of our reevaluation, we believe 

that CPT code 63043 (Laminotomy 

(hemilaminectomy), with 

decompression of nerve root(s), 

including partial facetectomy, 

foraminotomy and/or excision of 

herniated intervertebral disc, 

reexploration, single interspace; each 

additional cervical interspace) can be 

safely performed in the outpatient 

setting. Therefore, we are removing CPT 

codes 63043 and 63044 from the 

inpatient list. Because CPT codes 63043 

and 63044 are add-on codes, they are 

being assigned status indicator ‘‘N’’ for 

CY 2015. 

Comment: Other commenters urged 

CMS to continue reviewing its inpatient 

only policy in light of ongoing changes 

in delivery systems and procedural 

safety and technological advances. 

Response: We agree with the 

commenters and will continue to review 

the inpatient only policy. 

After consideration of the public 

comments we received, we are 

finalizing our proposals for the inpatient 

only list, with modifications. We are 

removing CPT codes 63043 and 63044 

from the inpatient list and adding CPT 

code 22222 (Osteotomy of spine, 

including discectomy, anterior 

approach, single vertebral segment; 

thoracic) to the CY 2015 inpatient list. 

The complete list of codes that will be 

paid by Medicare in CY 2015 only as 

inpatient procedures is included as 

Addendum E to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site. 

X. Nonrecurring Policy Changes: 

Collecting Data on Services Furnished 

in Off-Campus Provider-Based 

Departments of Hospitals 

As we discussed in the CY 2014 

OPPS/ASC proposed rule and final rule 

with comment period (78 FR 43626 and 

78 FR 75061) and in the CY 2014 

Medicare Physician Fee Schedule 

(MPFS) proposed rule and final rule 

with comment period (78 FR 43301 and 

78 FR 74427), in recent years, the 

research literature and popular press 

have documented the increased trend 

toward hospital acquisition of physician 

practices, integration of those practices 

as a department of the hospital, and the 

resultant increase in the delivery of 

physicians’ services in a hospital 

setting. When a Medicare beneficiary 

receives outpatient services in a 

hospital, the total payment amount for 

outpatient services made by Medicare is 

generally higher than the total payment 

amount made by Medicare when a 

physician furnishes those same services 

in a freestanding clinic or in a 

physicians’ office. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41013), we stated that we 

continue to seek a better understanding 

of how the growing trend toward 

hospital acquisition of physicians’ 

offices and subsequent treatment of 

those locations as off-campus providerbased departments (PBDs) of hospitals 

affects payments under the MPFS and 

the OPPS, as well as beneficiary costsharing obligations. We also noted that 

MedPAC continues to question the 

appropriateness of increased Medicare 

payment and beneficiary cost-sharing 

when physicians’ offices become 

hospital outpatient departments and to 

recommend that Medicare pay selected 

hospital outpatient services at MPFS 

rates (MedPAC March 2012 and June 

2013 Report to Congress). In order to 

understand how this trend is affecting 

Medicare, we need information on the 

extent to which this shift is occurring. 

To that end, during the CY 2014 OPPS/ 

ASC rulemaking cycle, we sought public 

comment regarding the best method for 

collecting information and data that 

would allow us to analyze the 

frequency, type, and payment for 

physicians’ and outpatient hospital 

services furnished in off-campus PBDs 

of hospitals (78 FR 75061 through 75062 

and 78 FR 74427 through 74428). In 

response to our solicitation, we received 

many detailed public comments. 

However, the commenters did not 

present a consensus opinion regarding 

whether this data collection was 

advisable or which data collection 

method would be preferable. Based on 

our analysis of the public comments we 

received, we proposed for the CY 2015 

OPPS/ASC proposed rule that the most 

efficient and equitable means of 

gathering this important information 

across two different payment systems 

would be to create a HCPCS modifier to 

be reported with every code for 

physicians’ services and outpatient 

hospital services furnished in an offcampus PBD of a hospital on both the 

CMS–1500 claim form for physicians’ 

services and the UB–04 form (CMS 

Form 1450) for hospital outpatient 

services. We noted that a main provider 

may treat an off-campus facility as 

provider-based if certain requirements 

in 42 CFR 413.65 are satisfied, and we 

define a ‘‘campus’’ at 42 CFR 

413.65(a)(2) to be the physical area 

immediately adjacent to the provider’s 

main buildings, other areas and 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66911 

structures that are not strictly 

contiguous to the main buildings but are 

located within 250 yards of the main 

buildings, and any other areas 

determined on an individual case basis, 

by the CMS regional office, to be part of 

the provider’s campus. 

Section 220(a)(1) of the Protecting 

Access to Medicare Act of 2014 (Pub. L. 

113–93) added a new subparagraph (M) 

under section 1848(c)(2) of the Act that 

granted CMS the authority to engage in 

data collection to support valuation of 

services paid under the MPFS. In the CY 

2015 OPPS/ASC proposed rule, we 

indicated that we are seeking more 

information on the frequency and type 

of services furnished in PBDs under this 

authority to improve the accuracy of 

MPFS practice expense payments for 

services furnished in off-campus PBDs. 

We discussed this issue in more detail 

in the CY 2015 MPFS proposed rule (79 

FR 40333). In that discussion, we noted 

our concerns that our current MPFS 

practice expense methodology primarily 

distinguishes between the resources 

involved in furnishing services in two 

sites of service: the nonfacility setting 

and the facility setting. As more 

physician practices become hospitalbased and are treated as off-campus 

PBDs, we believe it is important to 

develop an understanding of which 

practice expense costs typically are 

incurred by the physicians and 

practitioners in the setting, which are 

incurred by the hospital, and whether 

the facility and nonfacility site-ofservice differentials adequately account 

for the typical resource costs, given 

these new ownership arrangements. 

To understand how this trend is 

affecting Medicare, including the 

accuracy of payments made through the 

MPFS, we stated in the proposed rule 

that we need to develop data to assess 

the extent to which this shift toward 

hospital-based physician practices is 

occurring. Therefore, in the CY 2015 

OPPS/ASC proposed rule (79 FR 41013), 

we proposed to collect information on 

the type and frequency of physicians’ 

services and outpatient hospital services 

furnished in off-campus PBDs beginning 

January 1, 2015, in accordance with our 

authority under section 1848(c)(2)(M) of 

the Act (as added by section 220(a) of 

Pub. L. 113–93). As noted above, we 

proposed to create a HCPCS modifier 

that is to be reported with every code for 

physicians’ services and outpatient 

hospital services furnished in an offcampus PBD of a hospital. Under the 

proposal, the modifier would be 

reported on both the CMS–1500 claim 

form for physicians’ services and the 

UB–04 form (CMS Form 1450) for 

hospital outpatient services. In the 

proposed rule (79 FR 41013), we sought 

additional public comments on whether 

or not the use of a modifier code is the 

best mechanism for collecting this 

service-level data in the hospital 

outpatient department. 

Comment: Many commenters agreed 

on the need to collect information on 

the frequency, type, and payment of 

services furnished in off-campus PBDs 

of hospitals. However, several 

commenters expressed concern that the 

HCPCS modifier would create 

additional administrative burden for 

providers. Many of these commenters 

stated that the new modifier would 

require significant changes to hospitals’ 

billing systems, including a separate 

chargemaster for outpatient off-campus 

PBDs and training for staff on how to 

use the new modifier. Many of these 

commenters suggested that CMS should 

re-propose a detailed data collection 

methodology, test it with providers, 

make adjustments, and allow additional 

time for implementation. One 

commenter suggested that CMS 

withdraw the current proposal and ask 

the Advisory Panel on Hospital 

Outpatient Payment (HOP Panel) to 

develop a proposal for data collection. 

Response: While we understand the 

commenters’ concerns about the 

additional administrative burden of 

reporting a new HCPCS modifier, we 

have weighed the burden of reporting 

the modifier for each service against the 

benefit of having data that will allow us 

to obtain and assess accurate 

information on the type and frequency 

of physicians’ services and outpatient 

hospital services furnished in offcampus PBDs. We do not believe that 

the modifier is excessively burdensome 

for providers to report. This is 

especially the case because, under 

current rules, when billing for services, 

providers must know where services are 

performed in order to accurately 

complete value code 78 of an outpatient 

claim or the service location portion of 

a professional claim. However, as 

discussed later in this section, we agree 

that a place of service (POS) code on the 

professional claim allows for the same 

type of data collection as a modifier on 

the hospital claim and would be less 

burdensome than the modifier for 

practitioner billing. We discuss the 

timeframe for implementation later in 

this section. With respect to bringing 

this proposal to the HOP Panel, we note 

that such a proposal is outside the scope 

of the HOP Panel, which is generally 

charged with advising Medicare on the 

clinical integrity of APCs and their 

associate relative payment weights. The 

proposed modifier is for collecting data 

and, as structured, does not affect APCs 

and their associated relative payment 

weights. Therefore, it would not be 

appropriate to solicit HOP Panel 

discussion or recommendations on this 

proposal on data collection. 

Comment: Some commenters who 

were concerned about the 

administrative burden of the new 

HCPCS modifier suggested several 

alternative methods for CMS to collect 

data on services furnished in off-campus 

PBDs. Several of these commenters 

recommended that CMS consider the 

establishment of a new POS code for 

professional claims, or for both 

professional claims and hospital claims, 

because they believed this approach 

would be less administratively 

burdensome than attaching a modifier to 

each service reported on the claim that 

was furnished in an off-campus PBD. 

Some commenters preferred identifying 

services furnished in off-campus PBDs 

on the Medicare cost report (CMS– 

2552–10). Some commenters suggested 

using provider numbers and addresses 

to identify off-campus PBDs, or 

changing the provider enrollment 

process to be able to track these data. 

Other commenters suggested creating a 

new bill type to track outpatient 

hospital services furnished in offcampus PBDs. 

Commenters generally recommended 

that CMS choose the least 

administratively burdensome approach 

that would ensure accurate data 

collection, but did not necessarily agree 

on what approach would optimally 

achieve that result. Some commenters 

believed that a HCPCS modifier would 

more clearly identify specific services 

furnished at off-campus PBDs, and 

would provide better information about 

the type and level of care furnished. 

Some commenters believed that a 

HCPCS modifier would be the least 

administratively burdensome approach 

because hospitals and physicians 

already report a number of claims-based 

modifiers. Other commenters argued 

that additional modifiers would 

increase administrative burden because 

this approach would increase the 

modifiers that would need to be 

considered when billing. 

Response: With respect to creating a 

new POS code to obtain data on services 

furnished in off-campus PBDs of a 

hospital, we note that POS codes are 

only reported on professional claims 

and are not included on hospital claims. 

Therefore, a POS code could not be 

easily implemented for hospital claims. 

However, POS codes are already 

required to be reported on every 

professional claim and POS 22 is 

currently used to report when 

physicians’ services are furnished in an 


tkelley on DSK3SPTVN1PROD with RULES2
66912 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

outpatient hospital department. (More 

information on existing POS codes is 

available on the CMS Web site at: 

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

place-of-service-codes/Place_of_

Service_Code_Set.html.) 

Although we considered proposing a 

new POS code for professional claims to 

collect data on services furnished in the 

off-campus PBD setting, we ultimately 

did not do so, in part because we were 

aware that previous Government 

Accountability Office and Office of the 

Inspector General reports (October 2004, 

A–05–04–0025; January 2005, A–06–04– 

00046; July 2010, A–01–09–00503; 

September 2011, A–01–10–00516) have 

noted frequent inaccuracies in the 

reporting of POS codes. In addition, at 

the time the proposed rule was 

developed, we had concerns that using 

a POS code to report this information 

might not give us the reliable data we 

are looking to collect, especially if such 

data were to be crosswalked with 

hospital claims for the same service, 

because the hospital claim would have 

a modifier, not a POS code. However, 

we have been persuaded by public 

comments suggesting that use of a POS 

code would be less administratively 

burdensome on professional claims than 

use of a modifier. Specifically, because 

a POS code is already required on every 

professional claim, we believe that 

creating a new POS code to distinguish 

outpatient hospital services that are 

furnished on-campus versus off-campus 

would require less staff training and 

education than would use of a modifier 

on the professional claim. In addition, 

professional claims only have space for 

four modifiers. While a very small 

percentage of professional claims have 

four modifiers, required use of an 

additional modifier for every 

professional claim could lead to more 

occurrences where there would not be 

space for all applicable modifiers. 

Unlike hospital claims, we note that a 

new professional claim is required 

whenever the place of service changes. 

That is, even if the same practitioner 

treats the same patient on the same day 

in the office and hospital, the services 

furnished in the office setting must be 

submitted on one claim with the POS 11 

(Office) code, while those furnished in 

the outpatient hospital department 

would be submitted on a separate claim 

with the POS 22 (Outpatient Hospital) 

code (we note that the POS 22 code will 

be changing under the final policy). 

Likewise, if a new POS code were to be 

created for an off-campus PBD setting, a 

separate claim for services furnished in 

that setting would be required relative 

to a claim for services furnished on the 

main campus by the same practitioner 

to the same patient on the same day. 

Based on public comments and after 

further consultation with Medicare 

billing experts, we believe that the use 

of the POS code on professional claims 

would be no less accurate than the use 

of a modifier on professional claims in 

identifying services furnished in offcampus PBDs. In addition, we believe 

that the POS code would be less 

administratively burdensome for 

practitioners billing using the 

professional claim because a POS code 

is already required for every 

professional claim. 

With respect to adding new fields to 

existing claim forms or creating a new 

bill type, we do not believe that this 

data collection warrants these measures. 

We believe that those changes would 

create greater administrative burden 

than a HCPCS modifier or POS code, 

especially because providers are already 

accustomed to using modifiers and POS 

codes. Revisions to the claim form to 

add new fields or an additional bill type 

would create significant administrative 

burden to revise claims processing 

systems and educate providers, which 

we believe is not necessary, given the 

availability of a modifier and POS 

codes. Although providers may not be 

familiar with this new modifier or any 

new POS code; because these types of 

codes already exist generally for 

hospital and professional claims, 

providers and suppliers should already 

have an understanding of these types of 

codes and how to apply them. Finally, 

we do not believe that expansions to the 

claim form or use of a new bill type 

would provide us with detailed 

information on exactly which services 

were furnished in an off-campus PBD 

versus those furnished on the main 

campus when those services are 

furnished on the same day. 

We also do not believe that we could 

accurately determine which services are 

furnished at off-campus PBDs using 

currently available national provider 

identifier (NPI) and facility address 

data. Hospitals are required to report the 

9-digit zip code indicating where a 

service was furnished for purposes of 

paying properly for physician and 

anesthesia services paid under the 

MPFS when that zip code differs from 

the master address for the hospital on 

file in CMS claims systems (Pub. 100– 

04, Transmittal 1681, February 13, 

2009). However, the billing zip code for 

the hospital main campus could be 

broad enough to incorporate on and offcampus PBDs. Further, a zip code 

reported in value code 78 does not 

allow CMS to distinguish between 

services furnished in different locations 

on the same date. Therefore, we do not 

believe that a comparison of the zip 

code captured in value code 78 and the 

main campus zip code is sufficiently 

precise. 

Finally, while we considered the 

suggestion that CMS use currently 

reported Medicare hospital cost report 

(CMS–2552–10) data to identify services 

furnished at off-campus PBDs, we note 

that although aggregate data on services 

furnished in different settings must be 

reported through the appropriate cost 

center, we would not be able to obtain 

the service-specific level of detail that 

we would be able to obtain from claims 

data. 

We will take under consideration the 

suggestion that CMS create a way for 

hospitals to report their acquisition of 

off-campus PBDs through the 

enrollment process, although this 

information, as currently reported, like 

many of the suggestions above, would 

not allow us to know exactly which 

services are furnished in off-campus 

PBDs and which services are furnished 

on the hospital’s main campus when a 

hospital provides both on the same day. 

Comment: Commenters noted that the 

proposed modifier would not allow 

CMS to know the precise location of the 

off-campus PBDs for billed services or 

when services are furnished at different 

off-campus PBD locations in the same 

day. 

Response: We agree that neither the 

proposed modifier nor a POS code 

provides precise information on the 

specific location of each off-campus 

PBD for each furnished service. 

However, we believe having information 

on the type and frequency of services 

furnished at all off-campus locations 

will assist CMS in better understanding 

the distribution of services between oncampus locations and off-campus 

locations. 

Comment: MedPAC believed there 

may be some value in collecting data on 

services furnished in off-campus PBDs 

to validate the accuracy of site-ofservice reporting when the physician’s 

office is off-campus but bills as an 

outpatient department. MedPAC 

indicated that any data collection effort 

should not prevent the development of 

policies to align payment rates across 

settings. MedPAC encouraged CMS to 

seek legislative authority to set equal 

payment rates across settings for 

evaluation and management office visits 

and other select services. 

Response: We thank MedPAC for its 

support of our data collection efforts to 

better inform the frequency and types of 

services that are being furnished in offcampus PBDs. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66913 

Comment: Many commenters 

suggested that providers would not be 

able to accurately apply the new 

modifier by the January 1, 2015 

implementation timeline and 

recommended a 1-year delay before 

providers would be required to apply 

the modifier to services furnished at offcampus PBDs. Some commenters 

requested only a 6-month delay in 

implementation. Commenters indicated 

that significant revisions to internal 

billing processes would require 

additional time to implement. 

Response: Although we believe that 

the customary January 1st effective date 

that applies to most policies adopted in 

the final rules with comment period for 

both the MPFS and the OPPS would 

provide sufficient lead time, we 

understand the commenters’ concerns 

with the proposed timeline for 

implementation, given that the new 

reporting requirements may require 

changes to billing systems as well as 

education and training for staff. 

Accordingly, although we are finalizing 

our proposal to create a HCPCS modifier 

for hospital services furnished in an offcampus PBD setting, we are adopting a 

voluntary reporting period of the new 

HCPCS modifier for 1 year. That is, 

reporting the new HCPCS modifier for 

services furnished at an off-campus PBD 

will not be mandatory until January 1, 

2016, in order to allow providers time 

to make systems changes, test these 

changes, and train staff on use of the 

new modifier before reporting is 

required. We welcome early reporting of 

the modifier and believe a full year of 

preparation should provide hospitals 

with sufficient time to modify their 

systems for accurate reporting. With 

respect to the POS code for professional 

claims, we will request two new POS 

codes to replace POS code 22 (Hospital 

Outpatient) through the POS Workgroup 

and expect that it will take some time 

for these new codes to be established. 

Once the new POS codes are ready and 

integrated into CMS claims systems, 

practitioners would be required to use 

them, as applicable. More information 

on the availability of the new POS codes 

will be forthcoming in subregulatory 

guidance. However, we do not expect 

the new POS codes to be available prior 

to July 1, 2015. There will be no 

voluntary reporting period of the POS 

codes for applicable professional claims 

because each professional claim 

requires a POS code in order to be 

accepted by Medicare. However, we do 

not view this to be problematic because 

we intend to give prior notice on the 

POS coding changes and, as many of the 

commenters noted, because 

practitioners are already accustomed to 

using a POS code on every claim they 

submit. 

Comment: Many commenters 

expressed concern that this data 

collection would eventually lead to 

equalizing payment for similar services 

furnished in the nonfacility setting and 

the off-campus PBD setting. Several 

commenters noted that the trend of 

hospitals acquiring physician practices 

is due to efforts to better integrate care 

delivery and suggested that CMS weigh 

the benefits of care integration when 

deciding payment changes. Some 

commenters suggested that CMS use 

these data to equalize payment for 

similar services between these two 

settings. These commenters suggested 

that there is little difference in costs and 

care between the two settings that 

would warrant the difference in 

payment. Several of these commenters 

highlighted beneficiary cost-sharing as 

one reason for site-neutral payment, 

noting that the total payment amount for 

outpatient services is generally higher 

than the total payment amount for those 

same services when furnished in a 

physician’s office. 

Response: We appreciate these 

comments. At this time, we are only 

finalizing a data collection in this final 

rule with comment period. We did not 

propose and, therefore, are not 

finalizing any adjustment to payments 

furnished in the off-campus PBD setting. 

Comment: One commenter noted that 

the CMS proposal would not provide 

additional information on how a 

physician practice billed prior to 

becoming an off-campus PBD, which 

would be important for analyzing the 

impact of this trend. 

Response: We agree that 

understanding physician billing 

patterns prior to becoming an offcampus PBD is important in analyzing 

the impact of this trend, and we will 

continue to evaluate ways to analyze 

claims data to gather this information. 

We believe that collecting data using the 

additional modifier and POS code 

finalized in this final rule with 

comment period will be an important 

tool in furthering this analysis. 

Comment: Some commenters 

suggested that the term ‘‘off-campus’’ be 

better defined. Commenters asked how 

billing would occur for hospitals with 

multiple campuses because the CMS 

definition of campus references main 

buildings and does not include remote 

locations. The commenters maintained 

that remote locations are not the same 

as off-campus departments and that 

remote campuses furnish both inpatient 

and outpatient hospital services, in 

contrast to individual hospital 

departments. The commenters argued 

that these types of locations are not ones 

that were formerly a physician office 

practice, and furnish completely 

different types of services than a 

physician office. One commenter also 

asked whether the modifier is intended 

to cover services furnished in 

freestanding emergency departments. 

Response: For purposes of the 

modifier and the POS codes we are 

finalizing in this final rule with 

comment period, we define ‘‘campus’’ 

using the definition at 42 CFR 

413.65(a)(2) to be the physical area 

immediately adjacent to the provider’s 

main buildings, other areas and 

structures that are not strictly 

contiguous to the main buildings but are 

located within 250 yards of the main 

buildings, and any other areas 

determined on an individual case basis, 

by the CMS regional office, to be part of 

the provider’s campus. Our intent is to 

capture outpatient services furnished off 

of the hospital’s main campus and off of 

any other hospital campuses. The term 

‘‘remote location of a hospital’’ is 

defined at 42 CFR 413.65(a)(2). Under 

these regulations, a ‘‘remote location’’ 

includes a hospital campus other than 

the main hospital campus. Specifically, 

a remote location is ‘‘a facility or an 

organization that is either created by, or 

acquired by, a hospital that is a main 

provider for the purpose of furnishing 

inpatient hospital services under the 

name, ownership, and financial and 

administrative control of the main 

provider. . . .’’ Therefore, we agree 

with the commenter that remote 

locations of the hospital should not be 

required to report the modifier nor 

should practitioners be required to 

report the off-campus POS code in these 

settings. This term ‘‘remote location’’ 

does not include ‘‘satellite’’ locations of 

a hospital, but because a satellite facility 

is one that provides inpatient services in 

a building also used by another hospital, 

or in one or more entire buildings 

located on the same campus as 

buildings used by another hospital, we 

also are not requiring satellite facilities 

to report the modifier or the POS codes. 

Satellite facilities are described in the 

regulations at 42 CFR 412.22(h). 

Accordingly, reporting of the modifier 

and POS codes would be required for 

outpatient services furnished in PBDs 

beyond 250 yards from the main 

campus of the hospital, excluding 

services furnished in a remote location 

or satellite facility of the hospital. 

We also appreciate the comment on 

emergency departments. We do not 

intend for hospitals to report the new 

modifier for services furnished in an 

emergency department that is providerVerDate Sep<11>2014 17:07 Nov 07, 2014 Jkt 235001 PO 00000 Frm 00145 Fmt 4701 Sfmt 4700 E:\FR\FM\10NOR2.SGM 10NOR2

tkelley on DSK3SPTVN1PROD with RULES2
66914 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

based to a hospital. We note that there 

is already a POS code for the emergency 

department, POS 23 (emergency roomhospital), and this code would continue 

to be used for emergency department 

services. That is, the new off-campus 

PBD code that will be created for 

purposes of this data collection would 

not apply to hospital emergency 

department services. Hospitals that have 

questions about which departments are 

considered to be ‘‘off-campus PBDs’’ 

should review additional guidance that 

CMS releases on this policy and work 

with the appropriate CMS regional 

office if individual, specific questions 

remain. 

Comment: Several commenters asked 

for clarification on when to report the 

modifier for services furnished both oncampus and off-campus on the same 

day. The commenters provided several 

scenarios of visits and diagnostic 

services furnished on the same day. 

Response: The location where the 

service is actually furnished would 

dictate the use of the modifier, 

regardless of where the order for 

services initiated. We expect the 

modifier and the POS code for offcampus PBDs to be reported in locations 

in which the hospital expends resources 

to furnish the service in an off-campus 

PBD setting. For example, hospitals 

would not report the modifier for a 

diagnostic test that is ordered by a 

practitioner who is located in an offcampus PBD when the service is 

actually furnished on the main campus 

of the hospital. This issue does not 

impact use of the POS codes because 

practitioners submit a different claim for 

each POS where they furnish services 

for a specific beneficiary. 

Comment: A few commenters asked 

for clarification on whether their entity 

constitutes a PBD. 

Response: PBDs are departments of 

the hospital that meet the criteria 

specified in regulations at 42 CFR 

413.65. Questions about PBDs may be 

directed to the appropriate CMS 

regional office. 

Comment: One commenter 

recommended that CMS publish the 

data it acquires through adoption of this 

modifier. 

Response: Data collected through the 

new HCPCS modifier would be part of 

the Medicare Limited Data Set and 

would be available to the public for 

purchase along with the remainder of 

the Limited Data Set. Similarly, 

professional claims data with revised 

POS coding would be available as a 

standard analytic file for purchase. 

In summary, after consideration of the 

public comments received, we are 

finalizing our proposal with 

modifications. For hospital claims, we 

are creating a HCPCS modifier that is to 

be reported with every code for 

outpatient hospital services furnished in 

an off-campus PBD of a hospital. This 

code will not be required to be reported 

for remote locations of a hospital 

defined at 42 CFR 412.65, satellite 

facilities of a hospital defined at 42 CFR 

412.22(h), or for services furnished in an 

emergency department. This 2-digit 

modifier will be added to the HCPCS 

annual file as of January 1, 2015, with 

the label ‘‘PO,’’ the short descriptor 

‘‘Serv/proc off-campus pbd,’’ and the 

long descriptor ‘‘Services, procedures 

and/or surgeries furnished at off-campus 

provider-based outpatient 

departments.’’ Reporting of this new 

modifier will be voluntary for 1 year 

(CY 2015), with reporting required 

beginning on January 1, 2016. 

Additional instruction and provider 

education will be forthcoming in 

subregulatory guidance. 

For professional claims, instead of 

finalizing a HCPCS modifier, in 

response to public comments, we will 

be deleting current POS code 22 

(outpatient hospital department) and 

establishing two new POS codes—one 

to identify outpatient services furnished 

in on-campus, remote, or satellite 

locations of a hospital, and one to 

identify services furnished in an offcampus PBD hospital setting. We will 

maintain the separate POS code 23 

(Emergency room-hospital) to identify 

services furnished in an emergency 

department of the hospital. These new 

POS codes will be required to be 

reported as soon as they become 

available. However, advanced notice of 

the availability of these codes will be 

shared publicly as soon as practicable. 

XI. CY 2015 OPPS Payment Status and 

Comment Indicators 

A. CY 2015 OPPS Payment Status 

Indicator Definitions 

Payment status indicators (SIs) that 

we assign to HCPCS codes and APCs 

serve an important role in determining 

payment for services under the OPPS. 

They indicate whether a service 

represented by a HCPCS code is payable 

under the OPPS or another payment 

system and also whether particular 

OPPS policies apply to the code. The 

complete list of the CY 2015 payment 

status indicators and their definitions is 

displayed in Addendum D1 to this final 

rule with comment period, which is 

available on the CMS Web site at: http:// 

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

HospitalOutpatientPPS/index.html. The 

CY 2015 payment status indicator 

assignments for APCs and HCPCS codes 

are shown in Addendum A and 

Addendum B, respectively, to this final 

rule with comment period, which are 

available on the CMS Web site at: http:// 

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

HospitalOutpatientPPS/index.html. The 

changes to CY 2015 payment status 

indicators and their definitions are 

discussed in detail below. 

We note that, in the CY 2014 OPPS/ 

ASC final rule with comment period (78 

FR 74869 through 74888), for CY 2014, 

we created a new status indicator ‘‘J1’’ 

to identify HCPCS codes that are paid 

under a comprehensive APC. However, 

because we delayed implementation of 

the new comprehensive APC policy 

until CY 2015, we also delayed the 

effective date of payment status 

indicator ‘‘J1’’ to CY 2015. A claim with 

payment status indicator ‘‘J1’’ will 

trigger a comprehensive APC payment 

for the claim. We refer readers to section 

II.A.2.e. of this final rule with comment 

period for a discussion of 

implementation of the new 

comprehensive APC policy. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41014), for CY 2015, we 

proposed to delete payment status 

indicator ‘‘X’’ and to assign ancillary 

services that are currently assigned 

payment status indicator ‘‘X’’ to either 

payment status indicator ‘‘Q1’’ or ‘‘S.’’ 

We also proposed to revise the 

definition of payment status indicator 

‘‘Q1’’ by removing payment status 

indicator ‘‘X’’ from the packaging 

criteria, so that codes assigned payment 

status indicator ‘‘Q1’’ would be 

designated as STV-packaged, rather than 

STVX-packaged, because payment 

status indicator ‘‘X’’ was proposed for 

deletion. These proposed changes, the 

public comments we received and our 

responses, and our finalized policies are 

discussed in section II.A.3.c.(1) of this 

final rule with comment period. Section 

II.A.3.c.(1) of this final rule with 

comment period discusses the ancillary 

services packaging policy. The ancillary 

services packaging policy is the policy 

that makes maintaining status indicator 

‘‘X’’ no longer necessary. After 

consideration of the public comments 

that we received and that are discussed 

in section II.A.3.c.(1) of this final rule 

with comment period, we are finalizing, 

without modification, our CY 2015 

proposal to delete payment status 

indicator ‘‘X’’ and to assign ancillary 

services that are currently assigned 

payment status indicator ‘‘X’’ to either 

payment status indicator ‘‘Q1’’ or ‘‘S.’’ 

In addition, for CY 2015, we proposed 

to clarify the definition of payment 

status indicator ‘‘E’’ to state that 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66915 

payment status indicator ‘‘E’’ applies to 

items, codes, and services in any of the 

following cases: 

• For which pricing is not available; 

• Not covered by any Medicare 

outpatient benefit category; 

• Statutorily excluded by Medicare; 

or 

• Not reasonable and necessary. 

Regarding items ‘‘for which pricing is 

not available,’’ this applies to drugs and 

biologicals assigned a HCPCS code but 

with no available pricing information 

(for example, WAC). 

In reviewing the OPPS status 

indicators and Addendum D1 for CY 

2015, we noticed that there are a few 

drugs or biologicals that are currently 

assigned payment status indicator ‘‘A,’’ 

indicating payment under a non-OPPS 

fee schedule. These drugs or biologicals 

are administered infrequently in 

conjunction with emergency dialysis for 

patients with ESRD, but when 

administered in the HOPD, they are 

paid under the standard OPPS drug 

payment methodology for drugs and 

biologicals, that is, at ASP+6 percent 

unless they are packaged. (We refer 

readers to section V. of this final rule 

with comment period for additional 

discussion of these drugs and their 

status indicators.) We proposed to 

change the status indicators for these 

drugs or biologicals for CY 2015 by 

removing the phrase ‘‘EPO for ESRD 

Patients’’ from the list of examples for 

status indicator ‘‘A.’’ In addition, we 

proposed to clarify the definition of 

payment status indicator ‘‘A’’ by adding 

the phrase ‘‘separately payable’’ to 

nonimplantable prosthetic and orthotic 

devices. 

We did not receive any public 

comments regarding our proposed 

change and clarifications of the 

definitions of payment status indicators 

‘‘E’’ and ‘‘A.’’ Therefore, we are 

finalizing our clarification and proposed 

policies, without modifications, for CY 

2015. 

B. CY 2015 Comment Indicator 

Definitions 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41014), for the CY 2015 

OPPS, we proposed to use the same two 

comment indicators that are in effect for 

the CY 2014 OPPS. 

• ‘‘CH’’—Active HCPCS code in 

current and next calendar year; status 

indicator and/or APC assignment have 

changed or active HCPCS code that will 

be discontinued at the end of the 

current calendar year. 

• ‘‘NI’’—New code for the next 

calendar year or existing code with 

substantial revision to its code 

descriptor in the next calendar year as 

compared to current calendar year, 

interim APC assignment; comments will 

be accepted on the interim APC 

assignment for the new code. 

We proposed to use the ‘‘CH’’ 

comment indicator in the CY 2015 

OPPS/ASC proposed rule (79 FR 41014) 

to indicate HCPCS codes for which the 

status indicator or APC assignment, or 

both, are proposed for change in CY 

2015 compared to their assignment as of 

June 30, 2014. We believed that using 

the ‘‘CH’’ indicator in the proposed rule 

would facilitate the public’s review of 

the changes that we proposed for CY 

2015. We proposed to use the ‘‘CH’’ 

comment indicator in the CY 2015 

OPPS/ASC final rule with comment 

period to indicate HCPCS codes for 

which the status indicator or APC 

assignment, or both, would change in 

CY 2015 compared to their assignment 

as of December 31, 2014. Use of the 

comment indicator ‘‘CH’’ in association 

with a composite APC indicates that the 

configuration of the composite APC 

would be changed in the CY 2015 

OPPS/ASC final rule with comment 

period. 

In addition, we proposed that any 

existing HCPCS codes with substantial 

revisions to the code descriptors for CY 

2015 compared to the CY 2014 

descriptors would be labeled with 

comment indicator ‘‘NI’’ in Addendum 

B to the CY 2015 OPPS/ASC final rule 

with comment period. However, in 

order to receive the comment indicator 

‘‘NI,’’ the CY 2015 revision to the code 

descriptor (compared to the CY 2014 

descriptor) must be significant such that 

the new code descriptor describes a new 

service or procedure for which the 

OPPS treatment may change. We use 

comment indicator ‘‘NI’’ to indicate that 

these HCPCS codes will be open for 

comment as part of the CY 2015 OPPS/ 

ASC final rule with comment period. In 

the CY 2015 OPPS/ASC proposed rule, 

we stated that, like all codes labeled 

with comment indicator ‘‘NI,’’ we 

would respond to public comments and 

finalize their OPPS treatment in the CY 

2016 OPPS/ASC final rule with 

comment period. 

In accordance with our usual practice, 

we proposed that CPT and Level II 

HCPCS codes that are new for CY 2015 

also would be labeled with comment 

indicator ‘‘NI’’ in Addendum B to the 

CY 2015 OPPS/ASC final rule with 

comment period. 

We did not receive any public 

comments on the proposed use of 

comment indicators for CY 2015. 

We believe that the CY 2014 

definitions of the OPPS comment 

indicators continue to be appropriate for 

CY 2015. Therefore, we are continuing 

to use those definitions without 

modification for CY 2015. Only HCPCS 

codes with comment indicator ‘‘NI’’ in 

this CY 2015 OPPS/ASC final rule with 

comment period are subject to 

comment. HCPCS codes that do not 

appear with comment indicator ‘‘NI’’ in 

this CY 2015 OPPS/ASC final rule with 

comment period will not be open to 

public comment, unless we specifically 

request additional comments elsewhere 

in this final rule with comment period. 

The definitions of the OPPS comment 

indicators for CY 2015 are listed in 

Addendum D2 to this final rule with 

comment period, which is available on 

the CMS Web site at: http://

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

HospitalOutpatientPPS/index.html. 

XII. Updates to the Ambulatory 

Surgical Center (ASC) Payment System 

A. Background 

1. Legislative History, Statutory 

Authority, and Prior Rulemaking for the 

ASC Payment System 

For a detailed discussion of the 

legislative history and statutory 

authority related to payments to ASCs 

under Medicare, we refer readers to the 

CY 2012 OPPS/ASC final rule with 

comment period (76 FR 74377 through 

74378) and the June 12, 1998 proposed 

rule (63 FR 32291 through 32292). For 

a discussion of prior rulemaking on the 

ASC payment system, we refer readers 

to the CY 2012 OPPS/ASC final rule 

with comment period (76 FR 74378 

through 74379), the CY 2013 OPPS/ASC 

final rule with comment period (77 FR 

68434 through 68467), and the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75064 through 75090). 

2. Policies Governing Changes to the 

Lists of Codes and Payment Rates for 

ASC Covered Surgical Procedures and 

Covered Ancillary Services 

Under 42 CFR 416.2 and 416.166 of 

the Medicare regulations, subject to 

certain exclusions, covered surgical 

procedures in an ASC are surgical 

procedures that are separately paid 

under the OPPS, that would not be 

expected to pose a significant risk to 

beneficiary safety when performed in an 

ASC, and for which standard medical 

practice dictates that the beneficiary 

would not typically be expected to 

require active medical monitoring and 

care at midnight following the 

procedure (‘‘overnight stay’’). We 

adopted this standard for defining 

which surgical procedures are covered 

under the ASC payment system as an 

indicator of the complexity of the 

procedure and its appropriateness for 


tkelley on DSK3SPTVN1PROD with RULES2
66916 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

Medicare payment in ASCs. We use this 

standard only for purposes of evaluating 

procedures to determine whether or not 

they are appropriate to be furnished to 

Medicare beneficiaries in ASCs. We 

define surgical procedures as those 

described by Category I CPT codes in 

the surgical range from 10000 through 

69999, as well as those Category III CPT 

codes and Level II HCPCS codes that 

directly crosswalk or are clinically 

similar to ASC covered surgical 

procedures (72 FR 42478). 

In the August 2, 2007 final rule, we 

also established our policy to make 

separate ASC payments for the 

following ancillary items and services 

when they are provided integral to ASC 

covered surgical procedures: (1) 

Brachytherapy sources; (2) certain 

implantable items that have 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. These covered 

ancillary services are specified in 

§ 416.164(b) and, as stated previously, 

are eligible for separate ASC payment 

(72 FR 42495). Payment for ancillary 

items and services that are not paid 

separately under the ASC payment 

system is packaged into the ASC 

payment for the covered surgical 

procedure. 

We update the lists of, and payment 

rates for, covered surgical procedures 

and covered ancillary services in ASCs 

in conjunction with the annual 

proposed and final rulemaking process 

to update the OPPS and the ASC 

payment system (§ 416.173; 72 FR 

42535). In addition, as discussed in 

detail in section XII.B. of this final rule 

with comment period, because we base 

ASC payment policies for covered 

surgical procedures, drugs, biologicals, 

and certain other covered ancillary 

services on the OPPS payment policies, 

and we use quarterly change requests to 

update services covered under the 

OPPS, we also provide quarterly update 

change requests (CRs) for ASC covered 

surgical procedures and covered 

ancillary services throughout the year 

(January, April, July, and October). CMS 

releases new Level II codes to the public 

or recognizes the release of new CPT 

codes by the AMA and makes these 

codes effective (that is, the codes are 

recognized on Medicare claims) via 

these ASC quarterly update CRs. Thus, 

these quarterly updates are to 

implement newly created Level II 

HCPCS and Category III CPT codes for 

ASC payment and to update the 

payment rates for separately paid drugs 

and biologicals based on the most 

recently submitted ASP data. New 

Category I CPT codes, except vaccine 

codes, are released only once a year and, 

therefore, are implemented only through 

the January quarterly update. New 

Category I CPT vaccine codes are 

released twice a year and are 

implemented through the January and 

July quarterly updates. We refer readers 

to Table 41 in the CY 2012 OPPS/ASC 

proposed rule for the process used to 

update the HCPCS and CPT codes (76 

FR 42291). 

In our annual updates to the ASC list 

of, and payment rates for, covered 

surgical procedures and covered 

ancillary services, we undertake a 

review of excluded surgical procedures 

(including all procedures newly 

proposed for removal from the OPPS 

inpatient list), new procedures, and 

procedures for which there is revised 

coding, to identify any that we believe 

meet the criteria for designation as ASC 

covered surgical procedures or covered 

ancillary services. Updating the lists of 

ASC covered surgical procedures and 

covered ancillary services, as well as 

their payment rates, in association with 

the annual OPPS rulemaking cycle is 

particularly important because the 

OPPS relative payment weights and, in 

some cases, payment rates, are used as 

the basis for the payment of covered 

surgical procedures and covered 

ancillary services under the revised ASC 

payment system. This joint update 

process ensures that the ASC updates 

occur in a regular, predictable, and 

timely manner. 

B. Treatment of New Codes 

1. Process for Recognizing New Category 

I and Category III CPT Codes and Level 

II HCPCS Codes 

Category I CPT, Category III CPT, and 

Level II HCPCS codes are used to report 

procedures, services, items, and 

supplies under the ASC payment 

system. Specifically, we recognize the 

following codes on ASC claims: (1) 

Category I CPT codes, which describe 

surgical procedures and vaccine codes; 

(2) Category III CPT codes, which 

describe new and emerging 

technologies, services, and procedures; 

and (3) Level II HCPCS codes, which are 

used primarily to identify products, 

supplies, temporary procedures, and 

services not described by CPT codes. 

We finalized a policy in the August 2, 

2007 final rule to evaluate each year all 

new Category I and Category III CPT 

codes and Level II HCPCS codes that 

describe surgical procedures, and to 

make preliminary determinations 

during the annual OPPS/ASC 

rulemaking process regarding whether 

or not they meet the criteria for payment 

in the ASC setting as covered surgical 

procedures and, if so, whether or not 

they are office-based procedures (72 FR 

42533 through 42535). In addition, we 

identify new codes as ASC covered 

ancillary services based upon the final 

payment policies of the revised ASC 

payment system. 

We have separated our discussion 

below into two sections based on 

whether we proposed to solicit public 

comments in the CY 2015 OPPS/ASC 

proposed rule (and respond to those 

comments in this CY 2015 OPPS/ASC 

final rule with comment period) or 

whether we are soliciting public 

comments in this CY 2015 OPPS/ASC 

final rule with comment period (and 

responding to those comments in the CY 

2016 OPPS/ASC final rule with 

comment period). 

We note that we sought public 

comment in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

75067) on the new Category I and 

Category III CPT and Level II HCPCS 

codes that were effective January 1, 

2014. We also sought public comment 

in the CY 2014 OPPS/ASC final rule 

with comment period on the new Level 

II HCPCS codes effective October 1, 

2013. These new codes, with an 

effective date of October 1, 2013, or 

January 1, 2014, were flagged with 

comment indicator ‘‘NI’’ in Addenda 

AA and BB to the CY 2014 OPPS/ASC 

final rule with comment period to 

indicate that we were assigning them an 

interim payment status and payment 

rate, if applicable, which were subject to 

public comment following publication 

of the CY 2014 OPPS/ASC final rule 

with comment period. In the proposed 

rule, we stated that we will respond to 

public comments and finalize the 

treatment of these codes under the ASC 

payment system in this CY 2015 OPPS/ 

ASC final rule with comment period. 

2. Treatment of New Level II HCPCS 

Codes and Category III CPT Codes 

Implemented in April 2014 and July 

2014 for Which We Solicited Public 

Comments in the CY 2015 OPPS/ASC 

Proposed Rule 

In the April 2014 and July 2014 CRs, 

we made effective for April 1, 2014 and 

July 1, 2014, respectively, a total of 

seven new Level II HCPCS codes and 

four new Category III CPT codes that 

describe ASC covered surgical 

procedures and covered ancillary 

services that were not addressed in the 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66917 

CY 2014 OPPS/ASC final rule with 

comment period. 

In the April 2014 ASC quarterly 

update (Transmittal 2927, CR 8675, 

dated April 10, 2014), we added two 

new surgical Level II HCPCS codes and 

one new drug and biological Level II 

HCPCS code to the list of covered 

surgical procedures and covered 

ancillary services, respectively. Table 45 

of the CY 2015 OPPS/ASC proposed 

rule (79 FR 41016) listed the new Level 

II HCPCS codes that were implemented 

April 1, 2014, along with their proposed 

payment indicators for CY 2015. 

In the July 2014 quarterly update 

(Transmittal 2970, CR 8786, dated May 

23, 2014), we added one new 

brachytherapy Level II HCPCS code and 

three new drug and biological Level II 

HCPCS codes to the list of covered 

ancillary services. Table 46 of the CY 

2015 OPPS/ASC proposed rule (79 FR 

41016 through 41017) listed the new 

Level II HCPCS codes that were 

implemented July 1, 2014 along with 

their proposed payment indicators and 

proposed ASC payment rates for CY 

2015. 

Through the July 2014 quarterly 

update CR, we also implemented ASC 

payment for four new Category III CPT 

codes as one ASC covered surgical 

procedure and three covered ancillary 

services, effective July 1, 2014. These 

codes were listed in Table 47 of the CY 

2015 OPPS/ASC proposed rule (79 FR 

41017), along with their proposed 

payment indicators and proposed 

payment rates for CY 2015. 

The HCPCS codes listed in Table 45 

of the CY 2015 OPPS/ASC proposed 

rule (79 FR 41016) were included in 

Addenda AA or BB to the proposed rule 

(which are available via the Internet on 

the CMS Web site). Because the 

payment rates associated with the new 

Level II HCPCS codes and Category III 

CPT codes that became effective July 1, 

2014 (listed in Table 46 and Table 47 of 

the proposed rule (79 FR 41016 through 

41017)) were not available to us in time 

for incorporation into the Addenda to 

the OPPS/ASC proposed rule, our 

policy is to include these HCPCS codes 

and their proposed payment indicators 

and payment rates in the preamble to 

the proposed rule but not in the 

Addenda to the proposed rule. These 

codes and their final payment indicators 

and rates are included in the 

appropriate Addendum to this CY 2015 

OPPS/ASC final rule with comment 

period. Therefore, the codes 

implemented by the July 2014 ASC 

quarterly update CR and their proposed 

CY 2015 payment indicators and rates 

that were displayed in Table 46 and 

Table 47 of the proposed rule were not 

included in Addenda AA or BB to the 

proposed rule (which are available via 

the Internet on the CMS Web site). The 

final list of ASC covered surgical 

procedures and covered ancillary 

services and the associated payment 

weights and payment indicators are 

included in Addenda AA or BB to this 

CY 2015 OPPS/ASC final rule with 

comment period, consistent with our 

annual update policy. 

We invited public comment on these 

proposed payment indicators and the 

proposed payment rates for the new 

Category III CPT code and Level II 

HCPCS codes that were newly 

recognized as ASC covered surgical 

procedures or covered ancillary services 

in April 2014 and July 2014 through the 

quarterly update CRs, as listed in Tables 

45, 46, and 47 of the CY 2015 OPPS/

ASC proposed rule (79 FR 41016 

through 41017). We proposed to finalize 

their payment indicators and their 

payment rates in this CY 2015 OPPS/

ASC final rule with comment period. 

We did not receive any public 

comments regarding these proposed 

ASC payment indicators. Therefore, we 

are adopting as final for CY 2015 the 

ASC payment indicators for the ASC 

covered surgical procedures and 

covered ancillary services described by 

the new Level II HCPCS codes 

implemented in April 2014 and July 

2014 through the quarterly update CRs 

as shown below, in Tables 41 and 42, 

respectively. 

For the new Category III CPT codes 

implemented in July 2014 through the 

quarterly update CR, as shown below in 

Table 43, we are not finalizing the ‘‘Z2’’ 

payment indicator that we proposed for 

CPT codes 0348T, 0349T, and 0350T. 

For CY 2015, these codes will be 

conditionally packaged under the OPPS 

when provided with a significant 

procedure (status indicator ‘‘Q1’’). With 

the exception of device removal 

procedures (as discussed in section 

XII.D.1.b. of this final rule with 

comment period), HCPCS codes that are 

conditionally packaged under the OPPS 

are always packaged (payment indicator 

‘‘N1’’) under the ASC payment system. 

Therefore, we are changing the final CY 

2015 ASC payment indicator for CPT 

codes 0348T, 0349T, and 350T from 

‘‘Z2’’ to ‘‘N1.’’ We are adopting as final 

the payment indicator proposed for CPT 

code 0356T. 

These new HCPCS and CPT codes 

also are displayed in Addenda AA and 

BB to this final rule with comment 

period (which are available via the 

Internet on the CMS Web site). We note 

that after publication of the CY 2015 

OPPS/ASC proposed rule, the CMS 

HCPCS Workgroup created permanent 

HCPCS J-codes for CY 2015 to replace 

certain temporary HCPCS C-codes and 

Q-codes made effective for CY 2014. 

These permanent CY 2015 HCPCS Jcodes are listed alongside the temporary 

CY 2014 HCPCS C-codes and Q-codes in 

Tables 41 and 42 below. We also note 

that the CMS HCPCS Workgroup created 

a long descriptor for J1781 that is 

slightly different from the long 

descriptor listed for HCPCS code C9134 

in the CY 2015 OPPS/ASC proposed 

rule. 

TABLE 41—NEW LEVEL II HCPCS CODES FOR COVERED SURGICAL PROCEDURES OR COVERED ANCILLARY SERVICES

IMPLEMENTED IN APRIL 2014 

CY 2014 HCPCS 

code 

CY 2015 

HCPCS code CY 2015 long descriptor 

Final CY 2015 

payment 

indicator 

C9739 ................ C9739 ............... Cystourethroscopy, with insertion of transprostatic implant; 1 to 3 implants ....................... G2 

C9740 ................ C9740 ............... Cystourethroscopy, with insertion of transprostatic implant; 4 or more implants ................. G2 

C9021 ................ J9301 ................ Injection, obinutuzumab, 10 mg ............................................................................................ K2 

G2 = Non office-based surgical procedure added in CY 2008 or later; payment based on OPPS relative payment weight. 

K2 = Drugs and biologicals paid separately when provided integral to a surgical procedure on ASC list; payment based on OPPS rate. 


tkelley on DSK3SPTVN1PROD with RULES2
66918 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

TABLE 42—NEW LEVEL II HCPCS CODES FOR COVERED ANCILLARY SERVICES IMPLEMENTED IN JULY 2014 

CY 2014 HCPCS 

code 

CY 2015 

HCPCS code CY 2015 long descriptor 

Final CY 2015 

payment 

indicator 

C2644 ................ C2644 ............... Brachytherapy source, cesium-131 chloride solution, per millicurie .................................... H2 

C9022 ................ J1322 ................ Injection, elosulfase alfa, 1mg .............................................................................................. K2 

C9134 ................ J7181 ................ Injection, Factor XIII A-subunit, (recombinant), per iu .......................................................... K2 

Q9970 * ............. J1439 ................ Injection, ferric carboxymaltose, 1 mg .................................................................................. K2 

* HCPCS code Q9970 replaced HCPCS code C9441 effective July 1, 2014. 

H2 = Brachytherapy source paid separately when provided integral to a surgical procedure on ASC list; payment based on OPPS rate. 

K2 = Drugs and biologicals paid separately when provided integral to a surgical procedure on ASC list; payment based on OPPS rate. 

TABLE 43—NEW CATEGORY III CPT CODES FOR COVERED SURGICAL PROCEDURES OR COVERED ANCILLARY SERVICES

IMPLEMENTED IN JULY 2014 

CY 2014 CPT 

code 

CY 2015 CPT 

code CY 2015 long descriptor 

Final CY 2015 

payment 

indicator 

0348T ................ ........................... Radiologic examination, radiostereometric analysis (RSA); spine, (includes, cervical, thoracic and lumbosacral, when performed).N1 

0349T ................ ........................... Radiologic examination, radiostereometric analysis (RSA); upper extremity(ies), (includes 

shoulder, elbow and wrist, when performed).

N1 

0350T ................ ........................... Radiologic examination, radiostereometric analysis (RSA); lower extremity(ies), (includes 

hip, proximal femur, knee and ankle, when performed).

N1 

0356T ................ ........................... Insertion of drug-eluting implant (including punctal dilation and implant removal when 

performed) into lacrimal canaliculus, each.

R2 

N1 = Packaged service/item; no separate payment made. 

R2 = Office-based surgical procedure added to ASC list in CY 2008 or later without MPFS nonfacility PE RVUs; payment based on OPPS relative payment weight. 

3. Process for New Level II HCPCS 

Codes and Category I and Category III 

CPT Codes for Which We Are Soliciting 

Public Comments in This CY 2015 

OPPS/ASC Final Rule With Comment 

Period 

As has been our practice in the past, 

we incorporate those new Category I 

and Category III CPT codes and new 

Level II HCPCS codes that are effective 

January 1 in the final rule with 

comment period updating the ASC 

payment system for the following 

calendar year. These codes are released 

to the public via the CMS HCPCS (for 

Level II HCPCS codes) and AMA Web 

sites (for CPT codes), and also through 

the January ASC quarterly update CRs. 

In the past, we also have released new 

Level II HCPCS codes that are effective 

October 1 through the October ASC 

quarterly update CRs and incorporated 

these new codes in the final rule with 

comment period updating the ASC 

payment system for the following 

calendar year. All of these codes are 

flagged with comment indicator ‘‘NI’’ in 

Addenda AA and BB to the OPPS/ASC 

final rule with comment period to 

indicate that we are assigning them an 

interim payment status which is subject 

to public comment. The payment 

indicator and payment rate, if 

applicable, for all such codes flagged 

with comment indicator ‘‘NI’’ are open 

to public comment in the OPPS/ASC 

final rule with comment period, and we 

respond to these comments in the final 

rule with comment period for the next 

calendar year’s OPPS/ASC update. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41017), we proposed to 

continue this process for CY 2015. 

Specifically, for CY 2015, we proposed 

to include in Addenda AA and BB to 

the CY 2015 OPPS/ASC final rule with 

comment period any new Category I and 

III CPT codes effective January 1, 2015, 

that would be incorporated in the 

January 2015 ASC quarterly update CR 

and any new Level II HCPCS codes, 

effective October 1, 2014 or January 1, 

2015, that would be released by CMS in 

its October 2014 and January 2015 ASC 

quarterly update CRs. We stated that 

these codes would be flagged with 

comment indicator ‘‘NI’’ in Addenda 

AA and BB to this CY 2015 OPPS/ASC 

final rule with comment period to 

indicate that we have assigned them an 

interim payment status. We also stated 

that their payment indicators and 

payment rates, if applicable, would be 

open to public comment in this CY 2015 

OPPS/ASC final rule with comment 

period and would be finalized in the CY 

2016 OPPS/ASC final rule with 

comment period. 

We did not receive any public 

comments regarding this proposed 

process. Therefore, for CY 2015, we are 

finalizing our proposal, without 

modification, to continue our 

established process for recognizing and 

soliciting public comments on new 

Level II HCPCS codes and Category I 

and III CPT codes that become effective 

on October 1, 2014, or January 1, 2015, 

as described above. 

C. Update to the Lists of ASC Covered 

Surgical Procedures and Covered 

Ancillary Services 

1. Covered Surgical Procedures 

a. Additions to the List of ASC Covered 

Surgical Procedures 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41017 through 41018), we 

proposed to update the list of ASC 

covered surgical procedures by adding 

10 procedures to the list for CY 2015. 

These 10 procedures were among those 

excluded from the ASC list for CY 2014 

because we believed they did not meet 

the definition of a covered surgical 

procedure based on our expectation that 

they would be expected to pose a 

significant risk to beneficiary safety 

when performed in an ASC, or would be 

expected to require active medical 

monitoring and care of the beneficiary at 

midnight following the procedure. We 

conducted a review of all HCPCS codes 

that currently are paid under the OPPS, 

but not included on the ASC list of 

covered surgical procedures, to 

determine if changes in technology and/ 

or medical practice affected the clinical 

appropriateness of these procedures for 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66919 

the ASC setting. We determined that 

these 10 procedures would not be 

expected to pose a significant risk to 

beneficiary safety when performed in an 

ASC, and would not be expected to 

require active medical monitoring and 

care of the beneficiary at midnight 

following the procedure and, therefore, 

we proposed to include them on the list 

of ASC covered surgical procedures for 

CY 2015. 

The 10 procedures that we proposed 

to add to the ASC list of covered 

surgical procedures, including their 

HCPCS code long descriptors and 

proposed CY 2015 payment indicators, 

were displayed in Table 48 of the CY 

2015 OPPS/ASC proposed rule (79 FR 

41018). 

Comment: Several commenters 

supported adding the 10 procedures to 

the CY 2015 covered surgical 

procedures list for ASCs. 

Response: We thank the commenters 

for their support. As indicated later in 

this section, we are finalizing our 

proposal to add these procedure codes 

to the ASC list, in addition to two other 

procedure codes recommended by 

commenters. 

Comment: Some commenters stated 

that the APC relative weight for APC 

0208 is too low for the cervical and 

lumbar fusion procedures (as described 

by HCPCS codes 22551, 22554, and 

22612) proposed to be added to the list 

of ASC covered surgical procedures, and 

they urged CMS to reassign these three 

procedures codes to another APC with 

a higher relative weight. 

Response: As discussed in detail in 

section II.A.2.e. of this final rule with 

comment period, we agree with the 

commenters, and we are reassigning 

CPT codes 22551, 22554, and 22612 to 

APC 0425 for CY 2015 because the 

geometric mean costs of these codes are 

more similar to the geometric mean cost 

of APC 0425, which has a higher 

geometric mean cost than APC 0208. 

Comment: Some commenters stated 

that, in order to perform the procedures 

proposed to be added to the ASC list of 

covered surgical procedures, additional 

procedure codes needed to be added to 

the list because some of the proposed 

additions to the list could not be 

furnished without procedures described 

by additional codes. Other codes were 

requested to be added because they 

represent procedures that are commonly 

furnished in conjunction with 

procedures described by the codes that 

were proposed to be added. 

Commenters stated that without adding 

the additional codes for procedures that 

must be performed in conjunction with 

or are often performed along with the 

proposed added procedures, these types 

of cases will continue to not be 

furnished in the ASC setting. 

Commenters stated that some of the 

procedures described by these codes 

were covered by other carriers and 

could be safely performed in the ASC 

setting for Medicare patients. Some 

commenters believed that, because 

Medicare makes facility payments for 

unlisted CPT codes under the OPPS, 

CMS should provide ASCs with the 

same flexibility to use unlisted CPT 

codes to report procedures. The list of 

codes that commenters requested to be 

added in addition to those that were 

proposed to be added is shown in Table 

44 below. 

TABLE 44—PROCEDURES REQUESTED

FOR ADDITION TO THE CY 2015 LIST

OF ASC COVERED SURGICAL PROCEDURES

CY 2015 

CPT/ 

HCPCS 

codes 

CY 2015 short descriptor 

19307 ....... Mast mod rad. 

20930*** .. Sp bone algrft morsel add-on. 

20931*** .. Sp bone algrft struct add-on. 

20936* ..... Sp bone agrft local add-on. 

20937* ..... Sp bone agrft morsel add-on. 

20938* ..... Sp bone agrft struct add-on. 

22526 ....... Idet single level. 

22527 ....... Idet 1 or more levels. 

22532* ..... Lat thorax spine fusion. 

22533* ..... Lat lumbar spine fusion. 

22534* ..... Lat thor/lumb addl seg. 

22552* ..... Addl neck spine fusion. 

22558* ..... Lumbar spine fusion. 

22585* ..... Additional spinal fusion. 

22610* ..... Thorax spine fusion. 

22633* ..... Lumbar spine fusion combined. 

22830* ..... Exploration of spinal fusion. 

22840* ..... Insert spine fixation device. 

22842* ..... Insert spine fixation device. 

22845* ..... Insert spine fixation device. 

22846* ..... Insert spine fixation device. 

22849* ..... Reinsert spinal fixation. 

22850* ..... Remove spine fixation device. 

22851 ....... Apply spine prosth device. 

22855* ..... Remove spine fixation device. 

22856 ....... Cerv artific diskectomy. 

23470 ....... Reconstruct shoulder joint. 

28805 ....... Amputation thru metatarsal. 

31600 ....... Incision of windpipe. 

32551 ....... Insertion of chest tube. 

33244 ....... Remove eltrd transven. 

35471 ....... Repair arterial blockage. 

35903 ....... Excision graft extremity. 

37191 ....... Ins endovas vena cava filtr. 

37193 ....... Rem endovas vena cava filter. 

39400 ....... Mediastinoscopy incl biopsy. 

43280 ....... Laparoscopy fundoplasty. 

43281 ....... Lap paraesophag hern repair. 

43770 ....... Lap place gastr adj device. 

44180 ....... Lap enterolysis. 

44970 ....... Laparoscopy appendectomy. 

54332 ....... Revise penis/urethra. 

54336 ....... Revise penis/urethra. 

54535 ....... Extensive testis surgery. 

54650 ....... Orchiopexy (fowler-stephens). 

57120 ....... Closure of vagina. 

TABLE 44—PROCEDURES REQUESTED

FOR ADDITION TO THE CY 2015 LIST

OF ASC COVERED SURGICAL PROCEDURES—Continued 

CY 2015 

CPT/ 

HCPCS 

codes 

CY 2015 short descriptor 

57282 ....... Colpopexy extraperitoneal. 

57283 ....... Colpopexy intraperitoneal. 

57310 ....... Repair urethrovaginal lesion. 

57425 ....... Laparoscopy surg colpopexy. 

58260 ....... Vaginal hysterectomy. 

58262 ....... Vag hyst including t/o. 

58543 ....... Lsh uterus above 250 g. 

58544 ....... Lsh w/t/o uterus above 250 g. 

58553 ....... Laparo-vag hyst complex. 

58554 ....... Laparo-vag hyst w/t/o compl. 

58573 ....... Tlh w/t/o uterus over 250 g. 

60252 ....... Removal of thyroid. 

60260 ....... Repeat thyroid surgery. 

60271 ....... Removal of thyroid. 

63011 ....... Remove spine lamina 1/2 scrl. 

63012 ....... Remove lamina/facets lumbar. 

63015 ....... Remove spine lamina >2 crvcl. 

63016 ....... Remove spine lamina >2 thrc. 

63017 ....... Remove spine lamina >2 lmbr. 

63035 ....... Spinal disk surgery add-on. 

63040 ....... Laminotomy single cervical. 

63046 ....... Remove spine lamina 1 thrc. 

63048 ....... Remove spinal lamina add-on. 

63057 ....... Decompress spine cord add-on. 

63064 ....... Decompress spinal cord thrc. 

63075 ....... Neck spine disk surgery. 

63076 ....... Neck spine disk surgery. 

77002**** Needle localization by xray. 

L-codes** (L codes for implants—plates 

and screws, peek or bone, 

putty—HCPCS not specified). 

* CPT codes on the OPPS inpatient list for 

CY 2015. 

** HCPCS codes for prosthetics or prosthetic 

supplies. 

*** CPT codes already on the ASC list of 

covered surgical procedures. 

**** CPT code already on the ASC list of 

covered ancillary services. 

Response: We examined all of the 

codes that commenters requested for 

addition to the ASC list of covered 

surgical procedures. Of the 75 codes 

requested for addition to the ASC list, 

we did not review the 19 procedures 

that are reported by CPT codes that are 

on the OPPS inpatient list (identified 

with one asterisk in Table 44), or the 

unspecified non-surgical HCPCS Lcodes (identified with two asterisks in 

Table 44) because these codes are not 

eligible for addition to the ASC list of 

covered surgical procedures, consistent 

with our final policy which is discussed 

in detail in the August 2, 2007 final rule 

(72 FR 42476 through 42486; 42 CFR 

416.166). In addition, we did not review 

the 2 procedures reported by CPT codes 

that are already on the ASC list of 

covered surgical procedures (identified 

with three asterisks in Table 44), or the 

1 procedure reported by a CPT code that 

is on the ASC list of covered ancillary 


tkelley on DSK3SPTVN1PROD with RULES2
66920 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

services (identified with four asterisks 

in Table 44). 

With respect to the remaining 

procedures described by the 52 codes in 

Table 44 that commenters requested be 

added to the list of ASC covered 

surgical procedures, we do not agree 

that any of the procedures described by 

these codes should be added to the list 

because they do not meet our criteria for 

inclusion on this list. Under 42 CFR 

416.2 and 416.166, subject to certain 

exclusions, covered surgical procedures 

in an ASC are surgical procedures that 

are separately paid under the OPPS, that 

would not be expected to pose a 

significant risk to beneficiary safety 

when performed in an ASC, and would 

not be expected to require active 

medical monitoring and care of the 

beneficiary at midnight following the 

procedure. The criteria used under the 

revised ASC payment system to identify 

procedures that would be expected to 

pose a significant safety risk when 

performed in an ASC include, but are 

not limited to, those procedures that: 

Generally result in extensive blood loss; 

require major or prolonged invasion of 

body cavities; directly involve major 

blood vessels; are generally emergent or 

life threatening in nature; commonly 

require systemic thrombolytic therapy; 

are designated as requiring inpatient 

care under § 419.22(n); can only be 

reported using a CPT unlisted surgical 

procedure code; or are otherwise 

excluded under § 411.15 (we refer 

readers to § 416.166). Procedures that do 

not meet the criteria set forth in 42 CFR 

416.166 would not be added to the list 

of ASC covered surgical procedures. 

Although the commenters asserted 

that some of the procedures they were 

requesting for addition to the list are as 

safe as procedures already on the list, 

based on our review of the procedures 

listed in Table 44, we found that all of 

the remaining procedures described by 

the 52 codes either would be expected 

to pose a threat to beneficiary safety or 

would require active medical 

monitoring and care of the beneficiary at 

midnight following the procedure. 

Specifically, we found that prevailing 

medical practice called for inpatient 

hospital stays for beneficiaries 

undergoing many of the procedures and 

that some of the procedures directly 

involve major blood vessels and/or may 

result in extensive blood loss. Therefore, 

we are not including any of the 

procedures suggested by commenters on 

the list of ASC covered surgical 

procedures for CY 2015. 

Regarding the comment about 

unlisted codes being noncovered in the 

ASC, we have a longstanding ASC 

policy that all unlisted codes are 

noncovered in the ASC because we are 

unable to determine (due to the 

nondescript nature of unlisted codes) if 

a procedure that would be reported with 

an unlisted code would not be expected 

to pose a significant risk to beneficiary 

safety when performed in an ASC, and 

would not be expected to require active 

medical monitoring and care of the 

beneficiary at midnight following the 

procedure. We continue to believe it 

would not be appropriate to provide 

ASC payment for unlisted CPT codes in 

the surgical range, even if payment may 

be provided under the OPPS. ASCs do 

not possess the breadth and intensity of 

services that hospitals must maintain to 

care for patients of higher acuity, and 

we would have no way of knowing what 

specific procedures reported by unlisted 

CPT codes were provided to patients in 

order to ensure that they are safe for 

ASC performance. 

After consideration of the public 

comments we received, we are 

finalizing the addition of the 10 HCPCS 

codes that we proposed to the list of 

ASC covered surgical procedures for CY 

2015. As addressed in section XII.C.1.e. 

of this final rule with comment period, 

we also are adding CPT code 63044 

(Laminotomy (hemilaminectomy), with 

decompression of nerve root(s), 

including partial facetectomy, 

foraminotomy and/or excision of 

herniated intervertebral disc, 

reexploration, single interspace; each 

additional lumbar interspace) to the 

ASC list of covered surgical procedures 

for CY 2015. This code was removed 

from the OPPS inpatient-only list in 

response to comments and, after review 

of the procedure described by this code, 

we believe that the procedure could be 

safely performed in an ASC and would 

not require active medical monitoring 

and care of the beneficiary at midnight 

following the procedure. The procedure 

codes, descriptors, and payment 

indicators for these 11 new covered 

surgical procedures for CY 2015 are 

displayed in Table 45 below. 

TABLE 45—ADDITIONS TO THE LIST OF ASC COVERED SURGICAL PROCEDURES FOR CY 2015 

CY 2015 

HCPCS code CY 2015 long descriptor 

Final CY 2015 

ASC payment 

indicator 

22551 ................ Arthrodesis, anterior interbody, including disc space preparation, discectomy, osteophytectomy and decompression of spinal cord and/or nerve roots; cervical below c2.J8 

22554 ................ Arthrodesis, anterior interbody technique, including minimal discectomy to prepare interspace (other than for 

decompression); cervical below c2.

J8 

22612 ................ Arthrodesis, posterior or posterolateral technique, single level; lumbar (with lateral transverse technique, 

when performed).

J8 

22614 ................ Arthrodesis, posterior or posterolateral technique, single level; each additional vertebral segment (list separately in addition to code for primary procedure).N1 

63020 ................ Laminotomy (hemilaminectomy), with decompression of nerve root(s), including partial facetectomy, 

foraminotomy and/or excision of herniated intervertebral disc; 1 interspace, cervical.

G2 

63030 ................ Laminotomy (hemilaminectomy), with decompression of nerve root(s), including partial facetectomy, 

foraminotomy and/or excision of herniated intervertebral disc; 1 interspace, lumbar.

G2 

63042 ................ Laminotomy (hemilaminectomy), with decompression of nerve root(s), including partial facetectomy, 

foraminotomy and/or excision of herniated intervertebral disc, reexploration, single interspace; lumbar.

G2 

63044 ................ Laminotomy (hemilaminectomy), with decompression of nerve root(s), including partial facetectomy, 

foraminotomy and/or excision of herniated intervertebral disc, reexploration, single interspace; each additional lumbar interspace (list separately in addition to code for primary procedure).

N1 

63045 ................ Laminectomy, facetectomy and foraminotomy (unilateral or bilateral with decompression of spinal cord, 

cauda equina and/or nerve root[s], [eg, spinal or lateral recess stenosis]), single vertebral segment; cervical.

G2 

63047 ................ Laminectomy, facetectomy and foraminotomy (unilateral or bilateral with decompression of spinal cord, 

cauda equina and/or nerve root[s], [eg, spinal or lateral recess stenosis]), single vertebral segment; lumbar.

G2 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66921 

TABLE 45—ADDITIONS TO THE LIST OF ASC COVERED SURGICAL PROCEDURES FOR CY 2015—Continued 

CY 2015 

HCPCS code CY 2015 long descriptor 

Final CY 2015 

ASC payment 

indicator 

63056 ................ Transpedicular approach with decompression of spinal cord, equina and/or nerve root(s) (eg, herniated 

intervertebral disc), single segment; lumbar (including transfacet, or lateral extraforaminal approach) (eg, 

far lateral herniated intervertebral disc).

G2 

b. Covered Surgical Procedures 

Designated as Office-Based 

(1) Background 

In the August 2, 2007 ASC final rule, 

we finalized our policy to designate as 

‘‘office-based’’ those procedures that are 

added to the ASC list of covered 

surgical procedures in CY 2008 or later 

years that we determine are performed 

predominantly (more than 50 percent of 

the time) in physicians’ offices based on 

consideration of the most recent 

available volume and utilization data for 

each individual procedure code and/or, 

if appropriate, the clinical 

characteristics, utilization, and volume 

of related codes. In that rule, we also 

finalized our policy to exempt all 

procedures on the CY 2007 ASC list 

from application of the office-based 

classification (72 FR 42512). The 

procedures that were added to the ASC 

list of covered surgical procedures 

beginning in CY 2008 that we 

determined were office-based were 

identified in Addendum AA to that rule 

by payment indicator ‘‘P2’’ (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 

surgical procedures eligible for payment 

in ASCs, each year we identify surgical 

procedures as either temporarily officebased (these are new procedure codes 

with little or no utilization data that our 

medical advisors have determined are 

clinically similar to other procedures 

that are permanently office-based), 

permanently office-based, or nonofficebased, after taking into account updated 

volume and utilization data. 

(2) Changes for CY 2015 to Covered 

Surgical Procedures Designated as 

Office-Based 

In developing the CY 2015 OPPS/ASC 

proposed rule, we followed our policy 

to annually review and update the 

surgical procedures for which ASC 

payment is made and to identify new 

procedures that may be appropriate for 

ASC payment, including their potential 

designation as office-based. We 

reviewed CY 2013 volume and 

utilization data and the clinical 

characteristics for all surgical 

procedures that are assigned payment 

indicator ‘‘G2’’ (Non-office-based 

surgical procedure added in CY 2008 or 

later; payment based on OPPS relative 

payment weight) in CY 2014, as well as 

for those procedures assigned one of the 

temporary office-based payment 

indicators, specifically ‘‘P2,’’ ‘‘P3,’’ or 

‘‘R2’’ in the CY 2014 OPPS/ASC final 

rule with comment period (78 FR 75071 

through 75075). 

Our review of the CY 2013 volume 

and utilization data resulted in our 

identification of two covered surgical 

procedures, CPT codes 10022 and 19296 

that we believe meet the criteria for 

designation as office-based. The data 

indicate these procedures are performed 

more than 50 percent of the time in 

physicians’ offices and our medical 

advisors believe the services are of a 

level of complexity consistent with 

other procedures performed routinely in 

physicians’ offices. The two CPT codes 

we proposed to permanently designate 

as office-based were listed in Table 49 

of the CY 2015 OPPS/ASC proposed 

rule (79 FR 41019). 

We invited public comment on this 

proposal. 

Comment: One commenter stated that 

CPT code 10022 was performed only 51 

percent of the time in the office setting 

and recommended that it temporarily be 

designated as office-based rather than 

permanently. 

Response: As stated in the proposed 

rule and above, we designate new 

procedure codes as temporarily officebased in situations where we have little 

to no utilization data on these 

procedures and our Medical Officers 

have determined these procedures are 

clinically similar to other procedures 

that are permanently office-based. For 

CPT code 10022, we have enough 

volume and utilization data from CY 

2013 to indicate that CPT code 10022 is 

performed more than 50 percent of the 

time in physicians’ offices and our 

medical advisors believe this service is 

of a level of complexity consistent with 

other procedures performed routinely in 

physicians’ offices. Therefore, we 

believe that this code should be 

designated as permanently office-based. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to designate the 

procedures described by CPT codes 

10022 and 19296 as permanently officebased for CY 2015, as set forth in Table 

46 below. 

TABLE 46—ASC COVERED SURGICAL PROCEDURES NEWLY DESIGNATED AS PERMANENTLY OFFICE-BASED FOR CY 2015 

CY 2015 CPT 

code CY 2015 long descriptor 

CY 2014 ASC 

payment 

indicator 

Proposed CY 

2015 ASC 

payment 

indicator* 

Final CY 2015 

ASC payment 

indicator* 

10022 ............ Fine needle aspiration; with imaging guidance ................................................ G2 P3 P3 


tkelley on DSK3SPTVN1PROD with RULES2
66922 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

TABLE 46—ASC COVERED SURGICAL PROCEDURES NEWLY DESIGNATED AS PERMANENTLY OFFICE-BASED FOR CY 

2015—Continued 

CY 2015 CPT 

code CY 2015 Long descriptor 

CY 2014 ASC 

payment 

indicator 

Proposed CY 

2015 ASC 

payment 

indicator* 

Final CY 2015 

ASC payment 

indicator* 

19296 ............ Placement of radiotherapy afterloading expandable catheter (single or multichannel) into the breast for interstitial radioelement application following 

partial mastectomy, includes imaging guidance; on date separate from 

partial mastectomy.

G2 P2 P2 

* Final payment indicators are based on a comparison of the final rates according to the ASC standard ratesetting methodology and the MPFS 

final rates effective January 1, 2015. We note that these payment indicators do not include the effect of the negative update to the MPFS payment rates effective April 1, 2015 under current law. Updates to the ASC rates and payment indicators effective April l, 2015 will be included in 

the April 2015 quarterly ASC addenda posted on the CMS Web site. For a discussion of the MPFS rates, we refer readers to the CY 2015 

MPFS final rule with comment period. 

We also reviewed CY 2013 volume 

and utilization data and other 

information for the 8 procedures 

finalized for temporary office-based 

status in Tables 52 and 53 in the CY 

2014 OPPS/ASC final rule with 

comment period (78 FR 75074 through 

75075). Among these eight procedures, 

there were very few claims data or no 

claims data for six procedures: CPT 

code 0099T (Implantation of 

intrastromal corneal ring segments); 

CPT code 0299T (Extracorporeal shock 

wave for integumentary wound healing, 

high energy, including topical 

application and dressing care; initial 

wound); CPT code C9800 (Dermal 

injection procedure(s) for facial 

lipodystrophy syndrome (LDS) and 

provision of Radiesse or Sculptra 

dermal filler, including all items and 

supplies); CPT code 10030 (Imageguided fluid collection drainage by 

catheter (eg, abscess, hematoma, seroma, 

lymphocele, cyst), soft tissue (eg, 

extremity, abdominal wall, neck), 

percutaneous); CPT code 64617 

(Chemodenervation of muscle(s); larynx, 

unilateral, percutaneous (eg, for 

spasmodic dysphonia), includes 

guidance by needle electromyography, 

when performed); and CPT code 67229 

(Treatment of extensive or progressive 

retinopathy, one or more sessions; 

preterm infant (less than 37 weeks 

gestation at birth), performed from birth 

up to 1 year of age (eg, retinopathy of 

prematurity), photocoagulation or 

cryotherapy). Consequently, we 

proposed to maintain their temporary 

office-based designations for CY 2015. 

We proposed that one procedure that 

has a temporary office-based 

designation for CY 2014, CPT code 

0226T (Anoscopy, high resolution 

(HRA) (with magnification and chemical 

agent enhancement); diagnostic, 

including collection of specimen(s) by 

brushing or washing when performed), 

be packaged under the OPPS for CY 

2015. Our policy is to package covered 

surgical procedures under the ASC 

payment system if these procedures are 

packaged under the OPPS. 

Consequently, we proposed to package, 

and assign payment indicator ‘‘N1’’ to, 

this covered surgical procedure code in 

CY 2015. 

HCPCS code 0124T (Conjunctival 

incision with posterior extrascleral 

placement of pharmacological agent 

(does not include supply of 

medication)) was finalized for 

temporary office-based status in the CY 

2014 OPPS/ASC final rule with 

comment period. However, this code 

was deleted effective December 31, 

2013. 

The proposed CY 2015 payment 

indicator designations for the 7 

remaining procedures that were 

temporarily designated as office-based 

in CY 2014 were displayed in Table 50 

of the CY 2015 OPPS/ASC proposed 

rule (79 FR 41019). The procedures for 

which the proposed office-based 

designations for CY 2015 are temporary 

also were indicated by asterisks in 

Addendum AA to the proposed rule 

(which is available via the Internet on 

the CMS Web site). 

We invited public comment on these 

proposals. 

Comment: One commenter stated that 

because CPT code 10030 is new for CY 

2014, it should not be designated as 

temporarily office-based at this time. 

Response: As stated in the 2014 

OPPS/ASC final rule with comment 

period (78 FR 75074 through 75075), 

after reviewing the clinical 

characteristics, utilization, and volume 

of related codes, we determined that the 

procedures described by CPT code 

10030 would be predominantly 

performed in physicians’ offices. 

However, because we had no utilization 

data for CPT code 10030, we made the 

office-based designation temporary 

rather than permanent for CY 2014. As 

discussed above, we continue to have 

no claims data for this procedure so we 

are continuing to designate the 

procedures described by CPT code 

10030 as temporarily office-based. We 

will reevaluate CPT code 10030 in next 

year’s rulemaking. 

After consideration of the public 

comment we received, for CY 2015 we 

are finalizing our proposal without 

modification to designate six procedures 

listed in Table 47 below as temporarily 

office-based. HCPCS code 0226T 

(Anoscopy, high resolution (HRA) (with 

magnification and chemical agent 

enhancement); diagnostic, including 

collection of specimen(s) by brushing or 

washing when performed) was included 

in our proposal for CY 2015. However, 

this code will be deleted effective 

December 31, 2014. 

TABLE 47—CY 2015 PAYMENT INDICATORS FOR ASC COVERED SURGICAL PROCEDURES DESIGNATED AS TEMPORARILY

OFFICE-BASED IN THE CY 2014 OPPS/ASC FINAL RULE WITH COMMENT PERIOD

CY 2015 CPT 

code CY 2015 long descriptor 

CY 2014 ASC 

payment 

indicator 

CY 2015 ASC 

payment 

indicator ** 

0099T ............... Implantation of intrastromal corneal ring segments ................................................................. R2* R2* 

0226T ............... Anoscopy, high resolution (HRA) (with magnification and chemical agent enhancement); diagnostic, including collection of specimen(s) by brushing or washing when performed.R2* D5 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66923 

TABLE 47—CY 2015 PAYMENT INDICATORS FOR ASC COVERED SURGICAL PROCEDURES DESIGNATED AS TEMPORARILY

OFFICE-BASED IN THE CY 2014 OPPS/ASC FINAL RULE WITH COMMENT PERIOD—Continued 

CY 2015 CPT 

code CY 2015 long descriptor 

CY 2014 ASC 

payment 

indicator 

CY 2015 ASC 

payment 

indicator ** 

0299T ............... Extracorporeal shock wave for integumentary wound healing, high energy, including topical 

application and dressing care; initial wound.

R2* R2* 

C9800 ............... Dermal injection procedure(s) for facial lipodystrophy syndrome (LDS) and provision of 

Radiesse or Sculptra dermal filler, including all items and supplies.

R2* R2* 

10030 ................ Image-guided fluid collection drainage by catheter (eg, abscess, hematoma, seroma, 

lymphocele, cyst), soft tissue (eg, extremity abdominal wall, neck), percutaneous.

P2* P2* 

64617 ................ Chemodenervation of muscle(s); larynx, unilateral, percutaneous (eg, for spasmodic 

dysphonia), includes guidance by needle electromyography, when performed.

P3* P3* 

67229 ................ Treatment of extensive or progressive retinopathy, one or more sessions; preterm infant 

(less than 37 weeks gestation at birth), performed from birth up to 1 year of age (eg, retinopathy of prematurity), photocoagulation or cryotherapy.

R2* R2* 

* If designation is temporary. 

** Final payment indicators are based on a comparison of the final rates according to the ASC standard ratesetting methodology and the MPFS 

final rates effective January 1, 2015. We note that these payment indicators do not include the effect of the negative update to the MPFS payment rates effective April 1, 2015 under current law. Updates to the ASC rates and payment indicators effective April 1, 2015 will be included in 

the April 2015 quarterly ASC addenda posted on the CMS Web site. For a discussion of the MPFS rates, we refer readers to the CY 2015 

MPFS final rule with comment period. 

c. ASC Covered Surgical Procedures To 

Be Designated as Device-Intensive 

(1) Background 

As discussed in the August 2, 2007 

final rule (72 FR 42503 through 42508), 

we adopted a modified payment 

methodology for calculating the ASC 

payment rates for covered surgical 

procedures that are assigned to the 

subset of OPPS device-dependent APCs 

with a device offset percentage greater 

than 50 percent of the APC cost under 

the OPPS, in order to ensure that 

payment for the procedure is adequate 

to provide packaged payment for the 

high-cost implantable devices used in 

those procedures. 

(2) Changes to List of ASC Covered 

Surgical Procedures Designated as 

Device-Intensive for CY 2015 

As we discuss in section II.A.2.e of 

the CY 2015 OPPS/ASC proposed rule 

(79 FR 40940 through 40953), for CY 

2015, we proposed to implement 28 

comprehensive APCs created to replace 

the current device-dependent APCs and 

a few nondevice-dependent APCs under 

the OPPS, which would eliminate all 

device-dependent APCs for CY 2015. 

We proposed to define a comprehensive 

APC as a classification for the provision 

of a primary service and all adjunctive 

services provided to support the 

delivery of the primary service. Because 

a comprehensive APC would treat all 

individually reported codes as 

representing components of the 

comprehensive service, our OPPS 

proposal is to make a single prospective 

payment based on the cost of all 

individually reported codes that 

represent the provision of a primary 

service and all adjunctive services 

provided to support the delivery of the 

primary service. 

Unlike the OPPS claims processing 

system that can be configured to make 

a single payment for the encounterbased comprehensive service whenever 

a HCPCS code that is assigned to a 

comprehensive APC appears on the 

claim, the ASC claims processing 

system does not allow for this type of 

conditional packaging. Therefore, we 

proposed that all separately paid 

covered ancillary services that are 

provided integral to covered surgical 

procedures that would map to 

comprehensive APCs would continue to 

be separately paid under the ASC 

payment system instead of being 

packaged into the payment for the 

comprehensive APC as under the OPPS. 

The OPPS relative payment weights for 

the comprehensive APCs would include 

costs for ancillary services; therefore, we 

could duplicate payment if we based the 

ASC payment rate on the OPPS relative 

payment weights for the comprehensive 

APCs. Therefore, to avoid this issue, we 

proposed that the ASC payment rates for 

these comprehensive APCs would be 

based on the CY 2015 OPPS relative 

payments weights that have been 

calculated using the standard APC 

ratesetting methodology for the primary 

service instead of the relative payment 

weights that are based on the 

comprehensive bundled service. For the 

same reason, under the ASC payment 

system, we also proposed to use the 

standard OPPS APC ratesetting 

methodology instead of the 

comprehensive methodology to 

calculate the device offset percentage for 

comprehensive APCs for purposes of 

identifying device-intensive procedures 

and to calculate payment rates for 

device-intensive procedures assigned to 

comprehensive APCs. 

Payment rates for ASC deviceintensive procedures are based on a 

modified payment methodology to 

ensure that payment for the procedure 

is adequate to provide packaged 

payment for the high-cost implantable 

devices used in those procedures. 

Device-intensive procedures are 

currently defined as those procedures 

that are assigned to device-dependent 

APCs with a device offset percentage 

greater than 50 percent of the APC cost 

under the OPPS. Because we proposed 

to implement the comprehensive APC 

policy and, therefore, eliminate devicedependent APCs under the OPPS in CY 

2015, we need to define ASC deviceintensive procedures for CY 2015. We 

proposed to define ASC deviceintensive procedures as those 

procedures that are assigned to any APC 

(not only an APC formerly designated 

device-dependent) with a device offset 

percentage greater than 40 percent based 

on the standard OPPS APC ratesetting 

methodology. We believe that our 

proposal to lower the offset threshold 

from greater than 50 percent to greater 

than 40 percent better aligns with the 

OPPS device credit policy finalized for 

CY 2014 (78 FR 75006 and 75007) that 

applies to procedures with a significant 

device offset amount, which is defined 

as exceeding 40 percent of the APC cost. 

Because the ASC device-intensive 

methodology is applied to procedures 

with significant device costs, we believe 

that the definition of ‘‘significant’’ with 

regard to device-intensive procedures 

should match that used under the OPPS 

to determine ‘‘significant’’ device costs 

for the device credit policy. We 


tkelley on DSK3SPTVN1PROD with RULES2
66924 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

proposed changes to § 416.171(b)(2) to 

reflect this proposal. 

We also proposed to update the ASC 

list of covered surgical procedures that 

are eligible for payment according to our 

device-intensive procedure payment 

methodology, consistent with our 

proposed modified definition of deviceintensive procedures, reflecting the 

proposed APC assignments of 

procedures and APC device offset 

percentages based on the CY 2013 OPPS 

claims and cost report data available for 

the final rule with comment period. 

The ASC covered surgical procedures 

that we proposed to designate as deviceintensive and that would be subject to 

the device-intensive procedure payment 

methodology for CY 2015 were listed in 

Table 51 of the proposed rule (79 FR 

41021 through 41023). The CPT code, 

the CPT code short descriptor, the 

proposed CY 2015 ASC payment 

indicator (PI), the proposed CY 2015 

OPPS APC assignment, the proposed CY 

2015 OPPS APC device offset 

percentage, and an indication if the full 

credit/partial credit (FB/FC) device 

adjustment policy would apply also 

were listed in Table 51. All of these 

procedures were included in 

Addendum AA to the proposed rule 

(which is available via the Internet on 

the CMS Web site). 

We invited public comment on these 

proposals. 

Comment: Some commenters 

supported the proposal to change the 

device offset threshold from 50 percent 

to 40 percent, citing that the proposal 

allowed for greater flexibility in 

allowing clinical considerations to 

determine site-of-care decisions and 

would likely lead to a migration of 

services from HOPDs to ASCs. However, 

some commenters urged CMS to 

monitor volume and to explore the 

implications of the expansion of this 

policy. Other commenters requested 

that CMS adopt additional changes to 

the device-intensive policy to encourage 

migration of services to ASCs from other 

settings. Some commenters 

recommended that the device offset 

percentage be lowered to 30 percent. 

Some commenters expressed the same 

views as CMS received in prior 

rulemaking—that the ASC device offset 

percentages should be based on a 

percentage of the total unadjusted ASC 

cost for a service rather than a 

percentage of the HOPD, or that the 

device offset be applied to all 

procedures for which CMS can establish 

a device cost regardless of the 

percentage of the total cost that the 

device represents. These commenters 

suggested that these alternatives would 

result in savings to the Medicare 

program. Some commenters also 

expressed the same views as CMS 

received in prior rulemakings—that 

CMS should not adjust the device 

portion of the ASC payment for deviceintensive procedures by the wage index. 

Response: In the August 2, 2007 final 

rule (72 FR 42503 through 42508), we 

established a modified payment 

methodology for calculating ASC 

payment rates for device-intensive 

procedures under the ASC payment 

system. We defined device-intensive 

procedures as those procedures that are 

assigned to device-dependent APCs 

under the OPPS with device costs of 

greater than 50 percent of the APC cost 

under the OPPS (that is, the device 

offset percentage is greater than 50 

percent). In the CY 2015 OPPS/ASC 

proposed rule (79 FR 41020), we 

proposed to define ASC deviceintensive procedures as those 

procedures that are assigned to any APC 

with a device offset percentage greater 

than 40 percent based on the standard 

OPPS APC ratesetting methodology. In 

that proposed rule, we stated that we 

believe that lowering the offset 

threshold from greater than 50 percent 

to greater than 40 percent better aligns 

with the OPPS device credit policy 

finalized for CY 2014 (78 FR 75006 

through 75007) that applies to 

procedures with a significant device 

offset amount, which is defined as 

exceeding 40 percent of the APC cost. 

Because the ASC device-intensive 

methodology is applied to procedures 

with significant device costs, we believe 

that the definition of ‘‘significant’’ with 

regard to device-intensive procedures 

should match that used under the OPPS 

to determine ‘‘significant’’ device costs 

for the device credit policy. We do not 

believe that it should be lowered to 30 

percent, because the intent of the policy 

change is to align significant device cost 

percentage in the OPPS with the deviceintensive procedures in the ASC 

payment system. 

We do not agree with the commenters 

that the device-intensive methodology 

should be applied to all procedures 

where a device offset could be 

established. Nor do we agree with the 

commenters who suggested using a 

threshold to determine device-intensive 

procedures that is based on the ASC 

payment rate instead of the OPPS 

payment rate. Under 42 CFR 416.167 

and 416.171, most ASC payment rates 

are based on the OPPS relative payment 

weights, and our ASC policy is to be 

consistent with the OPPS. ‘‘Device 

intensive’’ identifies those procedures 

assigned to APCs with significant device 

costs and applies to services that are 

performed both in the HOPD and ASC. 

Procedures are not device intensive in 

one setting and not in another—they 

either have significant associated device 

costs or they do not, based on the 

purpose of the surgical procedure. 

Accordingly, we believe that the deviceintensive methodology for ASCs should 

align with the device-intensive policies 

for OPPS. 

We also continue to believe it would 

not be appropriate to vary the portion of 

the national payment that is wageadjusted for different services, such as 

applying the wage index only to the 

service portion of the ASC payment for 

device-intensive procedures, as the 

commenters requested. As indicated 

above, our ASC policy is to be 

consistent with the OPPS because ASC 

payment rates are based on the OPPS 

relative payment weights. Therefore, we 

apply the ASC geographic wage 

adjustment to the entire ASC payment 

rate for device-intensive procedures. We 

also refer readers to our responses to 

similar comments in the CY 2009, CY 

2010, CY 2011, CY 2012, CY 2013, and 

CY 2014 OPPS/ASC final rules with 

comment period (73 FR 68735; 74 FR 

60608 through 60609; 75 FR 72039; 76 

FR 74409; 77 FR 68449; and 78 FR 

75076, respectively). We respond to the 

commenters’ request to monitor volume 

and to explore the implications of this 

policy in the next response. 

Comment: Some commenters 

supported the lowering of the device 

offset percentage to 40 percent, but 

stated that this policy, if finalized, 

would make device-intensive 

procedures more attractive to ASCs. 

Commenters suggested that CMS 

monitor its data to determine whether 

the policy results in significant 

increases in volume of these services 

and that CMS explore the implications 

of further expanding the list of deviceintensive procedures. 

Response: We will continue to 

monitor our data to ensure that our 

payment policies do not have the 

unintended consequence of 

inappropriately encouraging shifts in 

site of service. 

Comment: One commenter expressed 

appreciation that CMS designated 

HCPCS code 0334T (Sacroiliac joint 

stabilization for arthrodesis, 

percutaneous or minimally invasive 

(indirect visualization), includes 

obtaining and applying autograft or 

allograft (structural or morselized), 

when performed, includes image 

guidance when performed (eg, CT or 

fluoroscopic)) as device-intensive, but 

expressed concern that the device offset 

percentage was too low, thereby 

resulting in an undervalued ASC 

payment. The commenter stated that 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66925 

Medicare patients otherwise eligible for 

this treatment in the ASC would be 

denied access due to the low ASC 

payment. The commenter suggested that 

CMS consider HCPCS-specific device 

offsets rather than at the APC level. 

Alternatively, the commenter suggested 

that CMS add ‘‘device offset similarity’’ 

(that is, identifying and grouping 

procedure codes based on the similarity 

of their respective device offsets) as an 

additional criterion (in addition to 

clinical and cost similarity) in APC 

assignment. Another commenter stated 

that ASC payment for transprostatic 

implant procedures (as described by 

HCPCS codes C9739 and C9740) was too 

low because these procedures were not 

designated as device-intensive in the 

ASC setting, and it is unlikely that any 

transprostatic implant procedures 

would be conducted in the ASC setting 

for a Medicare patient. 

Response: In the August 2, 2007 ASC 

final rule (72 FR 42504), we finalized 

our policy to apply the OPPS device 

offset percentage to the OPPS national 

unadjusted payment to acquire the 

device cost included in the OPPS 

payment rate for a device-intensive ASC 

covered surgical procedure, which we 

then set as equal to the device portion 

of the national unadjusted ASC payment 

rate for the procedure. The device offset 

percentage represents a weighted 

average for all of the procedures 

assigned to the APC. It is not 

uncommon that, within an APC, there 

will be a range of device costs 

associated with the various procedures 

assigned to the APC. The device offset 

for the APC represents a weighted 

average for all of the procedures 

assigned to the APC, and the device 

offset percentage is our best estimate of 

the amount of device cost included in 

an APC payment under the OPPS. 

We did not propose calculating offsets 

at the HCPCS level or introducing a new 

criterion for APC code assignments. 

These would be significant changes to 

our longstanding policy of calculating 

offsets at the APC level, discussed 

above, and we believe our current 

policy allows for appropriate payment. 

Moreover, under 42 CFR 416.167 and 

416.171, ASC covered surgical 

procedures are classified using OPPS 

APC groups described in 42 CFR 419.31. 

Under our policy, we cannot assign a 

CPT code to a different APC for the ASC 

setting. 

We believe that APC 0425 is an 

appropriate APC assignment for CPT 

code 0334T based on clinical and 

resource similarity to other procedures 

assigned to APC 0425 and have 

calculated the device offset for this 

procedure according to our longstanding 

policy discussed above. We believe that 

payment for this code is appropriate. 

With respect to the comment about 

ASC payment for transprostatic implant 

procedures being too low because the 

procedures do not currently qualify for 

a device-intensive offset adjustment, as 

addressed in section III.C.3.e. of this 

final rule with comment period, for CY 

2015, we are maintaining our APC 

assignments for HCPCS codes C9739 

and C9740 to APCs 0162 and 1564, 

respectively. As discussed in section 

III.C.3.e. of this final rule with comment 

period, the APC assignments for HCPCS 

codes C9739 and C9740 are initial APC 

assignments until we obtain claims data 

for these two codes for the CY 2016 

OPPS update. We will reevaluate 

whether these codes qualify for a 

device-intensive adjustment based on 

their APC assignments for CY 2016 in 

next year’s rulemaking cycle. 

As indicated in section II.A.2.e. of this 

final rule with comment period, after 

consideration of the public comments 

we received regarding the proposed 

OPPS comprehensive APC policy, we 

are finalizing our proposal to implement 

the comprehensive APC policy for CY 

2015, with some minor modifications. 

With respect to modifications to the 

comprehensive APC policy that affect 

the ASC payment policy, we note that 

the finalized comprehensive APC policy 

includes all device-dependent APCs, 

except for APCs 0427, 0622, and 0652, 

which will become standard APCs 

because we are discontinuing the 

device-dependent APC policy. This 

modification does not affect any of our 

proposals with respect to the finalized 

comprehensive APCs or the definition 

of device-intensive. 

Given the final OPPS comprehensive 

APC policy and after consideration of 

the public comments we received, we 

are finalizing our proposal that all 

separately paid covered ancillary 

services that are provided integral to 

covered surgical procedures that would 

map to comprehensive APCs will 

continue to be separately paid under the 

ASC payment system instead of being 

packaged into the payment for the 

comprehensive APC as under the OPPS. 

Further, the ASC payment rates for 

these comprehensive APCs will be 

based on the CY 2015 OPPS relative 

payments weights that have been 

calculated using the standard APC 

ratesetting methodology for the primary 

service (instead of the relative payment 

weights that are based on the 

comprehensive bundled service) and 

use the standard OPPS APC ratesetting 

methodology instead of the 

comprehensive methodology to 

calculate the device offset percentage for 

comprehensive APCs for purposes of 

identifying device-intensive procedures 

and to calculate payment rates for 

device-intensive procedures assigned to 

comprehensive APCs. We also will 

define ASC device-intensive procedures 

as those procedures that are assigned to 

any APC with a device offset percentage 

greater than 40 percent based on the 

standard OPPS APC ratesetting 

methodology and codify this policy in 

the regulations at 42 CFR 416.171(b)(2). 

Finally, we will update the ASC list of 

covered surgical procedures that are 

eligible for payment according to our 

device-intensive procedure payment 

methodology, consistent with our final 

modified definition of device-intensive 

procedures, reflecting the final APC 

assignments of procedures and APC 

device offset percentages based on the 

CY 2013 OPPS claims and cost report 

data available for this final rule with 

comment period. 

We are designating the ASC covered 

surgical procedures displayed in Table 

48 below as device-intensive and 

subject to the device-intensive 

procedure payment methodology for CY 

2015. The CPT code, the CPT code short 

descriptor, the final CY 2015 ASC 

payment indicator (PI), the final CY 

2014 OPPS APC assignment, the final 

CY 2015 OPPS APC device offset 

percentage, and an indication if the full 

credit/partial credit (FB/FC) device 

adjustment policy will apply, also are 

listed in Table 48 below. All of these 

procedures are included in Addendum 

AA to this final rule with comment 

period (which is available via the 

Internet on the CMS Web site). 

d. Adjustment to ASC Payments for No 

Cost/Full Credit and Partial Credit 

Devices 

Our ASC policy with regard to 

payment for costly devices implanted in 

ASCs at no cost/full credit or partial 

credit as set forth in § 416.179 is 

consistent with the OPPS policy that 

was in effect until CY 2014. The 

established ASC policy reduces 

payment to ASCs when a specified 

device is furnished without cost or with 

full credit or partial credit for the cost 

of the device for those ASC covered 

surgical procedures that are assigned to 

APCs under the OPPS to which this 

policy applies. We refer readers to the 

CY 2009 OPPS/ASC final rule with 

comment period for a full discussion of 

the ASC payment adjustment policy for 

no cost/full credit and partial credit 

devices (73 FR 68742 through 68744). 

As discussed in section IV.B. of the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75005 through 

75006), we finalized our proposal to 


tkelley on DSK3SPTVN1PROD with RULES2
66926 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

modify our former policy of reducing 

OPPS payment for specified APCs when 

a hospital furnishes a specified device 

without cost or with a full or partial 

credit. Formerly, under the OPPS, our 

policy was to reduce OPPS payment by 

100 percent of the device offset amount 

when a hospital furnishes a specified 

device without cost or with a full credit 

and by 50 percent of the device offset 

amount when the hospital receives 

partial credit in the amount of 50 

percent or more (but less than 100 

percent) of the cost for the specified 

device. For CY 2014, we finalized our 

proposal to reduce OPPS payment for 

applicable APCs by the full or partial 

credit a provider receives for a replaced 

device, capped at the device offset 

amount. 

Although we finalized our proposal to 

modify the policy of reducing payments 

when a hospital furnishes a specified 

device without cost or with full or 

partial credit under the OPPS, in that 

final rule with comment period (78 FR 

75076 through 75080), we finalized our 

proposal for CY 2014 to maintain our 

ASC policy for reducing payments to 

ASCs for specified device-intensive 

procedures when the ASC furnishes a 

device without cost or with full or 

partial credit. Unlike the OPPS, there is 

currently no mechanism within the ASC 

claims processing system for ASCs to 

submit to CMS the actual amount 

received when furnishing a specified 

device at full or partial credit. 

Therefore, under the ASC payment 

system, we finalized our proposal for 

CY 2014 to continue to reduce ASC 

payments by 100 percent or 50 percent 

of the device offset amount when an 

ASC furnishes a device without cost or 

with full or partial credit, respectively. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41021 through 41023), we 

proposed to update the list of ASC 

covered device-intensive procedures, 

based on the revised device-intensive 

definition proposed above, that would 

be subject to the no cost/full credit and 

partial credit device adjustment policy 

for CY 2015. Table 51 of the proposed 

rule (79 FR 41021 through 41023) 

displays the ASC covered deviceintensive procedures that we proposed 

would be subject to the no cost/full 

credit or partial credit device 

adjustment policy for CY 2015. 

Specifically, when a procedure that is 

listed in Table 51 is subject to the no 

cost/full credit or partial credit device 

adjustment policy and is performed to 

implant a device that is furnished at no 

cost or with full credit from the 

manufacturer, the ASC would append 

the HCPCS ‘‘FB’’ modifier on the line 

with the procedure to implant the 

device. The contractor would reduce 

payment to the ASC by the device offset 

amount that we estimate represents the 

cost of the device when the necessary 

device is furnished without cost to the 

ASC or with full credit. We continue to 

believe that the reduction of ASC 

payment in these circumstances is 

necessary to pay appropriately for the 

covered surgical procedure being 

furnished by the ASC. 

For partial credit, we proposed to 

reduce the payment for implantation 

procedures listed in Table 51 of the CY 

2015 OPPS/ASC proposed rule (79 FR 

41021 through 41023) that are subject to 

the no cost/full credit or partial credit 

device adjustment policy by one-half of 

the device offset amount that would be 

applied if a device was provided at no 

cost or with full credit, if the credit to 

the ASC is 50 percent or more (but less 

than 100 percent) of the cost of the new 

device. The ASC would append the 

HCPCS ‘‘FC’’ modifier to the HCPCS 

code for a surgical procedure listed in 

Table 51 that is subject to the no cost/ 

full credit or partial credit device 

adjustment policy, when the facility 

receives a partial credit of 50 percent or 

more (but less than 100 percent) of the 

cost of a device. In order to report that 

they received a partial credit of 50 

percent or more (but less than 100 

percent) of the cost of a new device, 

ASCs would have the option of either: 

(1) Submitting the claim for the device 

replacement procedure to their 

Medicare contractor after the 

procedure’s performance but prior to 

manufacturer acknowledgment of credit 

for the device, and subsequently 

contacting the contractor regarding a 

claim adjustment once the credit 

determination is made; or (2) holding 

the claim for the device implantation 

procedure until a determination is made 

by the manufacturer on the partial credit 

and submitting the claim with the ‘‘FC’’ 

modifier appended to the implantation 

procedure HCPCS code if the partial 

credit is 50 percent or more (but less 

than 100 percent) of the cost of the 

replacement device. Beneficiary 

coinsurance would continue to be based 

on the reduced payment amount. 

We currently apply the ‘‘FB/FC’’ 

modifier policy to device-intensive 

procedures that involve devices that 

would be amenable to removal and 

replacement in a device recall or 

warranty situation. We proposed to 

apply the ‘‘FB/FC’’ modifier policy to all 

device-intensive procedures beginning 

in CY 2015 because, in addition to 

receiving devices at no cost/full credit 

or partial credit due to a device recall 

or warranty situation, ASCs also may 

receive devices at no cost/full credit or 

partial credit due to being part of an 

investigational device trial. In order to 

ensure that our policy covers any 

situation involving a device-intensive 

procedure where an ASC may receive a 

device at no cost/full credit or partial 

credit, we proposed to apply our FB/FC 

policy to all device-intensive 

procedures. 

We invited public comment on these 

proposals. 

We did not receive any comments on 

this proposal. Therefore, we are 

finalizing our proposals without 

modification. Specifically, we will 

apply our FB/FC policy to all deviceintensive procedures beginning in CY 

2015. The device-intensive procedures 

for CY 2015 are listed in Table 48 

below. For CY 2015, we will reduce the 

payment for the procedures listed in 

Table 48 below by the full device offset 

amount if a device is furnished without 

cost or with full credit. ASCs must 

append the HCPCS modifier ‘‘FB’’ to the 

HCPCS code for a surgical procedure 

listed in Table 48 below when the 

device is furnished without cost or with 

full credit. In addition, for CY 2015, we 

will reduce the payment for the 

procedures listed in Table 48 below by 

one-half of the device offset amount if 

a device is provided with partial credit, 

if the credit to the ASC is 50 percent or 

more (but less than 100 percent) of the 

device cost. The ASC must append the 

HCPCS ‘‘FC’’ modifier to the HCPCS 

code for a surgical procedure listed in 

Table 48 below when the facility 

receives a partial credit of 50 percent or 

more (but less than 100 percent) of the 

cost of a device. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66927 

TABLE 48—ASC COVERED SURGICAL PROCEDURES DESIGNATED AS DEVICE-INTENSIVE FOR CY 2015, INCLUDING ASC 

COVERED SURGICAL PROCEDURES FOR WHICH THE NO COST/FULL CREDIT OR PARTIAL CREDIT DEVICE ADJUSTMENT POLICY WILL APPLY

HCPCS code Short descriptor Final CY 2015 

ASC PI 

Final CY 2015 

OPPS APC 

Final CY 2015 

device offset 

percentage 

Final FB/FC 

policy will 

apply 

19298 ................ Place breast rad tube/caths ................................................ J8 0648 0.4408 Yes. 

19325 ................ Enlarge breast with implant ................................................. J8 0648 0.4408 Yes. 

19342 ................ Delayed breast prosthesis ................................................... J8 0648 0.4408 Yes. 

19357 ................ Breast reconstruction .......................................................... J8 0648 0.4408 Yes. 

22551 ................ Neck spine fuse&remov bel c2 ........................................... J8 0425 0.5565 Yes. 

22554 ................ Neck spine fusion ................................................................ J8 0425 0.5565 Yes. 

22612 ................ Lumbar spine fusion ............................................................ J8 0425 0.5565 Yes. 

23515 ................ Treat clavicle fracture .......................................................... J8 0064 0.4319 Yes. 

23585 ................ Treat scapula fracture ......................................................... J8 0064 0.4319 Yes. 

23615 ................ Treat humerus fracture ........................................................ J8 0064 0.4319 Yes. 

23616 ................ Treat humerus fracture ........................................................ J8 0064 0.4319 Yes. 

23630 ................ Treat humerus fracture ........................................................ J8 0064 0.4319 Yes. 

23670 ................ Treat dislocation/fracture ..................................................... J8 0064 0.4319 Yes. 

24361 ................ Reconstruct elbow joint ....................................................... J8 0425 0.5565 Yes. 

24363 ................ Replace elbow joint ............................................................. J8 0425 0.5565 Yes. 

24365 ................ Reconstruct head of radius ................................................. J8 0425 0.5565 Yes. 

24366 ................ Reconstruct head of radius ................................................. J8 0425 0.5565 Yes. 

24370 ................ Revise reconst elbow joint .................................................. J8 0425 0.5565 Yes. 

24371 ................ Revise reconst elbow joint .................................................. J8 0425 0.5565 Yes. 

24435 ................ Repair humerus with graft ................................................... J8 0425 0.5565 Yes. 

24498 ................ Reinforce humerus .............................................................. J8 0425 0.5565 Yes. 

24515 ................ Treat humerus fracture ........................................................ J8 0064 0.4319 Yes. 

24516 ................ Treat humerus fracture ........................................................ J8 0064 0.4319 Yes. 

24545 ................ Treat humerus fracture ........................................................ J8 0064 0.4319 Yes. 

24546 ................ Treat humerus fracture ........................................................ J8 0064 0.4319 Yes. 

24575 ................ Treat humerus fracture ........................................................ J8 0064 0.4319 Yes. 

24579 ................ Treat humerus fracture ........................................................ J8 0064 0.4319 Yes. 

24586 ................ Treat elbow fracture ............................................................ J8 0064 0.4319 Yes. 

24587 ................ Treat elbow fracture ............................................................ J8 0064 0.4319 Yes. 

24615 ................ Treat elbow dislocation ....................................................... J8 0064 0.4319 Yes. 

24635 ................ Treat elbow fracture ............................................................ J8 0064 0.4319 Yes. 

24666 ................ Treat radius fracture ............................................................ J8 0064 0.4319 Yes. 

25441 ................ Reconstruct wrist joint ......................................................... J8 0425 0.5565 Yes. 

25442 ................ Reconstruct wrist joint ......................................................... J8 0425 0.5565 Yes. 

25444 ................ Reconstruct wrist joint ......................................................... J8 0425 0.5565 Yes. 

25446 ................ Wrist replacement ............................................................... J8 0425 0.5565 Yes. 

25574 ................ Treat fracture radius & ulna ................................................ J8 0064 0.4319 Yes. 

25575 ................ Treat fracture radius/ulna .................................................... J8 0064 0.4319 Yes. 

25607 ................ Treat fx rad extra-articul ...................................................... J8 0064 0.4319 Yes. 

25608 ................ Treat fx rad intra-articul ....................................................... J8 0064 0.4319 Yes. 

25609 ................ Treat fx radial 3+ frag ......................................................... J8 0064 0.4319 Yes. 

26686 ................ Treat hand dislocation ......................................................... J8 0064 0.4319 Yes. 

27279 ................ Arthrodesis sacroiliac joint .................................................. J8 0425 0.5565 Yes. 

27415 ................ Osteochondral knee allograft .............................................. J8 0425 0.5565 Yes. 

27428 ................ Reconstruction knee ............................................................ J8 0425 0.5565 Yes. 

27438 ................ Revise kneecap with implant .............................................. J8 0425 0.5565 Yes. 

27440 ................ Revision of knee joint .......................................................... J8 0425 0.5565 Yes. 

27442 ................ Revision of knee joint .......................................................... J8 0425 0.5565 Yes. 

27443 ................ Revision of knee joint .......................................................... J8 0425 0.5565 Yes. 

27446 ................ Revision of knee joint .......................................................... J8 0425 0.5565 Yes. 

27745 ................ Reinforce tibia ..................................................................... J8 0425 0.5565 Yes. 

27759 ................ Treatment of tibia fracture ................................................... J8 0064 0.4319 Yes. 

27823 ................ Treatment of ankle fracture ................................................. J8 0064 0.4319 Yes. 

27827 ................ Treat lower leg fracture ....................................................... J8 0064 0.4319 Yes. 

27828 ................ Treat lower leg fracture ....................................................... J8 0064 0.4319 Yes. 

28415 ................ Treat heel fracture ............................................................... J8 0064 0.4319 Yes. 

28715 ................ Fusion of foot bones ........................................................... J8 0425 0.5565 Yes. 

33206 ................ Insert heart pm atrial ........................................................... J8 0089 0.6972 Yes. 

33207 ................ Insert heart pm ventricular .................................................. J8 0089 0.6972 Yes. 

33208 ................ Insrt heart pm atrial & vent ................................................. J8 0089 0.6972 Yes. 

33210 ................ Insert electrd/pm cath sngl .................................................. J8 0090 0.6858 Yes. 

33211 ................ Insert card electrodes dual .................................................. J8 0090 0.6858 Yes. 

33212 ................ Insert pulse gen sngl lead ................................................... J8 0090 0.6858 Yes. 

33213 ................ Insert pulse gen dual leads ................................................. J8 0089 0.6972 Yes. 

33214 ................ Upgrade of pacemaker system ........................................... J8 0089 0.6972 Yes. 

33216 ................ Insert 1 electrode pm-defib ................................................. J8 0090 0.6858 Yes. 

33217 ................ Insert 2 electrode pm-defib ................................................. J8 0090 0.6858 Yes. 

33221 ................ Insert pulse gen mult leads ................................................. J8 0655 0.7495 Yes. 


tkelley on DSK3SPTVN1PROD with RULES2
66928 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

TABLE 48—ASC COVERED SURGICAL PROCEDURES DESIGNATED AS DEVICE-INTENSIVE FOR CY 2015, INCLUDING ASC 

COVERED SURGICAL PROCEDURES FOR WHICH THE NO COST/FULL CREDIT OR PARTIAL CREDIT DEVICE ADJUSTMENT POLICY WILL APPLY—Continued 

HCPCS code Short descriptor Final CY 2015 

ASC PI 

Final CY 2015 

OPPS APC 

Final CY 2015 

device offset 

percentage 

Final FB/FC 

policy will 

apply 

33224 ................ Insert pacing lead & connect .............................................. J8 0089 0.6972 Yes. 

33227 ................ Remove&replace pm gen singl ........................................... J8 0090 0.6858 Yes. 

33228 ................ Remv&replc pm gen dual lead ............................................ J8 0089 0.6972 Yes. 

33229 ................ Remv&replc pm gen mult leads .......................................... J8 0655 0.7495 Yes. 

33230 ................ Insrt pulse gen w/dual leads ............................................... J8 0107 0.7851 Yes. 

33231 ................ Insrt pulse gen w/mult leads ............................................... J8 0108 0.8114 Yes. 

33233 ................ Removal of pm generator ................................................... J8 0090 0.6858 Yes. 

33240 ................ Insrt pulse gen w/singl lead ................................................ J8 0107 0.7851 Yes. 

33249 ................ Nsert pace-defib w/lead ...................................................... J8 0108 0.8114 Yes. 

33262 ................ Remv&replc cvd gen sing lead ........................................... J8 0107 0.7851 Yes. 

33263 ................ Remv&replc cvd gen dual lead ........................................... J8 0107 0.7851 Yes. 

33264 ................ Remv&replc cvd gen mult lead ........................................... J8 0108 0.8114 Yes. 

33270 ................ Ins/rep subq defibrillator ...................................................... J8 0108 0.8114 Yes. 

33271 ................ Insj subq impltbl dfb elctrd .................................................. J8 0090 0.6858 Yes. 

33282 ................ Implant pat-active ht record ................................................ J8 0090 0.6858 Yes. 

37221 ................ Iliac revasc w/stent .............................................................. J8 0229 0.5036 Yes. 

37225 ................ Fem/popl revas w/ather ...................................................... J8 0229 0.5036 Yes. 

37226 ................ Fem/popl revasc w/stent ..................................................... J8 0229 0.5036 Yes. 

37227 ................ Fem/popl revasc stnt & ather .............................................. J8 0319 0.5911 Yes. 

37228 ................ Tib/per revasc w/tla ............................................................. J8 0229 0.5036 Yes. 

37229 ................ Tib/per revasc w/ather ........................................................ J8 0319 0.5911 Yes. 

37230 ................ Tib/per revasc w/stent ......................................................... J8 0319 0.5911 Yes. 

37231 ................ Tib/per revasc stent & ather ................................................ J8 0319 0.5911 Yes. 

37236 ................ Open/perq place stent 1st ................................................... J8 0229 0.5036 Yes. 

37238 ................ Open/perq place stent same ............................................... J8 0229 0.5036 Yes. 

53440 ................ Male sling procedure ........................................................... J8 0385 0.5902 Yes. 

53444 ................ Insert tandem cuff ............................................................... J8 0385 0.5902 Yes. 

53445 ................ Insert uro/ves nck sphincter ................................................ J8 0386 0.6988 Yes. 

53447 ................ Remove/replace ur sphincter .............................................. J8 0386 0.6988 Yes. 

54400 ................ Insert semi-rigid prosthesis ................................................. J8 0385 0.5902 Yes. 

54401 ................ Insert self-contd prosthesis ................................................. J8 0386 0.6988 Yes. 

54405 ................ Insert multi-comp penis pros ............................................... J8 0386 0.6988 Yes. 

54410 ................ Remove/replace penis prosth ............................................. J8 0386 0.6988 Yes. 

54416 ................ Remv/repl penis contain pros ............................................. J8 0386 0.6988 Yes. 

55873 ................ Cryoablate prostate ............................................................. J8 0385 0.5902 Yes. 

61885 ................ Insrt/redo neurostim 1 array ................................................ J8 0039 0.8616 Yes. 

61886 ................ Implant neurostim arrays ..................................................... J8 0318 0.8688 Yes. 

61888 ................ Revise/remove neuroreceiver ............................................. J8 0061 0.5625 Yes. 

62361 ................ Implant spine infusion pump ............................................... J8 0227 0.8062 Yes. 

62362 ................ Implant spine infusion pump ............................................... J8 0227 0.8062 Yes. 

63650 ................ Implant neuroelectrodes ...................................................... J8 0061 0.5625 Yes. 

63655 ................ Implant neuroelectrodes ...................................................... J8 0039 0.8616 Yes. 

63663 ................ Revise spine eltrd perq aray ............................................... J8 0061 0.5625 Yes. 

63664 ................ Revise spine eltrd plate ....................................................... J8 0061 0.5625 Yes. 

63685 ................ Insrt/redo spine n generator ................................................ J8 0318 0.8688 Yes. 

64553 ................ Implant neuroelectrodes ...................................................... J8 0061 0.5625 Yes. 

64555 ................ Implant neuroelectrodes ...................................................... J8 0061 0.5625 Yes. 

64561 ................ Implant neuroelectrodes ...................................................... J8 0061 0.5625 Yes. 

64565 ................ Implant neuroelectrodes ...................................................... J8 0061 0.5625 Yes. 

64568 ................ Inc for vagus n elect impl .................................................... J8 0318 0.8688 Yes. 

64569 ................ Revise/repl vagus n eltrd .................................................... J8 0061 0.5625 Yes. 

64575 ................ Implant neuroelectrodes ...................................................... J8 0061 0.5625 Yes. 

64580 ................ Implant neuroelectrodes ...................................................... J8 0039 0.8616 Yes. 

64581 ................ Implant neuroelectrodes ...................................................... J8 0061 0.5625 Yes. 

64590 ................ Insrt/redo pn/gastr stimul .................................................... J8 0039 0.8616 Yes. 

65770 ................ Revise cornea with implant ................................................. J8 0293 0.6611 Yes. 

69714 ................ Implant temple bone w/stimul ............................................. J8 0425 0.5565 Yes. 

69715 ................ Temple bne implnt w/stimulat ............................................. J8 0425 0.5565 Yes. 

69718 ................ Revise temple bone implant ................................................ J8 0425 0.5565 Yes. 

69930 ................ Implant cochlear device ...................................................... J8 0259 0.8283 Yes. 

0238T ............... Trluml perip athrc iliac art ................................................... J8 0319 0.5911 Yes. 

0282T ............... Periph field stimul trial ......................................................... J8 0061 0.5625 Yes. 

0283T ............... Periph field stimul perm ...................................................... J8 0318 0.8688 Yes. 

0302T ............... Icar ischm mntrng sys compl .............................................. J8 0089 0.6972 Yes. 

0303T ............... Icar ischm mntrng sys eltrd ................................................. J8 0090 0.6858 Yes. 

0304T ............... Icar ischm mntrng sys device ............................................. J8 0090 0.6858 Yes. 

0308T ............... Insj ocular telescope prosth ................................................ J8 0351 0.9066 Yes. 

0316T ............... Replc vagus nerve pls gen ................................................. J8 0039 0.8616 Yes. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66929 

TABLE 48—ASC COVERED SURGICAL PROCEDURES DESIGNATED AS DEVICE-INTENSIVE FOR CY 2015, INCLUDING ASC 

COVERED SURGICAL PROCEDURES FOR WHICH THE NO COST/FULL CREDIT OR PARTIAL CREDIT DEVICE ADJUSTMENT POLICY WILL APPLY—Continued 

HCPCS code Short descriptor Final CY 2015 

ASC PI 

Final CY 2015 

OPPS APC 

Final CY 2015 

device offset 

percentage 

Final FB/FC 

policy will 

apply 

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

e. ASC Treatment of Surgical 

Procedures Removed From the OPPS 

Inpatient List for CY 2015 

As we discussed in the CY 2009 

OPPS/ASC final rule with comment 

period (73 FR 68724), we adopted a 

policy to include in our annual 

evaluation of the ASC list of covered 

surgical procedures, a review of the 

procedures that are being proposed for 

removal from the OPPS inpatient list for 

possible inclusion on the ASC list of 

covered surgical procedures. In the CY 

2015 OPPS/ASC proposed rule (79 FR 

41023), we stated there are no 

procedures proposed for removal from 

the OPPS inpatient list for CY 2015, so 

we did not propose any procedures for 

possible inclusion on the ASC list of 

covered surgical procedures. 

Comment: Some commenters 

recommended that, if a surgical 

procedure was removed from the 

inpatient list, it be made eligible for 

payment in the ASC setting. 

Response: As discussed in the CY 

2009 OPPS/ASC final rule with 

comment period (73 FR 68724), we 

adopted a policy to include in our 

annual evaluation of the ASC list of 

covered surgical procedures a review of 

the procedures that are being proposed 

for removal from the OPPS inpatientonly list for possible inclusion on the 

ASC list of covered surgical procedures. 

We review these procedures and 

include them on the ASC list of covered 

surgical procedures only if the surgical 

procedure would not be expected to 

pose a significant risk to beneficiary 

safety when performed in an ASC, and 

would not be expected to require active 

medical monitoring and care of the 

beneficiary at midnight following the 

procedure. 

Although there were no procedures 

proposed for removal from the OPPS 

inpatient list for CY 2015, we are 

removing CPT code 63043 (Laminotomy 

(hemilaminectomy), with 

decompression of nerve root(s), 

including partial facetectomy, 

foraminotomy and/or excision of 

herniated intervertebral disc, 

reexploration, single interspace; each 

additional cervical interspace) and CPT 

code 63044 (Laminotomy 

(hemilaminectomy), with 

decompression of nerve root(s), 

including partial facetectomy, 

foraminotomy and/or excision of 

herniated intervertebral disc, 

reexploration, single interspace; each 

additional lumbar interspace) from the 

inpatient-only list in response to a 

public comment. We refer readers to 

section IX.B. of this final rule with 

comment period for our discussion of 

the CY 2015 inpatient-only list. As 

discussed previously, because these 

procedures were removed from the 

OPPS inpatient-only list, we review 

them to determine whether they should 

be included on the list of ASC covered 

surgical procedures. We believe that the 

procedure described by CPT code 63044 

would not be expected to pose a 

significant risk to beneficiary safety 

when performed in an ASC, and would 

not be expected to require active 

medical monitoring and care of the 

beneficiary at midnight following the 

procedure. Therefore, we are including 

the procedure described by CPT code 

63044 on the list of ASC covered 

surgical procedures and list the 

procedure code, descriptor, and 

payment indicator for this new covered 

surgical procedure in Table 45 of 

section XII.C.1.a. of this final rule with 

comment period. However, we do not 

believe that the procedure described by 

CPT code 63043 should be added to the 

ASC list because we believe that the 

beneficiary would generally require 

active medical monitoring and care at 

midnight following the procedure, so 

we are not adding it to the list of ASC 

covered surgical procedures. 

2. Covered Ancillary Services 

Consistent with the established ASC 

payment system policy, we proposed to 

update the ASC list of covered ancillary 

services to reflect the proposed payment 

status for the services under the CY 

2015 OPPS. Maintaining consistency 

with the OPPS may result in proposed 

changes to ASC payment indicators for 

some covered ancillary services because 

of changes that are being proposed 

under the OPPS for CY 2015. For 

example, a covered ancillary service 

that was separately paid under the 

revised ASC payment system in CY 

2014 may be proposed for packaged 

status under the CY 2015 OPPS and, 

therefore, also under the ASC payment 

system for CY 2015. 

To maintain consistency with the 

OPPS, we proposed that these services 

also would be packaged under the ASC 

payment system for CY 2015. Comment 

indicator ‘‘CH,’’ discussed in section 

XII.F. of the CY 2015 OPPS/ASC 

proposed rule (79 FR 41028), is used in 

Addendum BB to the proposed rule 

(which is available via the Internet on 

the CMS Web site) to indicate covered 

ancillary services for which we 

proposed a change in the ASC payment 

indicator to reflect a proposed change in 

the OPPS treatment of the service for CY 

2015. 

Except for the Level II HCPCS codes 

and Level III CPT codes listed in Table 

46 and Table 47 of the proposed rule (79 

FR 41016 through 41017), all ASC 

covered ancillary services and their 

proposed payment indicators for CY 

2015 were included in Addendum BB to 

the proposed rule (which is available 

via the Internet on the CMS Web site). 

We invited public comment on this 

proposal. 

Comment: Commenters were 

concerned that, because ASC payment 

rates are already substantially lower 

than HOPD rates, packaging these 

ancillary services codes would not 

provide adequate payment for all of the 

procedures being performed, and would 

result in cases shifting from the ASC to 

the more expensive HOPD setting. The 

commenters noted that this was 

particularly problematic because there 

are 244 ancillary and surgical codes that 

are separately payable as procedures in 

CY 2014 under the OPPS but are 

proposed to be packaged and no longer 

separately payable in CY 2015 under the 

OPPS. The commenters noted that 

Medicare currently pay ASCs 

approximately 55 percent of the hospital 

rate for the same service and expressed 

concern that packaging the payment for 

the secondary services will lower the 

ASC payment even further and 

discourage the movement of volume to 

ASCs. Commenters recommended that 

CMS work to ensure that any packaging 

policies are not structured to 


tkelley on DSK3SPTVN1PROD with RULES2
66930 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

disproportionately impact the already 

lower cost provider. 

Response: We discuss the OPPS 

ancillary services packaging policy for 

CY 2015 in section II.A.3.c.(1) of this 

final rule with comment period. Of the 

21 APCs proposed for conditional 

packaging under this policy, 17 of the 

21 contain services that are not ASC 

services. Therefore, for the most part, 

this packaging policy does not apply to 

the ASC. The four remaining APCs 

contain primarily minor imaging 

services, such as a chest X-ray. Most of 

these diagnostic tests are not typically 

performed in the ASC; instead, they are 

performed pre-operatively before the 

patient has surgery at the ASC. 

Therefore, we do not believe that ASCs 

will be adversely impacted by the OPPS 

ancillary services packaging policy in 

CY 2015. In addition, to the extent that 

any of the packaged covered ancillary 

services are performed with covered 

surgical procedures, the relative weights 

of the surgical procedures will reflect 

the additional cost of the packaged 

ancillary service. We typically consider 

the potential effect of OPPS payment 

policy changes, including new 

packaging policies, on ASC payments, 

and we will continue to do so in the 

future. 

After consideration of the public 

comments we received, we are 

finalizing, without modification, our 

proposal to update the ASC list of 

covered ancillary services to reflect the 

payment status for the services under 

the OPPS. All CY 2015 ASC covered 

ancillary services and their final 

payment indicators are included in 

Addendum BB to this final rule with 

comment period (which is available via 

the Internet on the CMS Web site). 

D. ASC Payment for Covered Surgical 

Procedures and Covered Ancillary 

Services 

1. ASC Payment for Covered Surgical 

Procedures 

a. Background 

Our ASC payment policies for 

covered surgical procedures under the 

revised ASC payment system are fully 

described in the CY 2008 OPPS/ASC 

final rule with comment period (72 FR 

66828 through 66831). Under our 

established policy for the revised ASC 

payment system, the ASC standard 

ratesetting methodology of multiplying 

the ASC relative payment weight for the 

procedure by the ASC conversion factor 

for that same year is used to calculate 

the national unadjusted payment rates 

for procedures with payment indicators 

‘‘G2’’ and ‘‘A2.’’ Payment indicator 

‘‘A2’’ was developed to identify 

procedures that were included on the 

list of ASC covered surgical procedures 

in CY 2007 and, therefore, were subject 

to transitional payment prior to CY 

2011. Although the 4-year transitional 

period has ended and payment indicator 

‘‘A2’’ is no longer required to identify 

surgical procedures subject to 

transitional payment, we retained 

payment indicator ‘‘A2’’ because it is 

used to identify procedures that are 

exempted from application of the officebased designation. 

The rate calculation established for 

device-intensive procedures (payment 

indicator ‘‘J8’’) is structured so that the 

packaged device payment amount is the 

same as under the OPPS, and only the 

service portion of the rate is subject to 

the ASC standard ratesetting 

methodology. In the CY 2014 OPPS/

ASC final rule with comment period (78 

FR 75064 through 75090), we updated 

the CY 2013 ASC payment rates for ASC 

covered surgical procedures with 

payment indicators of ‘‘A2,’’ ‘‘G2,’’ and 

‘‘J8’’ using CY 2012 data, consistent 

with the CY 2014 OPPS update. We also 

updated payment rates for deviceintensive procedures to incorporate the 

CY 2014 OPPS device offset 

percentages. 

Payment rates for office-based 

procedures (payment indicators ‘‘P2,’’ 

‘‘P3,’’ and ‘‘R2’’) are the lower of the 

MPFS nonfacility PE RVU-based 

amount (we refer readers to the CY 2015 

MPFS proposed rule) or the amount 

calculated using the ASC standard 

ratesetting methodology for the 

procedure. In the CY 2014 OPPS/ASC 

final rule with comment period, we 

updated the payment amounts for 

office-based procedures (payment 

indicators ‘‘P2,’’ ‘‘P3,’’ and ‘‘R2’’) using 

the most recent available MPFS and 

OPPS data. We compared the estimated 

CY 2014 rate for each of the office-based 

procedures, calculated according to the 

ASC standard ratesetting methodology, 

to the MPFS nonfacility PE RVU-based 

amount to determine which was lower 

and, therefore, would be the CY 2014 

payment rate for the procedure 

according to the final policy of the 

revised ASC payment system 

(§ 416.171(d)). 

b. Update to ASC Covered Surgical 

Procedure Payment Rates for CY 2015 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41024), we proposed to 

update ASC payment rates for CY 2015 

using the established rate calculation 

methodologies under § 416.171 and 

using our proposed modified definition 

of device-intensive procedures, as 

discussed above. Because the proposed 

OPPS relative payment weights were 

based on geometric mean costs for CY 

2015, the ASC system used geometric 

means to determine proposed relative 

payment weights under the ASC 

standard methodology. We proposed to 

continue to use the amount calculated 

under the ASC standard ratesetting 

methodology for procedures assigned 

payment indicators ‘‘A2’’ and ‘‘G2.’’ 

We proposed that payment rates for 

office-based procedures (payment 

indicators ‘‘P2,’’ ‘‘P3,’’ and ‘‘R2’’) and 

device-intensive procedures (payment 

indicator ‘‘J8’’) be calculated according 

to our established policies and, for 

device-intensive procedures, using our 

proposed modified definition of deviceintensive procedures, as discussed 

above. Therefore, we proposed to 

update the payment amount for the 

service portion of the device-intensive 

procedures using the ASC standard 

ratesetting methodology and the 

payment amount for the device portion 

based on the proposed CY 2015 OPPS 

device offset percentages that have been 

calculated using the standard OPPS 

APC ratesetting methodology. Payment 

for office-based procedures is at the 

lesser of the proposed CY 2015 MPFS 

nonfacility PE RVU-based amount or the 

proposed CY 2015 ASC payment 

amount calculated according to the ASC 

standard ratesetting methodology. 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75081), we 

finalized our proposal to calculate the 

CY 2014 payment rates for ASC covered 

surgical procedures according to our 

established methodologies, with the 

exception of device removal procedures. 

For CY 2014, we finalized a policy to 

conditionally package device removal 

codes under the OPPS. Under the OPPS, 

a conditionally packaged code (status 

indicators ‘‘Q1’’ and ‘‘Q2’’) describes a 

HCPCS code where the payment is 

packaged when it is provided with a 

significant procedure but is separately 

paid when the service appears on the 

claim without a significant procedure. 

Because ASC services always include a 

covered surgical procedure, HCPCS 

codes that are conditionally packaged 

under the OPPS are always packaged 

(payment indicator ‘‘N1’’) under the 

ASC payment system. Therefore, no 

Medicare payment would be made 

when a device removal procedure is 

performed in an ASC without another 

surgical procedure included on the 

claim; therefore, no Medicare payment 

would be made if a device was removed 

but not replaced. To address this 

concern, for the device removal 

procedures that are conditionally 

packaged in the OPPS (status indicator 

‘‘Q2’’), we assigned the current ASC 

payment indicators associated with 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66931 

these procedures and continued to 

provide separate payment in CY 2014. 

For CY 2015, we proposed to continue 

this policy for the device removal 

procedures for these same reasons. 

We invited public comment on these 

proposals. We did not receive any 

public comments on these proposals. 

Therefore, we are finalizing our 

proposed policies without modification 

to calculate the CY 2015 payment rates 

for ASC covered surgical procedures 

according to our established 

methodologies using the modified 

definition of device-intensive 

procedures. For those covered surgical 

procedures where the payment rate is 

the lower of the final rates under the 

ASC standard ratesetting methodology 

and the MPFS final rates, the final 

payment indicators and rates set forth in 

this rule are based on a comparison 

using the MPFS rates effective January 

1, 2015. These payment rates and 

indicators do not include the effect of 

the negative update to the MPFS 

payment rates effective April 1, 2015 

under current law. Updates to these 

rates and payment indicators effective 

April l, 2015 will be included in the 

April 2015 quarterly ASC addenda 

posted on the CMS Web site. For a 

discussion of the MPFS rates, we refer 

readers to the CY 2015 MPFS final rule 

with comment period. 

c. Waiver of Coinsurance and 

Deductible for Certain Preventive 

Services 

Section 1833(a)(1) and section 

1833(b)(1) of the Act waive the 

coinsurance and the Part B deductible 

for those preventive services under 

section 1861(ddd)(3)(A) of the Act as 

described in section 1861(ww)(2) of the 

Act (excluding electrocardiograms) that 

are recommended by the United States 

Preventive Services Task Force 

(USPSTF) with a grade of A or B for any 

indication or population and that are 

appropriate for the individual. Section 

1833(b) of the Act also waives the Part 

B deductible for colorectal cancer 

screening tests that become diagnostic. 

In the CY 2011 OPPS/ASC final rule 

with comment period, we finalized our 

policies with respect to these provisions 

and identified categories of services and 

the ASC covered surgical procedures 

and covered ancillary services that are 

preventive services that are 

recommended by the USPSTF with a 

grade of A or B for which the 

coinsurance and the deductible are 

waived. For a complete discussion of 

our policies and categories of services, 

we refer readers to the CY 2011 OPPS/ 

ASC final rule with comment period (75 

FR 72047 through 72049). We did not 

propose any changes to our policies or 

the categories of services for CY 2015. 

We identify the specific services with a 

double asterisk in Addenda AA and BB 

to this final rule with comment period 

(which are available via the Internet on 

the CMS Web site). 

d. Payment for Cardiac 

Resynchronization Therapy Services 

Cardiac resynchronization therapy 

(CRT) uses electronic devices to 

sequentially pace both sides of the heart 

to improve its output. CRT utilizes a 

pacing electrode implanted in 

combination with either a pacemaker or 

an implantable cardioverter defibrillator 

(ICD). CRT performed by the 

implantation of an ICD along with a 

pacing electrode is referred to as ‘‘CRT– 

D.’’ In the CY 2012 OPPS/ASC final rule 

with comment period, we finalized our 

proposal to establish the CY 2012 ASC 

payment rate for CRT–D services based 

on the OPPS payment rate applicable to 

APC 0108 when procedures described 

by CPT codes 33225 (Insertion of pacing 

electrode, cardiac venous system, for 

left ventricular pacing, at time of 

insertion of pacing cardioverterdefibrillator or pacemaker pulse 

generator (eg., for upgrade to dual 

chamber system) (list separately in 

addition to code for primary procedure)) 

and 33249 (Insertion or replacement of 

permanent pacing cardioverterdefibrillator system with transvenous 

lead(s), single or dual chamber) are 

performed on the same date of service 

in an ASC. ASCs use the corresponding 

HCPCS Level II G-code (G0448) for 

proper reporting when the procedures 

described by CPT codes 33225 and 

33249 are performed on the same date 

of service. When not performed on the 

same day as the service described by 

CPT code 33225, ASC payment for the 

service described by CPT code 33249 is 

based on APC 0108 using the deviceintensive methodology. When not 

performed on the same day as the 

service described by CPT code 33249, 

ASC payment for the service described 

by CPT code 33225 is based on APC 

0655 using the device-intensive 

methodology. For a complete discussion 

of our policy regarding payment for 

CRT–D services in ASCs, we refer 

readers to the CY 2012 OPPS/ASC final 

rule with comment period (76 FR 74427 

through 74428). 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41025), for CY 2015, we 

proposed that CPT code 33249, the 

primary code for CRT–D services, 

continue to be assigned to APC 0108, 

and that payment for CPT code 33225 be 

packaged under the OPPS. 

Consequently, we also proposed that 

CPT code 33249 would continue to be 

assigned to APC 0108 and payment for 

CPT code 33225 would be packaged into 

the payment for the primary covered 

surgical procedure (for example, CPT 

code 33249) under the ASC payment 

system for CY 2015. Because we 

proposed to package CPT code 33225 

packaged under the ASC payment 

system and, therefore, it would not 

receive separate payment, it would no 

longer be necessary that ASCs use the 

HCPCS Level II G-code (G0448) for 

proper reporting when the procedures 

described by CPT codes 33225 and 

33249 are performed on the same date 

of service. 

We invited public comment on these 

proposals. 

We did not receive any public 

comments on these proposals. Further, 

we are finalizing our proposals under 

the OPPS that CPT code 33249, the 

primary code for CRT–D services, 

continue to be assigned to APC 0108, 

and that payment for CPT code 33225 be 

packaged under the OPPS. Therefore, 

we are finalizing our proposals under 

the ASC payment system without 

modification. Specifically, CPT code 

33249, the primary code for CRT–D 

services, will continue to be assigned to 

APC 0108, and payment for CPT code 

33225 will be packaged into the 

payment for the primary covered 

surgical procedure (for example, CPT 

code 33249). 

e. Payment for Low Dose Rate (LDR) 

Prostate Brachytherapy Composite 

LDR prostate brachytherapy is a 

treatment for prostate cancer in which 

hollow needles or catheters are inserted 

into the prostate, followed by 

permanent implantation of radioactive 

sources into the prostate through the 

needles/catheters. At least two CPT 

codes are used to report the treatment 

service because there are separate codes 

that describe placement of the needles/ 

catheters and the application of the 

brachytherapy sources: CPT code 55875 

(Transperineal placement of needles or 

catheters into prostate for interstitial 

radioelement application, with or 

without cystoscopy); and CPT code 

77778 (Interstitial radiation source 

application; complex). Generally, the 

component services represented by both 

codes are provided in the same 

operative session on the same date of 

service to the Medicare beneficiary 

being treated with LDR brachytherapy 

for prostate cancer. 

In the CY 2013 OPPS/ASC final rule 

with comment period, we finalized our 

proposal to establish the CY 2013 ASC 

payment rate for LDR prostate 

brachytherapy services based on the 


tkelley on DSK3SPTVN1PROD with RULES2
66932 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

OPPS relative payment weight 

applicable to APC 8001 when CPT 

codes 55875 and 77778 are performed 

on the same date of service in an ASC. 

ASCs use the corresponding HCPCS 

Level II G-code (G0458) for proper 

reporting when the procedures 

described by CPT codes 55875 and 

77778 are performed on the same date 

of service, and therefore receive the 

appropriate LDR prostate brachytherapy 

composite payment. When not 

performed on the same day as the 

service described by CPT code 55875, 

the service described by CPT code 

77778 will be assigned to APC 0651. 

When not performed on the same day as 

the service described by CPT code 

77778, the service described by CPT 

code 55875 will be assigned to APC 

0162. For a complete discussion of our 

policy regarding payment for LDR 

prostate brachytherapy services in 

ASCs, we refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68457). In the CY 2015 

OPPS/ASC proposed rule (79 FR 41025), 

we did not propose any changes to our 

current policy regarding ASC payment 

for LDR prostate brachytherapy services 

for CY 2015. 

2. Payment for Covered Ancillary 

Services 

a. Background 

Our final payment policies under the 

revised ASC payment system for 

covered ancillary services vary 

according to the particular type of 

service and its payment policy under 

the OPPS. Our overall policy provides 

separate ASC payment for certain 

ancillary items and services integrally 

related to the provision of ASC covered 

surgical procedures that are paid 

separately under the OPPS and provides 

packaged ASC payment for other 

ancillary items and services that are 

packaged or conditionally packaged 

(status indicators ‘‘N,’’ ‘‘Q1,’’ and ‘‘Q2’’) 

under the OPPS. In the CY 2013 OPPS/ 

ASC rulemaking (77 FR 45169; 77 FR 

68457 through 68458), we further 

clarified our policy regarding the 

payment indicator assignment of codes 

that are conditionally packaged in the 

OPPS (status indicators ‘‘Q1’’ and 

‘‘Q2’’). Under the OPPS, a conditionally 

packaged code describes a HCPCS code 

where the payment is packaged when it 

is provided with a significant procedure 

but is separately paid when the service 

appears on the claim without a 

significant procedure. Because ASC 

services always include a surgical 

procedure, HCPCS codes that are 

conditionally packaged under the OPPS 

are always packaged (payment indictor 

‘‘N1’’) under the ASC payment system. 

Thus, our final policy generally aligns 

ASC payment bundles with those under 

the OPPS (72 FR 42495). In all cases, in 

order for those ancillary services also to 

be paid, ancillary items and services 

must be provided integral to the 

performance of ASC covered surgical 

procedures for which the ASC bills 

Medicare. 

Our ASC payment policies provide 

separate payment for drugs and 

biologicals that are separately paid 

under the OPPS at the OPPS rates. We 

generally pay for separately payable 

radiology services at the lower of the 

MPFS nonfacility PE RVU-based (or 

technical component) amount or the 

rate calculated according to the ASC 

standard ratesetting methodology (72 FR 

42497). However, as finalized in the CY 

2011 OPPS/ASC final rule with 

comment period (75 FR 72050), 

payment indicators for all nuclear 

medicine procedures (defined as CPT 

codes in the range of 78000 through 

78999) that are designated as radiology 

services that are paid separately when 

provided integral to a surgical 

procedure on the ASC list are set to 

‘‘Z2’’ so that payment is made based on 

the ASC standard ratesetting 

methodology rather than the MPFS 

nonfacility PE RVU amount, regardless 

of which is lower. This modification to 

the ASC payment methodology for 

ancillary services was finalized in 

response to a comment on the CY 2011 

OPPS/ASC proposed rule that suggested 

it is inappropriate to use the MPFSbased payment methodology for nuclear 

medicine procedures because the 

associated diagnostic 

radiopharmaceutical, although packaged 

under the ASC payment system, is 

separately paid under the MPFS (42 

CFR 416.171(d)(1)). We set the payment 

indicator to ‘‘Z2’’ for these nuclear 

medicine procedures in the ASC setting 

so that payment for these procedures 

would be based on the OPPS relative 

payment weight rather than the MPFS 

nonfacility PE RVU-based amount to 

ensure that the ASC will be 

compensated for the cost associated 

with the diagnostic 

radiopharmaceuticals. 

In addition, because the same issue 

exists for radiology procedures that use 

contrast agents (the contrast agent is 

packaged under the ASC payment 

system but is separately paid under the 

MPFS), we finalized in the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74429 through 74430) to 

set the payment indicator to ‘‘Z2’’ for 

radiology services that use contrast 

agents so that payment for these 

procedures will be based on the OPPS 

relative payment weight and, therefore, 

will include the cost for the contrast 

agent (42 CFR 416.171(d)(2)). 

ASC payment policy for 

brachytherapy sources mirrors the 

payment policy under the OPPS. ASCs 

are paid for brachytherapy sources 

provided integral to ASC covered 

surgical procedures at prospective rates 

adopted under the OPPS or, if OPPS 

rates are unavailable, at 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 the final 

policies for the revised ASC payment 

system (72 FR 42502 and 42508 through 

42509; 42 CFR 416.164(b)). Under the 

revised ASC payment system, we have 

designated corneal tissue acquisition 

and hepatitis B vaccines as contractorpriced. 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. 

Currently, the one device that is eligible 

for pass-through payment in the OPPS 

is described by HCPCS code C1841 

(Retinal prosthesis, includes all internal 

and external components). The payment 

amount for HCPCS code C1841 under 

the ASC payment system is contractorpriced. Under the revised ASC payment 

system (72 FR 42502), payment for the 

surgical procedure associated with the 

pass-through device is made according 

to our standard methodology for the 

ASC payment system, based on only the 

service (nondevice) portion of the 

procedure’s OPPS relative payment 

weight if the APC weight for the 

procedure includes other packaged 

device costs. (We note that the cost for 

the new pass-through device would not 

be included in the APC weight because 

historical claims are used to establish 

the OPPS relative weights). We also 

refer to this methodology as applying a 

‘‘device offset’’ to the ASC payment for 

the associated surgical procedure. This 

ensures that duplicate payment is not 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66933 

provided for any portion of an 

implanted device with OPPS passthrough payment status. There are no 

other device costs included in the APC 

for the surgical procedure associated 

with HCPCS code C1841. Therefore, 

payment for the associated surgical 

procedure is made according to the 

standard methodology and no device 

offset is applied. HCPCS code C1841 

was approved for pass-through payment 

effective October 1, 2013, and will 

continue to be eligible for pass-through 

payment in CY 2015. 

b. Payment for Covered Ancillary 

Services for CY 2015 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41026 through 41027), for 

CY 2015, we proposed to update the 

ASC payment rates and to make changes 

to ASC payment indicators as necessary 

to maintain consistency between the 

OPPS and ASC payment system 

regarding the packaged or separately 

payable status of services and the 

proposed CY 2015 OPPS and ASC 

payment rates. We also proposed to 

continue to set the CY 2015 ASC 

payment rates for brachytherapy sources 

and separately payable drugs and 

biologicals equal to the proposed OPPS 

payment rates for CY 2015. 

Consistent with established ASC 

payment policy (72 FR 42497), we 

proposed that the proposed CY 2015 

payment for separately payable covered 

radiology services be based on a 

comparison of the proposed CY 2015 

MPFS nonfacility PE RVU-based 

amounts (we refer readers to the CY 

2015 MPFS proposed rule) and the 

proposed CY 2015 ASC payment rates 

calculated according to the ASC 

standard ratesetting methodology and 

then set at the lower of the two amounts 

(except as discussed below for nuclear 

medicine procedures and radiology 

services that use contrast agents). We 

proposed that payment for a radiology 

service would be packaged into the 

payment for the ASC covered surgical 

procedure if the radiology service is 

packaged or conditionally packaged 

under the OPPS. The payment 

indicators in Addendum BB to the 

proposed rule indicate whether the 

proposed payment rates for radiology 

services are based on the MPFS 

nonfacility PE RVU-based amount or the 

ASC standard ratesetting methodology, 

or whether payment for a radiology 

service is packaged into the payment for 

the covered surgical procedure 

(payment indicator ‘‘N1’’). Radiology 

services that we proposed to pay based 

on the ASC standard ratesetting 

methodology are assigned payment 

indicator ‘‘Z2’’ (proposed revised 

definition, as discussed below: 

Radiology or diagnostic service paid 

separately when provided integral to a 

surgical procedure on ASC list; payment 

based on OPPS relative payment 

weight), and those for which the 

proposed payment is based on the 

MPFS nonfacility PE RVU-based 

amount be assigned payment indicator 

‘‘Z3’’ (proposed revised definition, as 

discussed below: Radiology or 

diagnostic service paid separately when 

provided integral to a surgical 

procedure on ASC list; payment based 

on MPFS nonfacility PE RVUs). 

As finalized in the CY 2011 OPPS/

ASC final rule with comment period (75 

FR 72050), payment indicators for all 

nuclear medicine procedures (defined 

as CPT codes in the range of 78000 

through 78999) that are designated as 

radiology services that are paid 

separately when provided integral to a 

surgical procedure on the ASC list are 

set to ‘‘Z2’’ so that payment for these 

procedures will be based on the OPPS 

relative payment weight (rather than the 

MPFS nonfacility PE RVU-based 

amount, regardless of which is lower) 

and, therefore, will include the cost for 

the diagnostic radiopharmaceutical. We 

proposed to continue this modification 

to the payment methodology in CY 2015 

and, therefore, set the payment indicator 

to ‘‘Z2’’ for nuclear medicine 

procedures. 

As finalized in the CY 2012 OPPS/

ASC final rule with comment period (76 

FR 74429 through 74430), payment 

indicators for radiology services that use 

contrast agents are set to ‘‘Z2’’ so that 

payment for these procedures will be 

based on the OPPS relative payment 

weight and, therefore, will include the 

cost for the contrast agent. We proposed 

to continue this modification to the 

payment methodology in CY 2015 and, 

therefore, proposed to assign the 

payment indicator ‘‘Z2’’ to radiology 

services that use contrast agents. 

Covered ancillary services are items 

and services that are integral to a 

covered surgical procedure performed 

in an ASC for which separate payment 

may be made under the ASC payment 

system (42 CFR 416.2). Covered 

ancillary services include, among other 

categories of items and services, certain 

radiology services, including diagnostic 

imaging services, for which separate 

payment is allowed under the OPPS 

when these services are necessary for 

the successful completion of a surgical 

procedure and are performed in the ASC 

immediately preceding, during, or 

immediately following the covered 

surgical procedure, as evidenced by the 

service being provided on the same day 

as a covered surgical procedure (42 CFR 

416.164(b)(5)). Currently, there are 

certain nonimaging diagnostic tests for 

which payment is not made under 

Medicare Part B when provided in an 

ASC setting although these tests are 

paid under the OPPS. Therefore, we 

believe that certain nonimaging 

diagnostic tests for which separate 

payment is allowed under the OPPS 

should be considered covered ancillary 

services and separately paid when these 

tests are required for the successful 

performance of the surgery and are 

performed in the ASC on the same day 

as a covered surgical procedure. 

Therefore, we proposed that, 

beginning in CY 2015, certain diagnostic 

tests within the medicine range of CPT 

codes for which separate payment is 

allowed under the OPPS be covered 

ancillary services when they are integral 

to an ASC covered surgical procedure. 

We believe that adopting such a 

payment policy is reasonable and 

appropriate to ensure access to these 

tests in ASCs and is consistent with the 

OPPS. We proposed that diagnostic tests 

within the medicine range of CPT codes 

include all Category I CPT codes in the 

medicine range established by CPT, 

from 90000 to 99999, and Category III 

CPT codes and Level II HCPCS codes 

that describe diagnostic tests that 

crosswalk or are clinically similar to 

procedures in the medicine range 

established by CPT. 

We proposed to pay for these tests at 

the lower of the MPFS nonfacility PE 

RVU-based (or technical component) 

amount or the rate calculated according 

to the ASC standard ratesetting 

methodology because this would ensure 

appropriate and equitable payment for 

these diagnostic tests provided integral 

to covered surgical procedures and not 

provide a payment incentive for 

migration of the tests from physician 

offices to ASCs. Further, we believe 

these diagnostic tests are similar to the 

covered ancillary services that are 

radiology services, and this is the 

payment methodology we use for those 

services. We proposed that the 

diagnostic tests for which the proposed 

payment is based on the ASC standard 

ratesetting methodology be assigned to 

payment indicator ‘‘Z2’’ (proposed 

revised definition: Radiology or 

diagnostic service paid separately when 

provided integral to a surgical 

procedure on ASC list; payment based 

on OPPS relative payment weight), and 

those for which the proposed payment 

is based on the MPFS nonfacility PE 

RVU-based amount be assigned 

payment indicator ‘‘Z3’’ (proposed 

revised definition: Radiology or 

diagnostic service paid separately when 

provided integral to a surgical 


tkelley on DSK3SPTVN1PROD with RULES2
66934 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

procedure on ASC list; payment based 

on MPFS nonfacility PE RVUs). We 

proposed changes to the definitions for 

payment indicators ‘‘Z2’’ and ‘‘Z3,’’ as 

detailed in section XII.F.2. of this final 

rule with comment period, and 

proposed changes to § 416.164(a)(11) 

and (b)(5) as well as § 416.171(b)(1) to 

reflect these proposals. 

We have identified one diagnostic test 

that is within the medicine range of CPT 

codes and for which separate payment 

is allowed under the OPPS: CPT code 

91035 (Esophagus, gastroesophageal 

reflux test; with mucosal attached 

telemetry pH electrode placement, 

recording, analysis and interpretation). 

We proposed to add this code to the list 

of ASC covered ancillary services and 

proposed separate ASC payment as a 

covered ancillary service for this code 

beginning in CY 2015 when the test is 

integral to an ASC covered surgical 

procedure. We would expect the 

procedure described by CPT code 91035 

to be integral to the endoscopic 

attachment of the electrode to the 

esophageal mucosa. 

Most covered ancillary services and 

their proposed payment indicators were 

listed in Addendum BB to the proposed 

rule (which is available via the Internet 

on the CMS Web site). 

We invited public comment on these 

proposals. 

Comment: Several commenters 

supported CMS’ proposals to expand 

the scope of ASC covered ancillary 

services to include certain diagnostic 

tests and to add CPT code 91035 to the 

list of ASC covered ancillary services 

and allow separate payment for this 

code when the test is integral to an ASC 

covered surgical procedure. However, 

these commenters expressed concern 

regarding the proposed ASC payment 

for CPT code 91035 and requested that 

CMS reassign the code to a higherpaying APC. 

Response: We thank the commenters 

for their support for our proposal. 

Payment for CPT 91035 is addressed in 

section III.C.2. of this final rule with 

comment period. Briefly, the ASC 

payment is dependent upon the APC 

assignment for this service. Based on 

our analysis of the latest hospital 

outpatient claims data used for this final 

rule with comment period, we believe 

that CPT code 91035 is appropriately 

assigned to APC 0361. Our claims data 

show a geometric mean cost of 

approximately $466 for CPT code 91035 

based on 1,272 single claims (out of 

5,099 total claims), and a geometric 

mean cost of approximately $341 for 

APC 0361. Further, the geometric mean 

cost of APC 0142 is approximately $884, 

which is almost twice the geometric 

mean cost of CPT code 91035. Also, 

assignment of 91035 to APC 0142 would 

create a 2 times violation in APC 0142, 

because the geometric mean cost of the 

highest cost significant procedure in 

APC 0142 (CPT code 44361, with a 

geometric mean cost of $1,019) is 2.2 

times the geometric mean cost of 91035. 

Therefore, APC 0142 would not be 

appropriate for 91035 and we are 

finalizing our CY 2015 proposal to 

continue to assign CPT code 91035 to 

APC 0361. 

After consideration of the public 

comments we received, we are 

finalizing these proposals without 

modification: to expand the scope of 

ASC-covered ancillary services to 

include certain diagnostic tests for 

which separate payment is allowed 

under the OPPS when provided integral 

to covered ASC surgical procedures; to 

pay for these diagnostic tests at the 

lower of the MPFS nonfacility PE RVU 

based (or technical component) amount 

or the rate calculated according to the 

ASC standard ratesetting methodology; 

and to revise §§ 416.164(a)(11) and 

(b)(5) as well as § 416.171(b)(1) to reflect 

these finalized policies. We also are 

revising the regulation text at 

§ 416.171(d) to reflect that payment for 

these tests will be at the lower of the 

MPFS nonfacility PE RVU-based 

amount or the rate calculated according 

to the ASC standard ratesetting 

methodology, as discussed above and in 

the CY 2015 OPPS/ASC proposed rule 

(79 FR 41027). For those covered 

ancillary services where the payment 

rate is the lower of the final rates under 

the ASC standard ratesetting 

methodology and the MPFS final rates, 

the final payment indicators and rates 

set forth in this rule are based on a 

comparison using the MPFS rates 

effective January 1, 2015. These 

payment rates and indicators do not 

include the effect of the negative update 

to the MPFS payment rates effective 

April 1, 2015 under current law. 

Updates to these rates and payment 

indicators effective April l, 2015 will be 

included in the April 2015 quarterly 

ASC addenda posted on the CMS Web 

site. For a discussion of the MPFS rates, 

we refer readers to the CY 2015 MPFS 

final rule with comment period. 

E. New Technology Intraocular Lenses 

(NTIOLs) 

1. NTIOL Application Cycle 

Our process for reviewing 

applications to establish new classes of 

new technology intraocular lenses 

(NTIOLs) is as follows: 

• Applicants submit their NTIOL 

requests for review to CMS by the 

annual deadline. For a request to be 

considered complete, we require 

submission of the information that is 

found in the guidance document 

entitled ‘‘Application Process and 

Information Requirements for Requests 

for a New Class of New Technology 

Intraocular Lenses (NTIOLs) or 

Inclusion of an IOL in an existing 

NTIOL Class’’ posted on the CMS Web 

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

Medicare-Fee-for-Service-Payment/

ASCPayment/NTIOLs.html. 

• We announce annually in the 

proposed rule updating the ASC and 

OPPS payment rates for the following 

calendar year, a list of all requests to 

establish new NTIOL classes accepted 

for review during the calendar year in 

which the proposal is published. In 

accordance with section 141(b)(3) of 

Public Law 103–432 and our regulations 

at § 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— 

Æ Provide a list of determinations 

made as a result of our review of all new 

NTIOL class requests and public 

comments; 

Æ When a new NTIOL class is created, 

we identify the predominant 

characteristic of NTIOLs in that class 

that sets them apart from other IOLs 

(including those previously approved as 

members of other expired or active 

NTIOL classes) and that is associated 

with an improved clinical outcome. 

Æ The date of implementation of a 

payment adjustment in the case of 

approval of an IOL as a member of a 

new NTIOL class would be set 

prospectively as of 30 days after 

publication of the ASC payment update 

final rule, consistent with the statutory 

requirement. 

Æ Announce the deadline for 

submitting requests for review of an 

application for a new NTIOL class for 

the following calendar year. 

2. Requests To Establish New NTIOL 

Classes for CY 2015 

We did not receive any requests for 

review to establish a new NTIOL class 

for CY 2015 by March 3, 2014, the due 

date published in the CY 2014 OPPS/

ASC final rule with comment period (78 

FR 75085). 

3. Payment Adjustment 

The current payment adjustment for a 

5-year period from the implementation 

date of a new NTIOL class is $50 per 

lens. Since implementation of the 

process for adjustment of payment 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66935 

amounts for NTIOLs in 1999, we have 

not revised the payment adjustment 

amount, and we did not propose to 

revise the payment adjustment amount 

for CY 2015. 

4. Announcement of CY 2015 Deadline 

for Submitting Requests for CMS 

Review of Applications for a New Class 

of NTIOLs 

In accordance with 42 CFR 416.185(a) 

of our regulations, CMS announces that 

in order to be considered for payment 

effective beginning in CY 2016, requests 

for review of applications for a new 

class of new technology IOLs must be 

received at CMS by 5 p.m. EST, on 

March 2, 2015. Send requests to ASC/ 

NTIOL, Division of Outpatient Care, 

Mailstop C4–05–17, Centers for 

Medicare and Medicaid Services, 7500 

Security Boulevard, Baltimore, MD 

21244–1850. To be considered, requests 

for NTIOL reviews must include the 

information requested on the CMS Web 

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

Payment/downloads/NTIOLprocess.pdf. 

F. ASC Payment and Comment 

Indicators 

1. Background 

In addition to the payment indicators 

that we introduced in the August 2, 

2007 final rule, we also created final 

comment indicators for the ASC 

payment system in the CY 2008 OPPS/ 

ASC final rule with comment period (72 

FR 66855). We created Addendum DD1 

to define ASC payment indicators that 

we use in Addenda AA and BB to 

provide payment information regarding 

covered surgical procedures and 

covered ancillary services, respectively, 

under the revised ASC payment system. 

The ASC payment indicators in 

Addendum DD1 are intended to capture 

policy relevant characteristics of HCPCS 

codes that may receive packaged or 

separate payment in ASCs, such as 

whether they were on the ASC list of 

covered services prior to CY 2008; 

payment designation, such as 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 ‘‘NI’’ is used in the 

OPPS/ASC final rule with comment 

period to indicate new codes for the 

next calendar year for which the interim 

payment indicator assigned is subject to 

comment. The comment indicator ‘‘NI’’ 

also is assigned to existing codes with 

substantial revisions to their descriptors 

such that we consider them to be 

describing new services, as discussed in 

the CY 2010 OPPS/ASC final rule with 

comment period (74 FR 60622). We 

indicated that in the CY 2015 OPPS/

ASC final rule with comment period, we 

will respond to public comments and 

finalize the ASC treatment of all codes 

that are labeled with comment indicator 

‘‘NI’’ in Addenda AA and BB to the CY 

2014 OPPS/ASC final rule with 

comment period. 

The ‘‘CH’’ comment indicator was 

used in Addenda AA and BB to the 

proposed rule (which are available via 

the Internet on the CMS Web site) to 

indicate that the payment indicator 

assignment has changed for an active 

HCPCS code in the current year and 

next calendar year; an active HCPCS 

code is newly recognized as payable in 

ASCs; or an active HCPCS code is 

discontinued at the end of the current 

calendar year. The ‘‘CH’’ comment 

indicators that are published in the final 

rule with comment period are provided 

to alert readers that a change has been 

made from one calendar year to the 

next, but do not indicate that the change 

is subject to comment. 

2. ASC Payment and Comment 

Indicators 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41028), we did not propose 

any changes to the definitions of the 

ASC comment indicators for CY 2015. 

In order to incorporate changes 

associated with our proposal for CY 

2015, as detailed in section XII.D.2.b. of 

the proposed rule, that certain 

diagnostic tests qualify as covered 

ancillary services when provided 

integral to an ASC covered surgical 

procedure, we proposed to revise the 

definitions for payment indicators ‘‘Z2’’ 

and ‘‘Z3’’ to add the words ‘‘or 

diagnostic’’ after ‘‘Radiology’’ so that the 

proposed definition for payment 

indicator ‘‘Z2’’ would be ‘‘Radiology or 

diagnostic service paid separately when 

provided integral to a surgical 

procedure on ASC list; payment based 

on OPPS relative payment weight,’’ and 

the proposed definition for payment 

indicator ‘‘Z3’’ would be ‘‘Radiology or 

diagnostic service paid separately when 

provided integral to a surgical 

procedure on ASC list; payment based 

on MPFS nonfacility PE RVUs.’’ We 

refer readers to Addenda DD1 and DD2 

to the proposed rule (which are 

available via the Internet on the CMS 

Web site) for the complete list of ASC 

payment and comment indicators for 

the CY 2015 update. 

We did not receive any public 

comments regarding our proposals to 

change the definitions of ‘‘Z2’’ and 

‘‘Z3’’. Therefore, we are finalizing our 

proposal to revise the definitions for 

payment indicators ‘‘Z2’’ and ‘‘Z3’’ to 

add the words ‘‘or diagnostic’’ after 

‘‘Radiology’’ so that the revised 

definition for payment indicator ‘‘Z2’’ 

will be ‘‘Radiology or diagnostic service 

paid separately when provided integral 

to a surgical procedure on ASC list; 

payment based on OPPS relative 

payment weight,’’ and the revised 

definition for payment indicator ‘‘Z3’’ 

will be ‘‘Radiology or diagnostic service 

paid separately when provided integral 

to a surgical procedure on ASC list; 

payment based on MPFS nonfacility PE 

RVUs.’’ 

G. Calculation of the ASC Conversion 

Factor and the ASC Payment Rates 

1. Background 

In the August 2, 2007 final rule (72 FR 

42493), we established our policy to 

base ASC relative payment weights and 

payment rates under the revised ASC 

payment system on APC groups and the 

OPPS relative payment weights. 

Consistent with that policy and the 

requirement at section 1833(i)(2)(D)(ii) 

of the Act that the revised payment 

system be implemented so that it would 

be budget neutral, the initial ASC 

conversion factor (CY 2008) was 

calculated so that estimated total 

Medicare payments under the revised 

ASC payment system in the first year 

would be budget neutral to estimated 

total Medicare payments under the prior 

(CY 2007) ASC payment system (the 

ASC conversion factor is multiplied by 

the relative payment weights calculated 

for many ASC services in order to 

establish payment rates). That is, 

application of the ASC conversion factor 

was designed to result in aggregate 

Medicare expenditures under the 

revised ASC payment system in CY 

2008 being equal to aggregate Medicare 

expenditures that would have occurred 

in CY 2008 in the absence of the revised 

system, taking into consideration the 

cap on ASC payments in CY 2007 as 

required under section 1833(i)(2)(E) of 

the Act (72 FR 42522). We adopted a 

policy to make the system budget 

neutral in subsequent calendar years (72 


tkelley on DSK3SPTVN1PROD with RULES2
66936 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

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 and covered 

ancillary radiology services (excluding 

covered ancillary radiology services 

involving certain nuclear medicine 

procedures or involving the use of 

contrast agents, as discussed in section 

XII.D.2.b. of the proposed rule), the 

established policy is to set the payment 

rate at the lower of the MPFS 

unadjusted nonfacility PE RVU-based 

amount or the amount calculated using 

the ASC standard ratesetting 

methodology. Further, as discussed in 

the CY 2008 OPPS/ASC final rule with 

comment period (72 FR 66841 through 

66843), we also adopted alternative 

ratesetting methodologies for specific 

types of services (for example, 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 cost 

when calculating individual ASC 

payments by applying the pre-floor and 

pre-reclassified hospital wage index 

values that CMS calculates for payment 

under the IPPS, using updated Core 

Based Statistical Areas (CBSAs) issued 

by OMB in June 2003. In other words, 

the wage index for an ASC is the prefloor and pre-reclassified hospital wage 

index under the IPPS of the CBSA that 

maps to the CBSA where the ASC is 

located. 

The reclassification provision in 

section 1886(d)(10) of the Act is specific 

to hospitals. We believe that using the 

most recently available pre-floor and 

pre-reclassified IPPS hospital wage 

indexes results in the most appropriate 

adjustment to the labor portion of ASC 

costs. We continue to believe that the 

unadjusted hospital wage indexes, 

which are updated yearly and are used 

by many other Medicare payment 

systems, appropriately account for 

geographic variation in labor costs for 

ASCs. 

On February 28, 2013, OMB issued 

OMB Bulletin No. 13–01, which 

provides the delineations of all 

Metropolitan Statistical Areas, 

Metropolitan Divisions, Micropolitan 

Statistical Areas, Combined Statistical 

Areas, and New England City and Town 

Areas in the United States and Puerto 

Rico based on the standards published 

on June 28, 2010 in the Federal Register 

(75 FR 37246 through 37252) and 2010 

Census Bureau data. (A copy of this 

bulletin may be obtained at: http://

www.whitehouse.gov/sites/default/files/

omb/bulletins/2013/b-13-01.pdf.) The 

pre-floor and pre-reclassified IPPS 

hospital wage indexes for FY 2014 do 

not reflect OMB’s new area delineations 

and, because the ASC wage indexes are 

the pre-floor and pre-reclassified IPPS 

hospital wage indexes, the CY 2014 ASC 

wage indexes do not reflect the OMB 

changes. As discussed in the FY 2015 

IPPS/LTCH PPS proposed rule (79 FR 

28054 through 28068), we proposed to 

use the new CBSAs delineations issued 

by OMB in OMB Bulletin 13–01 for the 

IPPS hospital wage index beginning in 

FY 2015. Therefore, because the ASC 

wage indexes are the pre-floor and prereclassified IPPS hospital wage indexes, 

the proposed CY 2015 ASC wage 

indexes reflected the new OMB 

delineations. In the FY 2015 IPPS/LTCH 

PPS final rule (79 FR 49950 through 

49957), we finalized our proposal to use 

these new OMB delineations for the 

IPPS hospital wage index. Therefore, the 

final ASC wage indexes, which are the 

pre-floor and pre-reclassified IPPS 

hospital wage indexes, will reflect the 

new OMB delineations. As discussed in 

section XII.G.2.b. of the CY 2015 OPPS/ 

ASC proposed rule (79 FR 41030), we 

proposed a transition to these new OMB 

delineations for ASCs in certain 

situations for CY 2015. 

We note that, in certain instances, 

there might be urban or rural areas for 

which there is no IPPS hospital whose 

wage index data would be used to set 

the wage index for that area. For these 

areas, our policy has been to use the 

average of the wage indexes for CBSAs 

(or metropolitan divisions as applicable) 

that are contiguous to the area that has 

no wage index (where ‘‘contiguous’’ is 

defined as sharing a border). For 

example, for CY 2014, we applied a 

proxy wage index based on this 

methodology to ASCs located in CBSA 

25980 (Hinesville-Fort Stewart, GA) and 

CBSA 08 (Rural Delaware). 

When all of the areas contiguous to 

the urban CBSA of interest are rural and 

there is no IPPS hospital that has wage 

index data that could be used to set the 

wage index for that area, we determine 

the ASC wage index by calculating the 

average of all wage indexes for urban 

areas in the State (75 FR 72058 through 

72059). In other situations, where there 

are no IPPS hospitals located in a 

relevant labor market area, we will 

continue our current policy of 

calculating an urban or rural area’s wage 

index by calculating the average of the 

wage indexes for CBSAs (or 

metropolitan divisions where 

applicable) that are contiguous to the 

area with no wage index. 

2. Calculation of the ASC Payment Rates 

a. Updating the ASC Relative Payment 

Weights for CY 2015 and Future Years 

We update the ASC relative payment 

weights each year using the national 

OPPS relative payment weights (and 

MPFS nonfacility PE RVU-based 

amounts, as applicable) for that same 

calendar year and uniformly scale the 

ASC relative payment weights for each 

update year to make them budget 

neutral (72 FR 42533). In the CY 2015 

OPPS/ASC proposed rule (79 FR 41029 

through 41030), consistent with our 

established policy, we proposed to scale 

the CY 2015 relative payment weights 

for ASCs according to the following 

method. Holding ASC utilization and 

the mix of services constant from CY 

2013, we proposed to compare the total 

payment using the CY 2014 ASC 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66937 

relative payment weights with the total 

payment using the CY 2015 relative 

payment weights to take into account 

the changes in the OPPS relative 

payment weights between CY 2014 and 

CY 2015. We proposed to use the ratio 

of CY 2014 to CY 2015 total payment 

(the weight scaler) to scale the ASC 

relative payment weights for CY 2015. 

The proposed CY 2015 ASC scaler was 

0.9142 and scaling would apply to the 

ASC relative payment weights of the 

covered surgical procedures and 

covered ancillary radiology services for 

which the ASC payment rates are based 

on OPPS relative payment weights. 

Scaling would not apply in the case 

of ASC payment for separately payable 

covered ancillary services that have a 

predetermined national payment 

amount (that is, their national ASC 

payment amounts are not based on 

OPPS relative payment weights), such 

as drugs and biologicals that are 

separately paid or services that are 

contractor-priced or paid at reasonable 

cost in ASCs. Any service with a 

predetermined national payment 

amount would be included in the ASC 

budget neutrality comparison, but 

scaling of the ASC relative payment 

weights would not apply to those 

services. The ASC payment weights for 

those services without predetermined 

national payment amounts (that is, 

those services with national payment 

amounts that would be based on OPPS 

relative payment weights) would be 

scaled to eliminate any difference in the 

total payment between the current year 

and the update year. 

For any given year’s ratesetting, we 

typically use the most recent full 

calendar year of claims data to model 

budget neutrality adjustments. For this 

final rule with comment period, we 

used CY 2013 ASC claims data. 

To create an analytic file to support 

calculation of the weight scaler and 

budget neutrality adjustment for the 

wage index (discussed below), we 

summarized available CY 2013 ASC 

claims by ASC and by HCPCS code. We 

used the National Provider Identifier for 

the purpose of identifying unique ASCs 

within the CY 2013 claims data. We 

used the supplier zip code reported on 

the claim to associate State, county, and 

CBSA with each ASC. This file, 

available to the public as a supporting 

data file for the proposed rule, is posted 

on the CMS Web site at: http://

www.cms.gov/Research-Statistics-Dataand-Systems/Files-for-Order/

LimitedDataSets/

ASCPaymentSystem.html. 

b. Transition Period to New OMB 

Delineations for ASC Wage Index 

As discussed in the FY 2015 IPPS/

LTCH PPS proposed rule (79 FR 28054 

through 28055), we proposed to use the 

new CBSA delineations issued by OMB 

in OMB Bulletin 13–01 dated February 

28, 2013 for the IPPS hospital wage 

index. Therefore, because the ASC wage 

indexes are the pre-floor and prereclassified IPPS hospital wage indexes, 

the proposed CY 2015 ASC wage 

indexes reflected the new OMB 

delineations. While we believe that 

instituting the latest OMB labor market 

area delineations would create a more 

accurate and up-to-date wage index 

system, we also recognize that 

implementing the new OMB 

delineations may cause some short-term 

instability in ASC payments. Therefore, 

we proposed a transition to the new 

OMB delineations similar to what we 

proposed for the IPPS for FY 2015 (79 

FR 28062) and the OPPS as described in 

section II.C of the proposed rule. 

Specifically, for ASCs, we proposed a 1- 

year blended wage index for all ASCs 

that would experience any decrease in 

their actual wage index exclusively due 

to the implementation of the new OMB 

delineations. For ASCs where the CY 

2015 ASC wage index with the CY 2015 

CBSAs would be lower than with the 

CY 2014 CBSAs, we proposed that the 

CY 2015 ASC wage index would be 50 

percent of the ASC wage index based on 

the CY 2014 CBSA and 50 percent of the 

ASC wage index based on the new CY 

2015 CBSA. We believe a 1-year 50/50 

blended wage index would mitigate the 

short-term instability and negative 

payment impacts due to the proposed 

implementation of the new OMB 

delineations, providing ASCs that 

would be negatively impacted by the 

new OMB delineations with a transition 

period during which they may adjust to 

their new geographic CBSA. We believe 

that a longer transition period would 

reduce the accuracy of the overall labor 

market area wage index system. 

Comment: Some commenters objected 

to CMS continuing to use the pre-floor 

and pre-reclassified IPPS hospital wage 

indexes for the labor portion of ASC 

costs. These commenters stated that 

ASCs and hospitals compete in the same 

local markets and provide many of the 

same services and require similar staff. 

Commenters stated that the different 

wage index for hospitals than for ASCs 

increases the gap between the OPPS and 

ASC payment rates. 

Response: As discussed in the August 

2, 2007 final rule (72 FR 42517 through 

42518) and as codified at § 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 laborrelated share, which is 50 percent of the 

ASC payment amount. We have 

responded to similar comments in the 

past and believe our prior rationale for 

using unadjusted wage indexes is still a 

sound one. We continue to believe that 

the unadjusted hospital wage indexes, 

which are updated yearly and are used 

by many other Medicare payment 

systems, appropriately account for 

geographic variation in labor costs for 

ASCs. We did not propose to change our 

use of the pre-floor, pre-reclassified 

IPPS wage indexes for the ASC wage 

index. Therefore, in addition to the 

reasons stated above, we will continue 

to apply the pre-floor, pre-reclassified 

IPPS hospital wage indexes for the labor 

portion of ASC costs. We refer readers 

to our responses to similar comments in 

the CY 2010, CY 2011, CY 2012, CY 

2013, and CY 2014 OPPS/ASC final 

rules with comment period (74 FR 

60625; 75 FR 72059; 76 FR 74446; 77 FR 

68463; and 78 FR 75086, respectively). 

Comment: Commenters supported 

CMS’ proposal to phase in reductions to 

the ASC wage indexes that occur as a 

result of the new OMB labor market 

delineations. 

Response: We appreciate the 

commenters’ support and, as stated 

below, we are finalizing this policy as 

proposed. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to apply a 1-year 

blended wage index for all ASCs that 

would experience any decrease in their 

actual wage index exclusively due to the 

implementation of the new OMB 

delineations. Specifically, for ASCs 

where the CY 2015 ASC wage index 

with the CY 2015 CBSAs is lower than 

with the CY 2014 CBSAs, we will 

calculate the CY 2015 ASC wage index 

such that it will be 50 percent of the 

ASC wage index based on the CY 2014 

CBSA and 50 percent of the ASC wage 

index based on the new CY 2015 CBSA. 

c. Updating the ASC Conversion Factor 

Under the OPPS, we typically apply 

a budget neutrality adjustment for 

provider level changes, most notably a 

change in the wage index values for the 

upcoming year, to the conversion factor. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41030 through 41031), 

consistent with our final ASC payment 

policy, for the CY 2015 ASC payment 

system, we proposed to calculate and 

apply a budget neutrality adjustment to 

the ASC conversion factor for supplier 


tkelley on DSK3SPTVN1PROD with RULES2
66938 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

level changes in wage index values for 

the upcoming year, just as the OPPS 

wage index budget neutrality 

adjustment is calculated and applied to 

the OPPS conversion factor. For CY 

2015, we calculated this proposed 

adjustment for the ASC payment system 

by using the most recent CY 2013 claims 

data available and estimating the 

difference in total payment that would 

be created by introducing the proposed 

CY 2015 ASC wage indexes. 

Specifically, holding CY 2013 ASC 

utilization and service-mix and the 

proposed CY 2015 national payment 

rates after application of the weight 

scaler constant, we calculated the total 

adjusted payment using the CY 2014 

ASC wage indexes and the total 

adjusted payment using the proposed 

CY 2015 ASC wage indexes (which 

reflect the new OMB delineations and 

would include any applicable transition 

period). We used the 50-percent laborrelated share for both total adjusted 

payment calculations. We then 

compared the total adjusted payment 

calculated with the CY 2014 ASC wage 

indexes to the total adjusted payment 

calculated with the proposed CY 2015 

ASC wage indexes and applied the 

resulting ratio of 0.9983 (the proposed 

CY 2015 ASC wage index budget 

neutrality adjustment) to the CY 2014 

ASC conversion factor to calculate the 

proposed CY 2015 ASC conversion 

factor. 

Section 1833(i)(2)(C)(i) of the Act 

requires that, ‘‘if the Secretary has not 

updated amounts established’’ under 

the revised ASC payment system in a 

calendar year, the payment amounts 

‘‘shall be increased by the percentage 

increase in the Consumer Price Index 

for all urban consumers (U.S. city 

average) as estimated by the Secretary 

for the 12-month period ending with the 

midpoint of the year involved.’’ The 

statute, therefore, does not mandate the 

adoption of any particular update 

mechanism, but it requires the payment 

amounts to be increased by the CPI–U 

in the absence of any update. Because 

the Secretary updates the ASC payment 

amounts annually, we adopted a policy, 

which we codified at 42 CFR 

416.171(a)(2)(ii), to update the ASC 

conversion factor using the CPI–U for 

CY 2010 and subsequent calendar years. 

Therefore, the annual update to the ASC 

payment system is the CPI–U (referred 

to as the CPI–U update factor). 

Section 3401(k) of the Affordable Care 

Act amended section 1833(i)(2)(D) of the 

Act by adding a new clause (v) which 

requires that ‘‘any annual update under 

[the ASC payment] system for the year, 

after application of clause (iv), shall be 

reduced by the productivity adjustment 

described in section 

1886(b)(3)(B)(xi)(II)’’ of the Act effective 

with the calendar year beginning 

January 1, 2011. The statute defines the 

productivity adjustment to be equal to 

the 10-year moving average of changes 

in annual economy-wide private 

nonfarm business multifactor 

productivity (MFP) (as projected by the 

Secretary for the 10-year period ending 

with the applicable fiscal year, year, 

cost reporting period, or other annual 

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

(iv) of section 1833(i)(2)(D) of the Act 

authorizes the Secretary to provide for 

a reduction in any annual update for 

failure to report on quality measures. 

Clause (v) of section 1833(i)(2)(D) of the 

Act states that application of the MFP 

adjustment to the ASC payment system 

may result in the update to the ASC 

payment system being less than zero for 

a year and may result in payment rates 

under the ASC payment system for a 

year being less than such payment rates 

for the preceding year. 

In the CY 2012 OPPS/ASC final rule 

with comment period (76 FR 74516), we 

finalized a policy that ASCs begin 

submitting data on quality measures for 

services beginning on October 1, 2012 

for the CY 2014 payment determination 

under the ASCQR Program. In the CY 

2013 OPPS/ASC final rule with 

comment period (77 FR 68499 through 

68500), we finalized a methodology to 

calculate reduced national unadjusted 

payment rates using the ASCQR 

Program reduced update conversion 

factor that would apply to ASCs that fail 

to meet their quality reporting 

requirements for the CY 2014 payment 

determination and subsequent years. 

The application of the 2.0 percentage 

point reduction to the annual update 

factor, which currently is the CPI–U, 

may result in the update to the ASC 

payment system being less than zero for 

a year for ASCs that fail to meet the 

ASCQR Program requirements. We 

amended §§ 416.160(a)(1) and 416.171 

to reflect these policies. 

In accordance with section 

1833(i)(2)(C)(i) of the Act, before 

applying the MFP adjustment, the 

Secretary first determines the 

‘‘percentage increase’’ in the CPI–U, 

which we interpret cannot be a negative 

percentage. Thus, in the instance where 

the percentage change in the CPI–U for 

a year is negative, we would hold the 

CPI–U update factor for the ASC 

payment system to zero. For the CY 

2014 payment determination and 

subsequent years, under section 

1833(i)(2)(D)(iv) of the Act, we would 

reduce the annual update by 2.0 

percentage points for an ASC that fails 

to submit quality information under the 

rules established by the Secretary in 

accordance with section 1833(i)(7) of 

the Act. Section 1833(i)(2)(D)(v) of the 

Act, as added by section 3401(k) of the 

Affordable Care Act, requires that the 

Secretary reduce the annual update 

factor, after application of any quality 

reporting reduction, by the MFP 

adjustment, and states that application 

of the MFP adjustment to the annual 

update factor after application of any 

quality reporting reduction may result 

in the update being less than zero for a 

year. If the application of the MFP 

adjustment to the annual update factor 

after application of any quality reporting 

reduction would result in an 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 illustrative examples of how 

the MFP adjustment is applied to the 

ASC payment system. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41031), based on IHS Global 

Insight’s (IGI’s) 2014 first quarter 

forecast with historical data through 

2013 fourth quarter, for the 12-month 

period ending with the midpoint of CY 

2015, the CPI–U update was projected to 

be 1.7 percent. Also, based on IGI’s 2014 

first quarter forecast, the MFP 

adjustment for the period ending with 

the midpoint of CY 2015 was projected 

to be 0.5 percent. IGI is a nationally 

recognized economic and financial 

forecasting firm that contracts with CMS 

to forecast the components of CMS’ 

market baskets as well as the CPI–U and 

MFP. We finalized the methodology for 

calculating the MFP adjustment in the 

CY 2011 MPFS final rule with comment 

period (75 FR 73394 through 73396) as 

revised in the CY 2012 MPFS final rule 

with comment period (76 FR 73300 

through 73301). The ASCQR Program 

affected payment rates beginning in CY 

2014 and, under this program, there is 

a 2.0 percentage point reduction to the 

CPI–U for ASCs that fail to meet the 

ASCQR Program requirements. 

We proposed to reduce the CPI–U 

update of 1.7 percent by the MFP 

adjustment of 0.5 percentage point, 

resulting in an MFP-adjusted CPI–U 

update factor of 1.2 percent for ASCs 

meeting the quality reporting 

requirements. Therefore, we proposed to 

apply a 1.2 percent MFP-adjusted CPI– 

U update factor to the CY 2014 ASC 

conversion factor for ASCs meeting the 

quality reporting requirements. We 

proposed to reduce the CPI–U update of 

1.7 percent by 2.0 percentage points for 

ASCs that do not meet the quality 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66939 

reporting requirements and then apply 

the 0.5 percentage point MFP reduction. 

Therefore, we proposed to apply a ¥0.8 

percent quality reporting/MFP-adjusted 

CPI–U update factor to the CY 2014 ASC 

conversion factor for ASCs not meeting 

the quality reporting requirements. We 

also proposed that if more recent data 

are subsequently available (for example, 

a more recent estimate of the CY 2015 

CPI–U update and MFP adjustment), we 

would use such data, if appropriate, to 

determine the CY 2015 ASC update for 

the final rule with comment period. 

For CY 2015, we also proposed to 

adjust the CY 2014 ASC conversion 

factor ($43.471) by the proposed wage 

index budget neutrality factor of 0.9983 

in addition to the MFP-adjusted update 

factor of 1.2 percent discussed above, 

which results in a proposed CY 2015 

ASC conversion factor of $43.918 for 

ASCs meeting the quality reporting 

requirements. For ASCs not meeting the 

quality reporting requirements, we 

proposed to adjust the CY 2014 ASC 

conversion factor ($43.471) by the 

proposed wage index budget neutrality 

factor of 0.9983 in addition to the 

quality reporting/MFP-adjusted update 

factor of ¥0.8 percent discussed above, 

which results in a proposed CY 2015 

ASC conversion factor of $43.050. 

We invited public comment on these 

proposals. 

Comment: Some commenters stated 

that CMS should replace the CPI–U as 

the update mechanism for ASC 

payments with the hospital market 

basket. Commenters stated that the CPI– 

U measures inflation in a basket of 

consumer goods atypical of what ASCs 

purchase. In addition, the commenters 

stated that the Affordable Care Act 

requires CMS to reduce the update by a 

measure of productivity gains, which 

inappropriately subjects ASCs to two 

productivity adjustments: 

improvements reflected in the price of 

consumer purchased goods and the 

additional statutorily required 

reduction. While the commenters 

maintained that the hospital market 

basket would be the most appropriate 

update for ASCs, they suggested that 

there are various alternatives within the 

CPI–U that CMS could explore that 

more accurately reflect the economic 

climate in the ASC environment. For 

instance, CMS could use subsets of the 

CPI–U (medical care, medical care 

services, and outpatient services) that 

are consistent with the services being 

provided in the ASC setting. 

MedPAC commented that, in the CY 

2013 rulemaking, CMS requested public 

comment on the feasibility of ASC cost 

information to determine whether CPI– 

U or another type of update factor 

would be more appropriate, but that 

CMS did not propose to begin collecting 

ASC cost data. MedPAC acknowledged 

that there may be a burden associated 

with requiring ASCs to submit cost 

reports, but recommended that CMS 

collect some sort of ASC cost data, such 

as through surveys. 

Response: As we have stated in 

response to similar comments in the 

past (for example, 77 FR 68465; 78 FR 

75088 through 75089), we continue to 

believe that, while commenters argue 

that the items included in the CPI–U 

index may not adequately measure 

inflation for the goods and services 

provided by ASCs, the hospital market 

basket does not align with the cost 

structures of ASCs. Hospitals provide a 

much wider range of services, such as 

room and board and emergency 

services, and the costs associated with 

providing these services are not part of 

the ASC cost structure. Therefore, at this 

time, we do not believe that it is 

appropriate to use the hospital market 

basket for the ASC annual update. 

We recognize that the CPI–U is an 

output price index that accounts for 

productivity. However, section 

1833(i)(2)(D)(v) of the Act requires the 

agency to reduce the annual update 

factor by the MFP adjustment. For the 

reasons stated above, we do not believe 

that the hospital market basket 

appropriately reflects the cost structures 

of ASCs, and because we do not have 

cost data on ASCs, we are continuing to 

use the CPI–U which we believe 

provides a reasonable approximation of 

the price increases facing ASCs. We will 

continue to explore the feasibility of 

collecting ASC cost data. However, 

based on our past experience, we do not 

believe that collecting such data through 

surveys would be productive. We 

appreciate the commenter’s suggestion 

to adjust the CPI–U, such as by using 

subsets of services within the CPI–U, for 

productivity and will take this 

suggestion into consideration if we 

propose changes to the ASC update 

factor in the future. 

After consideration of the public 

comments we received, we are applying 

our established methodology for 

determining the final CY 2015 ASC 

conversion factor. Using more complete 

CY 2013 data for this final rule with 

comment period than were available for 

the proposed rule, we calculated a wage 

index budget neutrality adjustment of 

0.9998. Based on IGI’s 2014 third 

quarter forecast, the CPI–U for the 12- 

month period ending with the midpoint 

of CY 2015 is now projected to be 1.9 

percent, while the MFP adjustment (as 

discussed and finalized in the CY 2012 

MPFS final rule with comment period 

(76 FR 73300 through 73301)) is 0.5 

percent, resulting in an MFP-adjusted 

CPI–U update factor of 1.4 percent for 

ASCs that meet the quality reporting 

requirements. The final ASC conversion 

factor of $44.071, for ASCs that meet the 

quality reporting requirements, is the 

product of the CY 2014 conversion 

factor of $43.471 multiplied by the wage 

index budget neutrality adjustment of 

0.9998 and the MFP-adjusted CPI–U 

payment update of 1.4 percent. For 

ASCs that do not meet the quality 

reporting requirements, we are reducing 

the CPI–U update of 1.9 percent by 2.0 

percentage points and then we are 

applying the 0.5 percentage point MFP 

reduction, resulting in a -0.6 percent 

quality reporting/MFP-adjusted CPI–U 

update factor. The final ASC conversion 

factor of $43.202 for ASCs that do not 

meet the quality reporting requirements 

is the product of the CY 2014 

conversion factor of $43.471 multiplied 

by the wage index budget neutrality 

adjustment of 0.9998 and the quality 

reporting/MFP-adjusted CPI–U payment 

update of ¥0.6 percent. 

3. Display of CY 2015 ASC Payment 

Rates 

Addenda AA and BB to this CY 2015 

OPPS/ASC final rule with comment 

period (which are available via the 

Internet on the CMS Web site) display 

the final updated ASC payment rates for 

CY 2015 for covered surgical procedures 

and covered ancillary services, 

respectively. For those covered surgical 

procedures and covered ancillary 

services where the payment rate is the 

lower of the final rates under the ASC 

standard ratesetting methodology and 

the MPFS final rates, the final payment 

indicators and rates set forth in this rule 

are based on a comparison using the 

MPFS rates effective January 1, 2015. 

These payment rates and indicators do 

not include the effect of the negative 

update to the MPFS payment rates 

effective April 1, 2015 under current 

law. Updates to these rates and payment 

indicators effective April l, 2015 will be 

included in the April 2015 quarterly 

ASC addenda posted on the CMS Web 

site. For a discussion of the MPFS rates, 

we refer readers to the CY 2015 MPFS 

final rule with comment period. The 

payment rates included in these 

addenda reflect the full ASC payment 

update and not the reduced payment 

update used to calculate payment rates 

for ASCs not meeting the quality 

reporting requirements under the 

ASCQR Program. These addenda 

contain several types of information 

related to the CY 2015 payment rates. 

Specifically, in Addendum AA, a ‘‘Y’’ in 

the column titled ‘‘Subject to Multiple 


tkelley on DSK3SPTVN1PROD with RULES2
66940 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

Procedure Discounting’’ indicates that 

the surgical procedure will be subject to 

the multiple procedure payment 

reduction policy. As discussed in the 

CY 2008 OPPS/ASC final rule with 

comment period (72 FR 66829 through 

66830), most covered surgical 

procedures are subject to a 50-percent 

reduction in the ASC payment for the 

lower-paying procedure when more 

than one procedure is performed in a 

single operative session. Display of the 

comment indicator ‘‘CH’’ in the column 

titled ‘‘Comment Indicator’’ indicates a 

change in payment policy for the item 

or service, including identifying 

discontinued HCPCS codes, designating 

items or services newly payable under 

the ASC payment system, and 

identifying items or services with 

changes in the ASC payment indicator 

for CY 2015. Display of the comment 

indicator ‘‘NI’’ in the column titled 

‘‘Comment Indicator’’ indicates that the 

code is new (or substantially revised) 

and that the payment indicator 

assignment is an interim assignment 

that is open to comment in the final rule 

with comment period. 

The values displayed in the column 

titled ‘‘CY 2015 Payment Weight’’ are 

the relative payment weights for each of 

the listed services for CY 2015. The 

payment weights for all covered surgical 

procedures and covered ancillary 

services whose ASC payment rates are 

based on OPPS relative payment 

weights were scaled for budget 

neutrality. Therefore, scaling was not 

applied to the device portion of the 

device-intensive procedures, services 

that are paid at the MPFS nonfacility PE 

RVU-based amount, separately payable 

covered ancillary services that have a 

predetermined national payment 

amount, such as drugs and biologicals 

and brachytherapy sources that are 

separately paid under the OPPS, or 

services that are contractor-priced or 

paid at reasonable cost in ASCs. 

To derive the CY 2015 payment rate 

displayed in the ‘‘CY 2015 Payment 

Rate’’ column, each ASC payment 

weight in the ‘‘CY 2015 Payment 

Weight’’ column was multiplied by the 

CY 2015 conversion factor of $44.071. 

The conversion factor includes a budget 

neutrality adjustment for changes in the 

wage index values and the annual 

update factor as reduced by the 

productivity adjustment (as discussed in 

section XII.H.2.b. of this final rule with 

comment period). 

In Addendum BB, there are no 

relative payment weights displayed in 

the ‘‘CY 2015 Payment Weight’’ column 

for items and services with 

predetermined national payment 

amounts, such as separately payable 

drugs and biologicals. The ‘‘CY 2015 

Payment’’ column displays the CY 2015 

national unadjusted ASC payment rates 

for all items and services. The CY 2015 

ASC payment rates listed in Addendum 

BB for separately payable drugs and 

biologicals are based on ASP data used 

for payment in physicians’ offices in 

October 2014. 

Addendum E provides the HCPCS 

codes and short descriptors for surgical 

procedures that are to be excluded from 

payment in ASCs for FY 2015. 

We did not receive any public 

comments regarding the continuation of 

our policy to provide CY 2015 ASC 

payment information as detailed in 

Addenda AA and BB. Therefore, 

Addenda AA and BB to this final rule 

with comment period (which are 

available via the Internet on the CMS 

Web site) display the updated ASC 

payment rates for CY 2015 for covered 

surgical procedures and covered 

ancillary services, respectively, and 

provide additional information related 

to the CY 2015 rates. 

XIII. Hospital Outpatient Quality 

Reporting Program Updates 

A. Background 

1. Overview 

CMS seeks to promote higher quality 

and more efficient health care for 

Medicare beneficiaries. In pursuit of 

these goals, CMS has implemented 

quality reporting programs for multiple 

care settings including the quality 

reporting program for hospital 

outpatient care, known as the Hospital 

Outpatient Quality Reporting (OQR) 

Program, formerly known as the 

Hospital Outpatient Quality Data 

Reporting Program (HOP QDRP). The 

Hospital OQR Program has generally 

been modeled after the quality reporting 

program for hospital inpatient services 

known as the Hospital Inpatient Quality 

Reporting (IQR) Program (formerly 

known as the Reporting Hospital 

Quality Data for Annual Payment 

Update (RHQDAPU) Program). 

In addition to the Hospital IQR and 

Hospital OQR Programs, CMS has 

implemented quality reporting programs 

for other care settings that provide 

financial incentives for the reporting of 

quality data to CMS. These additional 

programs include reporting for care 

furnished by: 

• Physicians and other eligible 

professionals, under the Physician 

Quality Reporting System (PQRS, 

formerly referred to as the Physician 

Quality Reporting Program Initiative 

(PQRI)); 

• Inpatient rehabilitation facilities, 

under the Inpatient Rehabilitation 

Facility Quality Reporting Program (IRF 

QRP); 

• Long-term care hospitals, under the 

Long-Term Care Hospital Quality 

Reporting (LTCHQR) Program; 

• PPS-exempt cancer hospitals, under 

the PPS-Exempt Cancer Hospital 

Quality Reporting (PCHQR) Program; 

• Ambulatory surgical centers, under 

the Ambulatory Surgical Center Quality 

Reporting (ASCQR) Program; 

• Inpatient psychiatric facilities, 

under the Inpatient Psychiatric Facility 

Quality Reporting (IPFQR) Program; 

• Home health agencies, under the 

Home Health Quality Reporting Program 

(HH QRP); and 

• Hospices, under the Hospice 

Quality Reporting Program. 

In addition, CMS has implemented 

two value-based purchasing programs, 

the Hospital Value-Based Purchasing 

(Hospital VBP) Program and the EndStage Renal Disease (ESRD) Quality 

Incentive Program (QIP), that link 

payment to performance. 

In implementing the Hospital OQR 

Program and other quality reporting 

programs, we have focused on measures 

that have high impact and support 

national priorities for improved quality 

and efficiency of care for Medicare 

beneficiaries as reflected in the National 

Quality Strategy (NQS) and CMS 

Quality Strategy, as well as conditions 

for which wide cost and treatment 

variations have been reported, despite 

established clinical guidelines. To the 

extent possible under various 

authorizing statutes, our ultimate goal is 

to align the clinical quality measure 

requirements of our various quality 

reporting programs. As appropriate, we 

will consider the adoption of measures 

with electronic specifications to enable 

the collection of this information as part 

of care delivery. 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68467 through 68469) for 

a discussion on the principles 

underlying consideration for future 

measures that we intend to use in 

implementing this and other quality 

reporting programs. 

2. Statutory History of the Hospital OQR 

Program 

We refer readers to the CY 2011 

OPPS/ASC final rule with comment 

period (75 FR 72064 through 72065) for 

a detailed discussion of the statutory 

history of the Hospital OQR Program. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66941 

3. Measure Updates and Data 

Publication 

a. Maintenance of Technical 

Specifications for Quality Measures 

CMS maintains technical 

specifications for previously adopted 

Hospital OQR Program measures. These 

specifications are updated as we 

continue to develop the Hospital OQR 

Program. The manuals that contain 

specifications for the previously 

adopted measures can be found on the 

QualityNet Web site at: https://

www.qualitynet.org/dcs/Content

Server?c=Page&pagename

=QnetPublic%2FPage%2FQnetTier2

&cid=1196289981244. 

Many of the quality measures used in 

Medicare and Medicaid reporting 

programs are endorsed by the National 

Quality Forum (NQF). We note that not 

all of the measures adopted by the 

Hospital OQR Program are NQFendorsed, nor is NQF endorsement a 

program requirement (section 

1833(t)(17)(C)(i) of the Act). As part of 

its regular maintenance process for 

endorsed performance measures, the 

NQF requires measure stewards 

(owners/developers) to submit annual 

measure maintenance updates and 

undergo maintenance of endorsement 

review every 3 years. In the measure 

maintenance process, the measure 

steward is responsible for updating and 

maintaining the currency and relevance 

of the measure and will confirm existing 

or minor specification changes with the 

NQF on an annual basis. The NQF 

solicits information from measure 

stewards for annual reviews, and it 

reviews measures for continued 

endorsement in a specific 3-year cycle. 

We note that the NQF’s annual or 

triennial maintenance processes for 

endorsed measures may result in the 

NQF requiring updates to measures in 

order to maintain endorsement status. 

Other non-NQF measures may undergo 

maintenance changes as well. We 

believe that it is important to have in 

place a subregulatory process to 

incorporate nonsubstantive updates into 

the measure specifications for measures 

that we have adopted for the Hospital 

OQR Program so that these measure 

specifications remain current. We also 

recognize that some changes to 

measures are substantive in nature and 

might not be appropriate for adoption 

using a subregulatory process. 

Therefore, in the CY 2013 OPPS/ASC 

final rule with comment period (77 FR 

68469 through 68470), we finalized our 

proposal to follow the same process for 

updating Hospital OQR Program 

measures that we adopted for the 

Hospital IQR Program measures, 

including the subregulatory process for 

making updates to the adopted 

measures (77 FR 53504 through 53505). 

This process expanded upon the 

subregulatory process for updating 

measures that we finalized in the CY 

2009 OPPS/ASC final rule with 

comment period (73 FR 68766 through 

68767). 

b. Public Display of Quality Measures 

We refer readers to the CY 2014 

OPPS/ASC proposed rule (78 FR 43645) 

for a discussion of our policy for the 

publication of Hospital OQR Program 

data on the Hospital Compare Web site 

and noninteractive CMS Web sites. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41033), we did not propose 

any changes to our policies on the 

public display of quality measures. 

Comment: One commenter urged 

CMS to continue to keep stakeholders 

such as physicians, hospitals, measure 

developers, and patient groups engaged 

in public reporting to ensure that 

accurate and beneficial reporting is 

performed. This commenter encouraged 

CMS to establish streamlined policies 

and procedures for partnering with 

nongovernmental entities that have an 

interest in posting data through ongoing 

communication with these stakeholders, 

including the rulemaking process. 

Response: We interpret the 

commenter’s suggestion to ‘‘. . . 

establish streamlined policies and 

procedures for partnering with 

nongovernmental entities that have an 

interest in posting data . . .’’ to mean 

that we should establish streamlined 

policies and procedures to partner with 

physicians, hospitals, measure 

developers, and patient groups that 

wish to be involved in our quality data 

reporting efforts. To the extent feasible 

and practical, we work with as many 

stakeholders as possible to ensure data 

are accurately reported and displayed 

on Hospital Compare and other CMS 

Web sites. In the future, we will 

continue working with stakeholders to 

consolidate and streamline reporting. 

B. Process for Retention of Hospital 

OQR Program Measures Adopted in 

Previous Payment Determinations 

In the CY 2013 OPPS/ASC final rule 

with comment period (77 FR 68471), we 

finalized a policy that once a quality 

measure is adopted for the Hospital 

OQR Program, it is retained for use in 

subsequent years unless otherwise 

specified. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41033), we did not propose 

any changes to the process for retaining 

measures previously adopted. 

C. Removal of Quality Measures From 

the Hospital OQR Program Measure Set 

1. Considerations in Removing Quality 

Measures From the Hospital OQR 

Program 

In the FY 2010 IPPS/LTCH PPS final 

rule, we finalized a process for 

immediate retirement, which we later 

termed ‘‘removal’’ (74 FR 43863), of 

Hospital IQR Program measures based 

on evidence that the continued use of 

the measure as specified raised patient 

safety concerns. We adopted the same 

immediate measure retirement policy 

for the Hospital OQR Program in the CY 

2010 OPPS/ASC final rule with 

comment period (74 FR 60634 through 

60635). We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68472 through 68473) for 

a discussion of our reasons for changing 

the term ‘‘retirement’’ to ‘‘removal’’ in 

the Hospital OQR Program. 

In the FY 2011 IPPS/LTCH PPS final 

rule (75 FR 50185), we finalized a set of 

criteria for determining whether to 

remove measures from the Hospital IQR 

Program. These criteria are: (1) Measure 

performance among hospitals is so high 

and unvarying that meaningful 

distinctions and improvements in 

performance can no longer be made 

(‘‘topped-out’’ measures); (2) 

performance or improvement on a 

measure does not result in better patient 

outcomes; (3) a measure does not align 

with current clinical guidelines or 

practice; (4) the availability of a more 

broadly applicable (across settings, 

populations, or conditions) measure for 

the topic; (5) the availability of a 

measure that is more proximal in time 

to desired patient outcomes for the 

particular topic; (6) the availability of a 

measure that is more strongly associated 

with desired patient outcomes for the 

particular topic; and (7) collection or 

public reporting of a measure leads to 

negative unintended consequences such 

as patient harm. These criteria were 

suggested through public comment on 

proposals for the Hospital IQR Program, 

and we determined that these criteria 

are also applicable in evaluating the 

Hospital OQR Program quality measures 

for removal. 

In the CY 2013 OPPS/ASC final rule 

with comment period (77 FR 68472 

through 68473), we finalized our 

proposal to apply these measure 

removal criteria in the Hospital OQR 

Program as well. In addition to the 

Hospital IQR Program’s criteria, we 

consider eliminating measure 

redundancy and incorporating the views 

of the Measure Applications Partnership 

(MAP) when evaluating measures for 

removal. 


tkelley on DSK3SPTVN1PROD with RULES2
66942 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

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

Measures 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41033 through 41034), we 

proposed to refine the criteria for 

determining when a measure is 

‘‘topped-out.’’ We had previously 

finalized that a measure is ‘‘topped-out’’ 

when measure performance among 

hospitals is so high and unvarying that 

meaningful distinctions and 

improvements in performance can no 

longer be made (‘‘topped-out’’ measures) 

(77 FR 68472). We do not believe that 

measuring hospital performance on 

‘‘topped-out’’ measures provides 

meaningful information on the quality 

of care provided by hospitals. We 

further believe that quality measures, 

once ‘‘topped-out,’’ represent care 

standards that have been widely 

adopted by hospitals. We believe such 

measures should be considered for 

removal from the Hospital OQR Program 

because their associated reporting 

burden may outweigh the value of the 

quality information they provide. 

In order to determine ‘‘topped-out’’ 

status, we proposed to apply the 

following two criteria, the first of which 

was previously adopted by the Hospital 

VBP Program for certain measures in the 

Hospital Inpatient VBP Program final 

rule (76 FR 26510). The second criterion 

is a modified version of what was 

previously adopted by the Hospital VBP 

Program in the above mentioned final 

rule (76 FR 26510), with the change 

from the ‘‘less than’’ operator (<) to the 

‘‘less than or equal to’’ operator (≤). 

Specifically, we proposed that a 

measure under the Hospital OQR 

Program is ‘‘topped-out’’ when it meets 

both of the following criteria: 

• Statistically indistinguishable 

performance at the 75th and 90th 

percentiles; and 

• A truncated coefficient of variation 

less than or equal to 0.10. 

To identify if a measure has 

statistically indistinguishable 

performance at the 75th and 90th 

percentiles, we would determine 

whether the difference between the 75th 

and 90th percentiles for a measure is 

within two times the standard error of 

the full dataset. The coefficient of 

variation (CV) is a descriptive statistic 

that expresses the standard deviation as 

a percentage of the sample mean; this 

provides a statistic that is independent 

of the units of observation. Applied to 

this analysis, a large CV would indicate 

a broad distribution of individual 

hospital scores, with large and 

presumably meaningful differences 

between hospitals in relative 

performance. A small CV would 

indicate that the distribution of 

individual hospital scores is clustered 

tightly around the mean value, 

suggesting that it is not useful to draw 

distinctions among individual hospitals’ 

measure performance. The truncated CV 

excludes observations with rates below 

the 5th percentile and above the 95th 

percentile. We adopted the second of 

these ‘‘topped-out’’ criteria for the 

Hospital VBP Program (79 FR 50055). 

Both criteria were adopted for the 

Hospital IQR Program (79 FR 50204) 

and are being adopted for the ASCQR 

Program (section XIV.A.3. of this final 

rule with comment period). 

We invited public comment on this 

proposal. 

Comment: Many commenters 

supported CMS’ proposed criteria for 

identifying ‘‘topped-out’’ measures. 

Some commenters recommended that 

CMS proceed cautiously, expressing 

concern that removal of measures could 

disrupt hospitals’ quality improvement 

efforts. Some commenters believed there 

is value in collecting data on some 

topped-out measures, regardless of 

national performance scores. Other 

commenters urged CMS to assess the 

topped-out measures individually and 

in a broader context before removing 

them. 

Response: We agree that, in some 

cases, measures that are quantitatively 

‘‘topped-out’’ may still be appropriate if, 

for example, the specified care topic is 

important to providers and/or 

beneficiaries or if some classes or some 

hospitals may still have room for 

improvement with the measure. We 

recognize that some measures may not 

be appropriate for the topped-out 

analysis, including measures of 

outcomes for which small numbers are 

desired (for example, hospital-acquired 

infection and patient safety oriented 

measures). We note that ‘‘topped-out’’ 

status is only one of many factors we 

consider in removing measures. We 

consider the removal of each topped-out 

measure on a case-by-case basis, as 

appropriate, and determine whether a 

clinical or other quality improvement 

need for the measure justifies the 

retention of a topped-out measure that 

otherwise meets our criteria. We refer 

readers to III.C.1. of this final rule with 

comment period, ‘‘Considerations in 

Removing Quality Measures from the 

Hospital OQR Program,’’ for a 

discussion of the different factors we 

consider in removing measures. 

Comment: Many commenters urged 

CMS to continue monitoring 

performance on ‘‘topped-out’’ measures 

to ensure that high performance 

continues and that quality gains are 

sustained. 

Response: We expect hospitals to 

always follow appropriate standards-ofcare and clinical guidelines regardless 

of whether a quality measure exists. We 

believe that HOPDs are committed to 

providing quality care to patients and 

we do not have any indication that 

HOPDs will stop doing so when 

measures are removed. We currently 

monitor the performance of removed 

measures to ensure that performance 

does not decline significantly and will 

continue to do so. However, we must 

balance the costs of continued 

monitoring of a successful measure with 

high levels of performance with the 

adoption of other measures where there 

are opportunities for improvement in 

clinical quality. 

At this time, we believe the two 

finalized topped-out criteria will ensure 

the detection of potential topped-out 

measures that have high performance 

with little variability. However, we will 

consider the need for refinement and, if 

we determine changes may be 

necessary, we will propose such 

changes in future rulemaking. 

After consideration of the public 

comments we received, we are 

finalizing the ‘‘topped-out’’ criteria as 

proposed. Specifically, we are finalizing 

a policy that a measure under the 

Hospital OQR Program is ‘‘topped-out’’ 

when it meets both of the following 

criteria: (1) Statistically 

indistinguishable performance at the 

75th and 90th percentiles; and (2) a 

truncated coefficient of variation less 

than or equal to 0.10. To identify if a 

measure has statistically 

indistinguishable performance at the 

75th and 90th percentiles, we will 

determine whether the difference 

between the 75th and 90th percentiles 

for a measure is within two times the 

standard error of the full dataset. 

However, consistent with our 

discussion above at XIII.C.1. of this final 

rule with comment period, 

‘‘Considerations in Removing Quality 

Measures from the Hospital OQR 

Program,’’ we evaluate different factors 

in considering the removal of measures. 

We will assess the benefits of retaining 

a measure on a case-by-case basis before 

proposing to remove a measure from the 

Hospital OQR Program. 

3. Removal of Measures From the 

Hospital OQR Program for the CY 2017 

Payment Determination and Subsequent 

Years 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41034), we proposed to 

remove three measures for the CY 2017 

payment determination and subsequent 

years: OP–4, OP–6, and OP–7. Based on 

our analysis of Hospital OQR Program 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66943 

chart-abstracted measure data for 

January 1, 2013–June 30, 2013 (Q1–Q2) 

encounters, the following measures met 

both: (1) The previously finalized 

criteria for being ‘‘topped-out’’; that is, 

measure performance among hospitals 

is so high and unvarying that 

meaningful distinctions and 

improvements in performance can no 

longer be made (77 FR 68472); and (2) 

the two criteria we finalized in section 

XIII.C.2. of this final rule with comment 

period for determining ‘‘topped-out’’ 

status. These measures are: 

• OP–4: Aspirin at Arrival (NQF 

# 0286); 

• OP–6: Timing of Antibiotic 

Prophylaxis; and 

• OP–7: Prophylactic Antibiotic 

Selection for Surgical Patients (NQF 

# 0528). 

Therefore, we proposed to remove 

these three measures from the Hospital 

OQR Program beginning with the CY 

2017 payment determination. 

We believed that removal was 

appropriate as there appeared little 

room for improvement for these 

measures, all of which address 

standards of clinical care. In addition, 

by removing these measures, we hoped 

to alleviate the maintenance costs and 

administrative burden to hospitals 

associated with retaining them. Should 

we determine that hospital adherence to 

these practices has unacceptably 

declined, we stated that we would repropose these measures in future 

rulemaking. In addition, we would 

comply with any requirements imposed 

by the Paperwork Reduction Act before 

reinstituting these measures. We noted 

that we removed three measures under 

the Hospital IQR Program similar to 

these measures; the similar measures 

were AMI–1, SCIP–Inf–1, and SCIP–Inf– 

2, respectively. We note that we 

retained SCIP–Inf–1 and SCIP–Inf–2 as 

voluntarily reported electronic clinical 

quality measures in the Hospital IQR 

Program (79 FR 50208). 

We invited public comment on these 

proposals. 

Comment: Many commenters 

supported the proposal to remove OP– 

4, OP–6, and OP–7, noting that the 

removal would reduce administrative 

burden on hospitals. Some commenters 

specifically supported the removal of 

these measures to align with the 

Hospital IQR Program. One commenter 

recommended the removal of the three 

proposed topped-out measures effective 

January 2015, to reduce administrative 

burden for hospitals. 

Response: We thank the commenters 

for their support. We continue to look 

for ways to minimize burden as we 

pursue the quality objectives of the 

Hospital OQR Program. We agree that 

quality of care measures should be 

aligned across our quality reporting and 

value-based purchasing programs to the 

extent possible. The patient encounter 

period for the CY 2017 payment 

determination is January 1, 2015 

through December 31, 2015. Thus, for 

patient encounters beginning January 1, 

2015, hospitals would not be required to 

submit data on any measures that we are 

finalizing for removal as discussed 

below. 

Comment: Some commenters inquired 

about the criteria for resuming data 

collection for measures that are removed 

from the Hospital OQR Program. One 

commenter recommended that CMS 

establish a process, similar to the one 

used by NQF, to place a measure in 

‘‘reserve status’’ for some time after the 

measure is determined to be ‘‘toppedout’’ to ensure no ‘‘backsliding’’ has 

occurred. Another commenter suggested 

that CMS consider sampling hospitals 

on their performance on these removed 

measures to ensure continued high 

performance on these measures. 

Response: We thank the commenters 

for their suggestions to monitor toppedout measures for continued high 

performance and we understand their 

concerns of backsliding. Should we 

determine that hospital adherence to 

these practices has unacceptably 

declined; we would propose to reinstate 

the measure in future rulemaking to 

resume data collection. We expect 

hospitals to always follow appropriate 

standards-of-care and clinical guidelines 

in exercising positive interventions, 

regardless of whether a measure is 

removed. 

Comment: Some commenters urged 

CMS to retain OP–4 for voluntary 

reporting. Some commenters opposed 

the removal of OP–4, noting that this 

measure provides incentives for better 

care and improves patient outcomes, 

and the data help Medicare beneficiaries 

make informed choices about their 

health care options. One commenter 

recommended that CMS not remove 

OP–4 until there are at least 2 years of 

continued high performance data. 

Response: We agree with the 

commenters that OP–4 should be 

retained. Upon further analysis, we have 

found that, although technically 

‘‘topped-out,’’ the rate distributions for 

OP–4 indicate that hospitals with a 

small number of cases have lower rates. 

Because performance for OP–4 is still 

low in some hospitals, and there is 

substantial evidence indicating that 

aspirin at arrival is associated with 

better patient outcomes, we are not 

finalizing our proposal to remove OP–4. 

Comment: Some commenters opposed 

the removal of OP–6 and OP–7, noting 

that the removal of these measures may 

cause unnecessary harm to surgical 

patients. One commenter recommended 

that CMS not remove OP–6 and OP–7 

until there are at least 2 years of 

continued high performance data. 

Response: We thank the commenters 

for expressing their concerns. Our 

proposed criteria for topped-out 

measures did not include a timeframe 

for sustained statistical performance; 

however, we will take this suggestion 

into consideration for future 

rulemaking. Based on our topped-out 

analysis, both OP–6 and OP–7 are 

‘‘topped-out’’ across hospitals, and we 

do not believe that removal of these two 

measures would cause unnecessary 

harm to surgical patients because our 

data show that hospital performance on 

OP–6 and OP–7 is high and unvarying, 

indicating that HOPDs have been in 

compliance with OP–6 in exercising the 

correct timing as well as with OP–7 in 

administering the appropriate antibiotic 

for surgical patients. In addition, unlike 

OP–4, we did not see indications in the 

measure distributions for OP–6 and OP– 

7 that imply outlier hospitals with a 

small number of cases have statistically 

significantly lower rates. Therefore, this 

leads us to believe that removal of these 

two measures would not cause 

unnecessary harm to surgical patients. 

Because our data indicate that hospital 

performance on OP–6 and OP–7 is high 

and unvarying, we believe the costs 

associated with the maintenance of our 

administrative systems and the costs to 

hospitals to continue reporting 

outweigh the benefits of retaining of 

these measures in the Hospital OQR 

Program. We expect hospitals to follow 

appropriate standards-of-care and 

clinical guidelines in exercising positive 

interventions, regardless of whether a 

measure is removed. Therefore, as noted 

below, we are finalizing our proposal to 

remove the OP–6 and OP–7 measures 

and will continue to monitor clinical 

trends and repropose these measures if 

we see the performance gap widening. 

Comment: One commenter noted that, 

beginning with CY 2015 reporting, 

hospitals will be required to report a 

new element (Rectal Culture-Guided 

Antibiotic) for OP–7. The commenter 

requested clarification because CMS 

proposed to remove this measure. 

Response: We clarify that, as stated 

above, we are removing OP–7 from the 

Hospital OQR Program beginning with 

the CY 2017 payment determination. 

The patient encounter period for the CY 

2017 payment determination is January 

1, 2015 through December 31, 2015. 

Therefore, beginning with CY 2015 


tkelley on DSK3SPTVN1PROD with RULES2
66944 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

patient encounters, hospitals are not 

required to submit Rectal CultureGuided Antibiotic data or other data for 

OP–7. 

After consideration of the public 

comments we received and for the 

reasons we discussed above, we are 

finalizing our proposal to remove OP–6 

and OP–7 from the Hospital OQR 

Program as proposed. However, we are 

not finalizing our proposal to remove 

OP–4 and are retaining that measure in 

the Hospital OQR Program for reasons 

discussed above. Hospitals are to report 

data on OP–4 as previously required. 

We refer readers to the CY 2008 OPPS/ 

ASC final rule with comment period (FR 

72 66865), the CY 2013 OPPS/ASC final 

rule with comment period (77 FR 

68482), and the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

75111 through 75112) for more 

information about OP–4 and the data 

submission requirements. Set out in the 

table below are the measures we are 

removing for the CY 2017 payment 

determination and subsequent years. 

HOSPITAL OQR PROGRAM MEASURES REMOVED FOR THE CY 2017 PAYMENT DETERMINATION AND SUBSEQUENT YEARS

NQF # Measure 

N/A .............. OP–6: Timing of Prophylactic Antibiotics 

0528 ............ OP–7: Prophylactic Antibiotic Selection for Surgical Patients 

D. Quality Measures Previously Adopted 

for the CY 2016 Payment Determination 

and Subsequent Years 

As previously discussed, in the CY 

2013 OPPS/ASC final rule with 

comment period (77 FR 68471), we 

finalized a policy that, beginning CY 

2013, when we adopt measures for the 

Hospital OQR Program, these measures 

are automatically adopted for all 

subsequent years’ payment 

determinations, unless we propose to 

remove, suspend, or replace the 

measures. The table below lists 27 

measures that we adopted for the CY 

2016 payment determination and 

subsequent years under the Hospital 

OQR Program. 

HOSPITAL OQR PROGRAM MEASURE SET PREVIOUSLY ADOPTED FOR THE CY 2016 PAYMENT DETERMINATION AND

SUBSEQUENT YEARS

NQF # Measure name 

N/A .............. OP–1: Median Time to Fibrinolysis 

0288 ............ OP–2: Fibrinolytic Therapy Received Within 30 Minutes of ED Arrival   

0290 ............ OP–3: Median Time to Transfer to Another Facility for Acute Coronary Intervention 

0286 ............ OP–4: Aspirin at Arrival 

0289 ............ OP–5: Median Time to ECG 

N/A .............. OP–6: Timing of Prophylactic Antibiotics **  

528 .............. OP–7: Prophylactic Antibiotic Selection for Surgical Patients ** 

0514 ............ OP–8: MRI Lumbar Spine for Low Back Pain 

N/A .............. OP–9: Mammography Follow-up Rates 

N/A .............. OP–10: Abdomen CT—Use of Contrast Material 

0513 ............ OP–11: Thorax CT—Use of Contrast Material 

N/A .............. OP–12: The Ability for Providers with HIT to Receive Laboratory Data Electronically Directly into their ONC-Certified EHR System 

as Discrete Searchable Data 

0669 ............ OP–13: Cardiac Imaging for Preoperative Risk Assessment for Non Cardiac Low Risk Surgery 

N/A .............. OP–14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus Computed Tomography (CT) 

N/A .............. OP–15: Use of Brain Computed Tomography (CT) in the Emergency Department for Atraumatic Headache 

N/A .............. OP–17: Tracking Clinical Results between Visits 

0496 ............ OP–18: Median Time from ED Arrival to ED Departure for Discharged ED Patients 

N/A .............. OP–20: Door to Diagnostic Evaluation by a Qualified Medical Professional 

0662 ............ OP–21: Median Time to Pain Management for Long Bone Fracture 

N/A .............. OP–22: ED—Left Without Being Seen **** 

0661 ............ OP–23: ED—Head CT or MRI Scan Results for Acute Ischemic Stroke or Hemorrhagic Stroke who Received Head CT or MRI 

Scan Interpretation Within 45 minutes of Arrival 

N/A .............. OP–25: Safe Surgery Checklist Use 

N/A .............. OP–26: Hospital Outpatient Volume on Selected Outpatient Surgical Procedures * 

0431 ............ OP–27: Influenza Vaccination Coverage among Healthcare Personnel 

0658 ............ OP–29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for Normal Colonoscopy in Average Risk Patients 

0659 ............ OP–30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps—Avoidance of 

Inappropriate Use 

1536 ............ OP–31: Cataracts—Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery *** 

* OP–26: Procedure categories and corresponding HCPCS codes are located at: http://qualitynet.org/dcs/

BlobServer?blobkey=id&blobnocache=true&blobwhere=1228889963089&blobheader=multipart%2Foctet-stream&blobheadername1=Content-Disposition&blobheadervalue1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata&blobtable=MungoBlobs. 

** Measures removed beginning with the CY 2017 payment determination, as set forth in section XIII.D.3.b. of this final rule with comment period. 

*** Measure collected voluntarily, as set forth in section XIII.D.3.b. of this final rule with comment period. 

  Name has been updated to correspond with NQF-endorsed name. 

Comment: Some commenters 

expressed views on previously adopted 

Hospital OQR Program measures. Some 

commenters were supportive of 

previously adopted measures, and some 

commenters recommended changing 

measure specifications for some 

measures. Several commenters asked 

CMS to consider removing previously 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66945 

1We erroneously referred to ‘‘CNN’’ in the CY 

2015 OPPS/ASC proposed rule (79 FR 41035). We 

have corrected that reference in this final rule with 

comment period to ‘‘CCN.’’ 

adopted measures from the Hospital 

OQR Program, specifically, OP–9, OP– 

10, OP–14, OP–15, OP–20, OP–22, and 

OP–25, because these measures are no 

longer NQF-endorsed, are not 

recommended by the MAP, or are 

deemed unsuitable for public reporting. 

Response: Because we did not 

propose to remove OP–9, OP–10, OP– 

14, OP–15, OP–20, OP–22, or OP–25 

from the Hospital OQR Program, change 

their measure specifications, or discuss 

the related MAP recommendations in 

the CY 2015 OPPS/ASC proposed rule, 

these comments are beyond the scope of 

the proposed rule. Therefore, we are not 

changing the status of any of the 

measures referred to by commenters. 

However, we will take into 

consideration commenters’ concerns 

regarding these measures for future 

rulemaking. 

Regarding removal of measures from 

the Hospital OQR Program based upon 

NQF endorsement, we focus on 

measures appropriate to the specific 

provider category that reflect the level of 

care and the most important areas of 

service and measures for that provider 

category. Section 1833(t)(17)(C)(i) of the 

Act requires the Secretary to ‘‘develop 

measures that the Secretary determines 

to be appropriate for the measurement 

of the quality of care (including 

medication errors) furnished by 

hospitals in outpatient settings and that 

reflect consensus among affected parties 

and, to the extent feasible and 

practicable, shall include measures set 

forth by one or more national consensus 

building entities.’’ This provision does 

not require that the measures we adopt 

for the Hospital OQR Program be 

endorsed by any particular entity, and 

we believe that consensus among 

affected parties can be achieved by 

means other than endorsement by a 

national consensus building entity, 

including through the measure 

development process, through broad 

acceptance and use of the measure(s), 

and through public comment. 

At this time, we continue to believe 

there is value in collecting and reporting 

these measures, but we can consider 

removal in future rulemaking. We thank 

the commenters for the measure 

suggestions and will share them with 

measure stewards. 

1. Data Submission Requirements for 

OP–27: Influenza Vaccination Coverage 

Among Healthcare Personnel (NQF # 

0431) Reported via NHSN for the CY 

2017 Payment Determination and 

Subsequent Years 

The Influenza Vaccination Coverage 

among Healthcare Personnel (HCP) 

(NQF # 0431) was finalized for the 

Hospital OQR Program in the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75097 through 75099). We 

refer readers to the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

75116 through 75117) for a discussion 

of the previously finalized data 

submission requirements for this 

measure. This measure was previously 

finalized for the Hospital IQR Program 

in the FY 2012 IPPS/LTCH PPS final 

rule (76 FR 51631). In the CY 2015 

OPPS/ASC proposed rule (79 FR 41035), 

we made two clarifications: (1) 

correcting the previously stated 

submission deadline; and (2) clarifying 

that hospitals should report the 

Influenza Vaccination Coverage among 

HCP (NQF # 0431) measure by CMS 

Certification Number (CCN) rather than 

separately reporting for both the 

inpatient and outpatient setting. 

a. Clarification of Submission Deadline 

and Data Submitted 

We noted that there was a 

typographical error in our discussion in 

the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75116 through 

75117), and we proposed to remedy that 

error in the proposed rule. Specifically, 

we stated that the deadline for hospitals 

to submit NHSN hospital-acquired 

infection (HAI) measure collection data 

would be ‘‘May 15, 2015, with respect 

to the October 1, 2015 through March 

31, 2015 encounter period’’ (78 FR 

75117). In the CY 2015 OPPS/ASC 

proposed rule, we clarified that the 

beginning of the encounter period 

should be ‘‘October 1, 2014’’ instead of 

‘‘October 1, 2015.’’ In addition, we 

clarified that the data to be submitted 

are more specifically referred to as 

‘‘Healthcare Personnel (HCP) Influenza 

Vaccination summary reporting data’’ 

instead of ‘‘HAI measure collection 

data.’’ 

Comment: Commenters supported the 

CMS clarification of the reporting 

deadline for OP–27 because this 

deadline will align the reporting for 

both inpatient and outpatient settings. 

Response: We thank commenters for 

their support. We agree that measures 

should be aligned across our quality 

reporting and value-based purchasing 

programs to the extent possible. 

As stated above, we are clarifying that 

the beginning of the encounter period is 

October 1, 2014, and that the data to be 

submitted are ‘‘Healthcare Personnel 

Influenza Vaccination summary 

reporting data’’ instead of ‘‘HAI measure 

collection data.’’ 

b. Clarification on Reporting by CMS 

Certification Number (CCN) 

We received public comment about 

the burden of separately collecting HCP 

influenza vaccination status for both the 

hospital inpatient and outpatient 

settings (78 FR 75098). We believe that 

reporting a single vaccination count for 

each health care facility enrolled in 

NHSN will be less burdensome to 

facilities. Therefore, in response to these 

concerns, we collaborated with CDC and 

clarified in an Operational Guidance 

document that, beginning with the 

2014–2015 influenza season (CY 2014 

reporting period and CY 2016 payment 

determination), facilities will report 

data to NHSN by enrolled facility (also 

known as OrgID). CDC will then 

translate and submit the data to CMS on 

behalf of the facilities by CCN.1 The 

CDC also has produced an Operational 

Guidance document regarding reporting 

for this measure, which can be found at: 

http://www.cdc.gov/nhsn/PDFs/HCP/

Operational-Guidance-ACH–HCPFlu.pdf. 

Reporting data in this way will allow 

health care facilities with multiple care 

settings to simplify data collection and 

submit a single count applicable across 

the inpatient and outpatient settings. 

We will then publicly report the 

percentage of HCP who received an 

influenza vaccination per CCN. This 

single count per CCN will inform the 

public of the percentage of vaccinated 

HCP at a particular healthcare facility, 

which would still provide meaningful 

data and help to improve the quality of 

care. Specific details on data submission 

for this measure can be found at: http:// 

www.cdc.gov/nhsn/acute-care-hospital/

hcp-vaccination/ and at: http://

www.cdc.gov/nhsn/acute-care-hospital/

index.html. This clarification was also 

noted in the FY 2015 IPPS/LTCH PPS 

final rule for the Hospital IQR Program 

(79 FR 50217). 

Comment: Many commenters 

supported CMS’ guidance allowing 

hospitals to report OP–27 for both the 

inpatient and outpatient settings using 

one single count because it provides a 

clearer picture of vaccination rates, 

reduces provider burden, and aligns the 

inpatient and outpatient settings. Some 

commenters, however, requested further 

clarification on this guidance because 

the Hospital IQR Program clarified in 

the FY 2015 IPPS/LTCH PPS final rule 

that hospitals ‘‘should report a single 

count per enrolled facility, and not 

CCN’’ and that facilities should ‘‘collect 


tkelley on DSK3SPTVN1PROD with RULES2
66946 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

and submit a single vaccination count 

for each health care facility enrolled in 

NHSN by facility OrgID.’’ 

Response: We thank commenters for 

their support of the guidance issued. 

Consistent with the Hospital IQR 

Program in the FY 2015 IPPS/LTCH PPS 

final rule (79 FR 50217), for OP–27, 

hospitals should report a single count 

per enrolled facility (by OrgID), and not 

per CCN. We require facilities to collect 

and submit a single vaccination count 

for each health care facility enrolled in 

NHSN by facility OrgID. 

Comment: One commenter was 

concerned that viewers of Hospital 

Compare will not understand that the 

measure entails data in both hospital 

inpatient and outpatient settings. The 

commenter believed this would create 

confusion among consumers and 

misinform their decision-making. 

Response: We thank the commenter 

for its concern. However, we do not 

agree that reporting a single vaccination 

count for each enrolled health care 

facility will cause confusion. We believe 

that it will be easier for consumers to 

understand the influenza vaccination 

rate of a hospital as a whole when we 

combine data for both the inpatient and 

outpatient settings, and we believe the 

measure is important enough for it to be 

implemented in both the inpatient and 

outpatient settings. 

As stated above, we clarify that, 

consistent with the Hospital IQR 

Program and CDC Operational 

Guidance, hospitals should report to 

NHSN a single count per enrolled 

facility by the facility OrgID. 

2. Delayed Data Collection for OP–29 

and OP–30 

In the CY 2014 OPPS/ASC final rule 

with comment period, we adopted OP– 

29: Endoscopy/Polyp Surveillance: 

Appropriate Follow-up Interval for 

Normal Colonoscopy in Average Risk 

Patients (NQF # 0558) (78 FR 75102) 

and OP–30: Endoscopy/Polyp 

Surveillance: Colonoscopy Interval for 

Patients with a History of Adenomatous 

Polyps—Avoidance of Inappropriate 

Use (NQF # 0659) (78 FR 75102), both 

chart-abstracted measures, and 

proposed that aggregate data would be 

collected via an online Web-based tool 

(the QualityNet Web site) beginning 

with the CY 2016 payment 

determination. We finalized that, for the 

CY 2016 payment determination, 

hospitals would be required to submit 

aggregate-level encounter data between 

July 1, 2015 and November 1, 2015 for 

data collected during January 1, 2014 

through December 31, 2014 (78 FR 

75114). 

On December 31, 2013, we issued 

guidance stating that we would delay 

the implementation of OP–29 and OP– 

30 for 3 months for the CY 2016 

payment determination, changing the 

encounter period from January 1, 2014 

through December 31, 2014 to April 1, 

2014 through December 31, 2014 

(https://www.qualitynet.org/dcs/Content

Server?c=Page&pagename=QnetPublic

%2FPage%2FQnetTier3&cid=

1228772854917). The data submission 

window for data collected from April 1, 

2014 through December 31, 2014 is still 

July 1, 2015 through November 1, 2015. 

The data submission windows and the 

encounter periods for subsequent years 

remain as previously finalized (78 FR 

75114); hospitals are to submit Webbased data between July 1 and 

November 1 of the year prior to a 

payment determination with respect to 

the encounter period of January 1 to 

December 31 of 2 years prior to a 

payment determination year. 

Comment: Several commenters noted 

their support for efforts to limit the 

overuse of colonoscopies, but expressed 

concern that OP–29 and OP–30 are 

burdensome because they are chartabstracted measures, have not been 

specified or tested at the facility level, 

and are measures of physician quality 

rather than facility quality. Another 

commenter stated that these measures 

are not yet meaningful due to low 

sample sizes and the lack of 

specifications detailed with algorithms 

for the measures. 

Response: We have previously 

responded to the commenters’ concerns 

that the measure is not specified or 

tested at the facility level and is a 

measure of physician quality rather than 

facility quality. We refer readers to our 

responses in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

75099 through75103) where we 

finalized these measures. We continue 

to believe the measures are suitable for 

HOPDs based on the reasons we 

discussed in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

75100 through 75102). In addition, we 

understand the commenters’ concerns 

regarding the administrative effort 

associated with chart-abstraction. We 

will continue to examine options for 

less burdensome reporting mechanisms 

for these and other program measures in 

the future. 

Comment: Many commenters 

supported CMS’ delayed collection of 

OP–29 and OP–30, but requested 

specific rationale for the delay. 

Response: Based on feedback from 

stakeholders, we believed it would be 

too burdensome to require hospitals to 

implement OP–29 and OP–30 by 

January 1, 2014 since these measures 

could require coordination with other 

physicians (78 FR 75113). 

Consequently, we delayed the data 

collection period until April 1, 2014. 

We believe that this 3-month period was 

sufficient to allow hospitals to put the 

necessary mechanisms in place to 

collect these data. 

3. OP–31: Cataracts—Improvement in 

Patient’s Visual Function within 90 

Days Following Cataract Surgery 

In the CY 2014 OPPS/ASC final rule 

with comment period, we adopted OP– 

31 Cataracts—Improvement in Patient’s 

Visual Function within 90 Days 

Following Cataract Surgery (NQF # 

1536) for the CY 2016 payment 

determination and subsequent years (78 

FR 75103). This measure assesses the 

rate of patients 18 years and older (with 

a diagnosis of uncomplicated cataract) 

in a sample who had improvement in 

visual function achieved within 90 days 

following cataract surgery based on 

completing both a pre-operative and 

post-operative visual function survey. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41036), we: (1) Corrected 

our response to public comments, (2) 

noted our decision to delay data 

collection for the CY 2016 payment 

determination, and (3) proposed 

voluntary data collection for the CY 

2017 payment determination and 

subsequent years for OP–31: Cataracts: 

Improvement in Patient’s Visual 

Function within 90 Days Following 

Cataract Surgery (NQF # 1536). 

a. Correction of Response to Public 

Comments 

In the CY 2014 OPPS/ASC final rule 

with comment period, we stated, in 

response to commenters concerned that 

the proposed chart-abstracted measures 

had not been field-tested, that ‘‘all three 

measures that we are finalizing . . . were 

field-tested in the HOPD facility setting 

by the measure stewards. These three 

measures are: (1) Endoscopy/Polyp 

Surveillance: Appropriate Follow-Up 

Interval for Normal Colonoscopy in 

Average Risk Patients (NQF # 0658); (2) 

Endoscopy/Polyp Surveillance: 

Colonoscopy Interval for Patients with a 

History of Adenomatous Polyps— 

Avoidance of Inappropriate Use (NQF # 

0659); and (3) [OP–31] Cataracts: 

Improvement in Patient’s Visual 

Function within 90 Days Following 

Cataract Surgery (NQF # 1536)’’ (78 FR 

75099 through 75100). 

We inadvertently misstated that the 

OP–31: Cataracts: Improvement in 

Patient’s Visual Function within 90 

Days Following Cataract Surgery (NQF # 

1536) had been field-tested in the HOPD 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66947 

setting, and we are clarifying here that 

this measure has not been field-tested in 

that setting. However, we note that, in 

considering and selecting this measure, 

we took into account other principles or 

factors, including: NQS goals, type of 

measure, HHS Strategic Plan and 

Initiatives, NQF endorsement, MAP 

support, stakeholder input, alignment 

with quality goals and settings, 

relevance, utility, and burden. More 

information about these principles can 

be found in the CY 2014 OPPS/ASC 

proposed rule and final rule with 

comment period (78 FR 43643 through 

43644) and in the CY 2013 OPPS/ASC 

final rule with comment period (77 FR 

68467 through 68468). 

b. Delayed Data Collection for OP–31 

and Exclusion From the CY 2016 

Payment Determination Measure Set 

Since our adoption of this measure, 

we have come to believe that it can be 

operationally difficult for hospitals to 

collect and report this measure. 

Specifically, we are concerned that the 

results of the survey used to assess the 

pre-operative and post-operative visual 

function of the patient may not be 

shared across clinicians, making it 

difficult for hospitals to have knowledge 

of the visual function of the patient 

before and after surgery. 

We also are concerned about the use 

of inconsistent surveys to assess visual 

function; the measure specifications 

allow for the use of any validated survey 

and results may be inconsistent should 

clinicians use different surveys. 

Therefore, on December 31, 2013, we 

issued guidance stating that we would 

delay the implementation of OP–31 by 

3 months from January 1, 2014 to April 

1, 2014 for the CY 2016 payment 

determination (https://www.qualitynet.

org/dcs/ContentServer?c=Page&

pagename=QnetPublic%2FPage%2F

QnetTier3&cid=1228772854917). 

Because of continuing concerns, on 

April 2, 2014, we issued additional 

guidance stating that we would further 

delay the implementation of the 

measure from April 1, 2014 to January 

1, 2015 for the CY 2016 payment 

determination (https://www.qualitynet.

org/dcs/ContentServer?c=Page&

pagename=QnetPublic%2FPage%2F

QnetTier2&cid=1228721506778). In the 

CY 2015 OPPS/ASC proposed rule (79 

FR 41036), we proposed to exclude OP– 

31 Cataracts: Improvement in Patient’s 

Visual Function within 90 Days 

Following Cataract Surgery (NQF # 

1536) from the CY 2016 payment 

determination measure set. We 

proposed not to subject hospitals to a 

payment reduction with respect to this 

measure for the CY 2016 payment 

determination. 

We invited comment on this proposal. 

Comment: Many commenters 

commended CMS’ recognition of the 

associated operational issues and the 

proposal to exclude OP–31 from the CY 

2016 payment measure determination 

set. Other commenters disagreed; they 

stated that complications following 

cataract surgery are not acceptable, and 

they strongly believed that OP–31 tracks 

patient-centered clinical outcomes and 

improves care coordination among 

providers. 

Response: We agree that 

complications following cataract surgery 

are not acceptable. While OP–31 does 

not address complications following 

cataract surgery, it does address 

improvement in visual function 

following cataract surgery and tracks an 

important patient-centered clinical 

outcome. Based on stakeholder 

feedback, we believe this measure 

should be excluded from the CY 2016 

payment determination because there 

are a low number of hospitals ready to 

operationalize this measure for the CY 

2016 payment determination. As noted 

below, we believe that by the CY 2017 

payment determination, many more 

hospitals will be operationally able to 

collect the data necessary for this 

measure and may choose to do so. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to exclude OP– 

31 from the CY 2016 payment 

determination measure set as proposed. 

Therefore, we will not subject hospitals 

to a payment reduction with respect to 

OP–31 for the CY 2016 payment 

determination. 

c. Voluntary Collection of Data for OP– 

31 for the CY 2017 Payment 

Determination and Subsequent Years 

We continue to believe that OP–31 

promotes accountability for Medicare 

beneficiaries, improve coordination of 

services, reduce fragmented care, 

encouraged redesigned care processes 

for high quality and efficient service 

delivery, and incentivize higher value 

care (78 FR 75099). Furthermore, we 

believe that HOPDs should be partners 

in care with physicians and other 

clinicians, and this measure provides an 

opportunity to do so. Therefore, we are 

continuing to include this measure in 

the Hospital OQR Program measure set. 

However, in the CY 2015 OPPS/ASC 

proposed rule (79 FR 41036), we 

proposed that hospitals have the option 

to voluntarily collect and submit OP–31 

data for the CY 2015 encounter period/ 

CY 2017 payment determination and 

subsequent years. In addition, we 

proposed to not subject hospitals to a 

payment reduction with respect to this 

measure during the period of voluntary 

reporting. For hospitals that choose to 

submit data voluntarily, we would 

request that they submit such data using 

the means and timelines finalized in the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75112 through 

75113). Data submitted voluntarily will 

be publicly reported as discussed in the 

CY 2014 OPPS/ASC proposed rule (78 

FR 43645) and final rule with comment 

period (78 FR 75092). 

We invited public comment on this 

proposal. 

Comment: Many commenters 

requested that CMS remove the measure 

from the program entirely, rather than 

delaying implementation and allowing 

voluntary reporting. The commenters 

repeated similar concerns expressed in 

the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75099 through 

75103), where this measure was 

finalized, regarding associated burden, 

suitability for the Hospital OQR 

Program versus the PQRS, program 

alignment of this measure, nonstandardization of collected 

information, NQF endorsement, MAP 

recommendations, and coordination 

challenges faced by facilities. 

Response: We do not agree that we 

should remove the measure entirely, 

because we believe OP–31 addresses an 

area of care that is not adequately 

addressed in our current measure set 

and is an important area of care 

coordination between performing 

physicians, practitioners that assess 

visual function, and HOPDs where 

procedures are performed. We 

previously addressed the above 

concerns in our responses the CY 2014 

OPPS/ASC final rule with comment 

period where we finalized this measure 

and refer readers to that final rule with 

comment period (78 FR 75099 through 

75103) for a discussion of these issues. 

Comment: Commenters opposed to 

voluntary reporting of OP–31 were 

concerned that incomplete display of 

data is confusing and not meaningful to 

consumers and is hard to validate. 

Furthermore, commenters feared that 

the display of data from some hospitals 

but not others would lead some patients 

to conclude that some hospitals are 

more committed to improving cataract 

surgery. 

Response: We appreciate the 

commenters’ concerns, but we do not 

agree that voluntary data reporting will 

result in data that are confusing, are not 

meaningful, or cause patients to 

conclude that some hospitals are more 

committed to improving cataract 

surgery. There are many situations 


tkelley on DSK3SPTVN1PROD with RULES2
66948 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

2Russo A, Elixhauser A, Steiner C, Wier L. 

Hospital-Based Ambulatory Surgery, 2007: 

Statistical Brief #86. Healthcare Cost and 

Utilization Project (HCUP) Statistical Briefs. 

Rockville (MD) 2006. 

3Seeff LC, Richards TB, Shapiro JA, et al. How 

many endoscopies are performed for colorectal 

cancer screening? Results from CDC’s survey of 

endoscopic capacity. Gastroenterology. Dec 2004; 

127(6):1670–1677. 

4Rathgaber SW., Wick TM. Colonoscopy 

completion and complication rates in a community 

gastroenterology practice. Gastrointest Endosc. 

2006; 64:556–62. 

5Rabeneck L, Saskin R, Paszat LF. Onset and 

clinical course of bleeding and perforation after 

outpatient colonoscopy: A population-based study. 

Gastrointest Endosc. 2011; 73:520–3. 

6 Ko CW, Riffle S, Michael L, et al. Serious 

complications within 30 days of screening and 

surveillance colonoscopy are uncommon. Clin 

Gastroenterol Hepatol. 2010; 8:166–73. 

7 Ko CW, Riffle S, Shapiro JA, et al. Incidence of 

minor complications and time lost from normal 

activities after screening or surveillance 

colonoscopy. Gastrointest Endosc. Apr 2007; 

65(4):648–656. 

8Leffler DA, Kheraj R, Garud S, et al. The 

incidence and cost of unexpected hospital use after 

scheduled outpatient endoscopy. Arch Intern Med. 

Oct 25 2010; 170(19):1752–1757. 

9Chukmaitov AS, Menachemi N, Brown SL, 

Saunders C, Tang A, Brooks R. Is there a 

relationship between physician and facility 

volumes of ambulatory procedures and patient 

outcomes? J Ambul Care Manage. Oct–Dec 2008; 

31(4):354–369. 

10Leffler DA, Kheraj R, Garud S, et al. The 

incidence and cost of unexpected hospital use after 

scheduled outpatient endoscopy. Arch Intern Med. 

Oct 25 2010; 170(19):1752–1757. 

where hospitals do not submit 

information to the Hospital OQR 

Program due to lack of cases or low case 

volume. Where quality information is 

submitted, we make this information 

publicly available as statutorily 

required, and we state when it is not 

available. Furthermore, reporting of 

measure data by some hospitals and not 

others under voluntary reporting would 

not affect the validity of data reported 

for this Web-based measure any more so 

than a required measure where not all 

hospitals had cases. We note that at this 

time, we do not validate aggregate data 

submitted to CMS using an online tool, 

so difficulty to validate this information 

is not a program issue. We refer readers 

to section XIII.H.3 of this final rule with 

comment period where we discuss our 

validation procedures. 

We understand some facilities are 

capable of reporting data for this 

measure at this time, and we believe 

those facilities should report if they are 

operationally able to do so. We believe 

voluntary reporting is beneficial for 

HOPDs because all HOPDs, both 

participating and not participating in 

voluntary reporting, can use the 

reported data to gauge their own 

performance and identify improvement 

efforts. By retaining the measure but 

allowing voluntary reporting, we can 

continue to monitor the data submitted 

to assess further enhancement of the 

measure as necessary. 

Comment: Commenters expressed 

support for patient-reported outcome 

measures like OP–31 and recommended 

additional outcome measures for 

cataract procedures, such as 

Complications within 30 Days 

Following Cataract Surgery Requiring 

Additional Procedures (NQF #0564) and 

Better Visual Acuity Within 90 Days 

Following Cataract Surgery (NQF 

#0565). 

Response: We thank the commenters 

for the support and their input regarding 

patient-reported outcome measures. We 

may consider these suggestions for 

future measure selection. 

Comment: One commenter suggested 

that CMS allow voluntary reporting for 

all newly adopted measures, given the 

inconvenience and burden associated 

with preparing to report a measure that 

later may become suspended or for 

which we delay implementation. 

Response: We thank the commenter 

for the suggestion. We understand that 

hospitals may have been 

inconvenienced by this measure, but 

disagree that all newly adopted 

measures should be voluntarily 

reported. We have retained the vast 

majority of measures adopted for the 

Hospital OQR Program. 

After consideration of the public 

comments we received, we are 

finalizing our proposal that hospitals 

have the option to voluntarily collect 

and submit OP–31 data for the CY 2015 

encounter period/CY 2017 payment 

determination and subsequent years as 

proposed. For hospitals that choose to 

submit data, we request that they submit 

such data using the means and timelines 

finalized in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

75113 through 75115). We will not 

subject hospitals to a payment reduction 

with respect to this measure during the 

period of voluntary reporting. However, 

data submitted voluntarily will be 

publicly reported. 

E. New Quality Measure for the CY 2018 

Payment Determination and Subsequent 

Years 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41036 through 41039), we 

proposed to adopt one new claimsbased measure into the Hospital OQR 

Program for the CY 2017 payment 

determination and subsequent years: 

OP–32: Facility 7-Day RiskStandardized Hospital Visit Rate after 

Outpatient Colonoscopy. Colonoscopy 

is one of the most frequently performed 

procedures in the outpatient setting in 

the United States.2 The most recent data 

available indicate that, in 2002 alone, 

physicians performed an estimated 14 

million colonoscopies in the United 

States.3 Colonoscopies are associated 

with a range of well-described and 

potentially preventable adverse events 

that can lead to hospital visits, repeat 

procedures, or surgical intervention for 

treatment, including colonic 

perforation, gastrointestinal (GI) 

bleeding, and cardiopulmonary events 

such as hypoxia, aspiration pneumonia, 

and cardiac arrhythmias. While hospital 

visits are generally unexpected after 

outpatient colonoscopy, the literature 

suggests that the majority of these visits 

occur within the first 7 days.456

Reported hospital visit rates after 

outpatient colonoscopy range from 0.8 

to 1.0 percent at 7 to 14 days post 

procedure, and from 2.4 to 3.8 percent 

at 30 days post procedure.789 Some 

adverse events such as bleeding occur 

after the 7th day, but based on input 

from clinical experts, public comment, 

and empirical analyses, we concluded 

that unplanned hospital visits within 7 

days is the optimal outcome to ensure 

capture of procedure-related adverse 

events and to minimize capture of 

hospital visits unrelated to the 

procedure. This measure provides the 

opportunity for providers to improve 

quality of care and to lower the rates of 

adverse events leading to hospital visits 

after outpatient colonoscopy; this 

measure will encourage providers to 

achieve the outcome rates of the best 

performers. 

We believe it is important to reduce 

adverse patient outcomes associated 

with preparation for colonoscopy, the 

procedure itself, and follow-up care. 

Therefore, we proposed to include OP– 

32: Facility 7-Day Risk-Standardized 

Hospital Visit Rate after Outpatient 

Colonoscopy, which is based on paid 

Medicare FFS claims, in the Hospital 

OQR Program for the CY 2017 payment 

determination and subsequent years. We 

expect that the measure would promote 

improvement in patient care over time 

because transparency in publicly 

reporting measure scores will make 

patient unplanned hospital visits 

(emergency department visits, 

observation stays, and inpatient 

admissions) following colonoscopies 

more visible to providers and patients 

and encourage providers to incorporate 

quality improvement activities in order 

to reduce these visits. Providers are 

often unaware of complications 

following colonoscopy for which 

patients visit the hospital.10 This riskstandardized quality measure will 

address this information gap and 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66949 

promote quality improvement by 

providing feedback to facilities and 

physicians, as well as transparency for 

patients on the rates and variation 

across facilities in unplanned hospital 

visits after colonoscopy. 

The outcome measured in the OP–32 

measure is all-cause, unplanned 

hospital visits (admissions, observation 

stays, and emergency department visits) 

within 7 days of an outpatient 

colonoscopy procedure. The measure 

score, also referred to as the facilitylevel risk-standardized hospital visit 

rate, is derived from the calculation of 

the ratio of the numerator to the 

denominator multiplied by the crude 

rate. The numerator is the number of 

predicted (meaning adjusted actual) 

hospital visits, which is the number of 

unplanned hospital visits within 7 days 

of colonoscopy that the facility is 

predicted to have based on its case-mix. 

The denominator is the number of 

expected hospital visits, which is the 

number of unplanned hospital visits the 

facility is expected to have based on the 

nation’s performance with the facility’s 

case-mix. The crude rate is the national 

unadjusted number of patients who had 

a hospital visit post-colonoscopy among 

all patients who had a colonoscopy. 

Based on discussions with clinical 

and technical panel experts, the 

measure excludes colonoscopies for 

patients undergoing concomitant highrisk upper GI endoscopy because these 

patients are at a higher risk for hospital 

visits than patients undergoing a typical 

colonoscopy, and patients with a history 

of inflammatory bowel disease (IBD) or 

diverticulitis in the year preceding the 

colonoscopy because we likely could 

not fully characterize and adjust for 

their pre-procedure risk of needing a 

post-procedure hospital visit or identify 

whether these admissions are planned 

or unplanned. The measure also 

excludes procedures for patients who 

lack continuous enrollment in Medicare 

FFS Parts A and B in the 1 month after 

the procedure to ensure all patients 

have complete data available for 

outcome assessment. The statistical risk 

adjustment model includes 15 clinically 

relevant risk-adjustment variables that 

are strongly associated with risk of 

hospital visits within 7 days following 

colonoscopy. Additional methodology 

details and information obtained from 

public comments for measure 

development are available at: http:// 

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/ 

Measure-Methodology.html under 

‘‘Hospital Outpatient Colonoscopy.’’ 

Section 1890A(a)(2) of the Act 

outlines the pre-rulemaking process 

established under section 1890A of the 

Act, which requires the Secretary to 

make available to the public by 

December 1 of each year a list of quality 

and efficiency measures that the 

Secretary is considering. This measure 

was included on a publicly available 

document titled ‘‘MAP Pre-Rulemaking 

Report: 2014 Recommendations on 

Measures for More than 20 Federal 

Programs’’ on the NQF Web site at: 

http://www.qualityforum.org/ 

Publications/2014/01/MAP_PreRulemaking_Report_2014

_Recommendations_on_Measures

_for_More_than_20_Federal

_Programs.aspx (formerly referred to as 

the ‘‘List of Measures Under 

Consideration’’) in compliance with 

section 1890A(a)(2) of the Act. (We note 

that at the time the measure was listed 

on the ‘‘MAP Pre-Rulemaking Report: 

2014 Recommendations on Measures for 

More than 20 Federal Programs,’’ it was 

named ‘‘High-Acuity Care Visits after 

Outpatient Colonoscopy Procedure.’’) 

The MAP, which represents 

stakeholder groups, conditionally 

supported the measure, ‘‘noting the 

need to provide outcome information to 

inform consumer decisions and drive 

quality improvement.’’ The MAP further 

stated that ‘‘[t]his measure addresses an 

important quality and safety issue with 

incidence of these events ranging from 

10 to 22 per 1,000 after risk 

adjustment.’’ However, the MAP also 

‘‘recognized the need for the measure to 

be further developed and gain NQF 

endorsement. The MAP expects the 

endorsement process to resolve 

questions of the reliability and validity 

of the measure as well as with the 

accuracy of the algorithm for attributing 

claims data in light of possible effects of 

the Medicare 3-day payment window 

policy.’’ As required under section 

1890A(a)(4) of the Act, we considered 

the input and recommendations 

provided by the MAP in selecting 

measures to propose for the Hospital 

OQR Program. 

We believe we have addressed the 

concerns raised by the MAP to the 

extent possible. The measure is welldefined and precisely specified for 

consistent implementation within and 

between organizations that will allow 

for comparability. Reliability testing 

demonstrated the measure data 

elements produced were repeatable; that 

is, the same results were produced a 

high proportion of the time when 

assessed in the same population in the 

same time period. Validity testing 

demonstrated that the measure data 

elements produce measure scores that 

correctly reflect the quality of care 

provided and that adequately identify 

differences in quality. In order to ensure 

the accuracy of the algorithm for 

attributing claims data and the 

comprehensive capture of HOPD 

colonoscopies potentially affected by 

the policy, we identified physician 

claims for colonoscopy in the HOPD 

setting from the Medicare Part B 

Standard Analytical Files (SAF) with an 

inpatient admission within 3 days and 

lacking a corresponding HOPD facility 

claim. We then attribute the 

colonoscopies identified as affected by 

this policy to the appropriate HOPD 

facility using the facility provider ID 

from the inpatient claim. 

Section 1833(t)(17)(C)(i) of the Act 

states that, ‘‘The Secretary shall develop 

measures . . . that reflect consensus 

among affected parties and, to the extent 

feasible and practicable, shall include 

measures set forth by one or more 

national consensus building entities.’’ 

We believe that this proposed measure 

reflects consensus among the affected 

parties, because the MAP, which 

represents stakeholder groups, 

reviewed, conditionally supported the 

measure, and stated that it ‘‘would 

provide valuable outcome information 

to inform consumer decision and drive 

quality improvement.’’ Further, the 

measure was subject to public comment 

during the MAP and measure 

development processes, with some 

public commenters agreeing with the 

MAP’s conclusions on the measure 

(MAP Report, January 2014, p. 184 

http://www.qualityforum.org/ 

Publications/2014/01/MAP_PreRulemaking_Report_

2014_Recommendations_on_Measures

_for_More_than_20_Federal_

Programs.aspx). We also note that the 

measure was submitted to NQF for 

endorsement on February 21, 2014. 

Currently, there are no publicly 

available quality of care reports for 

providers or facilities that conduct 

outpatient colonoscopies. Thus, 

adoption of this measure provides an 

opportunity to enhance the information 

available to patients choosing among 

providers who offer this elective 

procedure. We believe this measure 

would reduce adverse patient outcomes 

associated with preparation for 

colonoscopy, the procedure itself, and 

follow-up care by capturing and making 

more visible to providers and patients 

all unplanned hospital visits following 

the procedure. Further, providing 

outcome rates to providers will make 

visible to clinicians meaningful quality 

differences and encourage 

improvement. Although this measure is 

not NQF-endorsed, it is currently 

undergoing the endorsement process, as 

noted above. Therefore, we believe the 


tkelley on DSK3SPTVN1PROD with RULES2
66950 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

11Available at: http://www.qualityforum.org/

docs/measure_evaluation_criteria.aspx. 

12Leffler DA, Kheraj R, Garud S, et al. The 

incidence and cost of unexpected hospital use after 

scheduled outpatient endoscopy. Arch Intern Med. 

Oct 25 2010; 170(19): 1752–1757. 

13 2010 Medicare 20 percent fee-for-service 

sample. Based on an analysis of 20 percent sample 

of Medicare FFS data from 2010 during measure 

development. The 20 percent sample included 

332,391 outpatient colonoscopies meeting the 

measure inclusion and exclusion criteria, and 1.6 

percent of these colonoscopies were followed by an 

unplanned hospital visit. This equates to 5,331 

unplanned hospital visits in the 20 percent sample. 

statutory requirement for included 

measures to have, to the extent feasible 

and practicable, been set forth by a 

national consensus-building entity has 

been met. 

We invited public comment on the 

proposal to include OP–32 in the 

Hospital OQR Program for the CY 2017 

payment determination and subsequent 

years. 

Comment: Several commenters 

supported the adoption of OP–32, 

stating that it will provide patients with 

important information about the quality 

of colonoscopy care furnished in 

outpatient settings. Some commenters 

noted that CMS has appropriately 

considered the MAP’s input in adopting 

this measure and that the measure’s 

adoption is a good first step in the 

continued evolution of the Hospital 

OQR Program. 

Response: We thank commenters for 

their support and acknowledgement that 

the measure is appropriate for the 

Hospital OQR Program. We agree that 

measuring quality of care associated 

with colonoscopy procedures is an 

important clinical care area to assess for 

HOPDs. 

Comment: Many commenters urged 

CMS not to adopt OP–32 until it is NQFendorsed. Several of these commenters 

also noted that the MAP supported this 

measure on condition of NQFendorsement, and stated that the NQF 

process would resolve a number of 

questions about the reliability, validity 

and feasibility of this measure. The 

commenters requested that, in general, 

CMS only include measures in the 

Hospital OQR Program that have been 

NQF-endorsed in order to avoid 

subsequent suspension or removal of 

these measures. 

Response: We note that not all of the 

measures adopted by the Hospital OQR 

Program are NQF-endorsed, and as we 

stated in our earlier discussion in this 

final rule with comment period, NQF 

endorsement is not a program 

requirement, as consensus among 

affected parties can be reached through 

means other than NQF endorsement. 

Under section 1833(t)(17)(C)(i) of the 

Act, the Secretary must develop 

measures that reflect consensus among 

affected parties and, to the extent 

feasible and practicable, must include 

measures set forth by one or more 

national consensus building entities. 

Whenever possible, we strive to adopt 

NQF-endorsed measures because these 

measures will meet these requirements. 

However, we believe the requirements 

that measures reflect consensus among 

affected parties can be achieved in other 

ways, including through the measure 

development process, through broad 

acceptance and use of the measure, and 

through public comments. Further, it 

may not be feasible or practicable to 

adopt an NQF-endorsed measure, such 

as when an NQF-endorsed measure does 

not exist. Section 1833(t)(17)(C)(i) of the 

Act does not require that each measure 

we adopt for the OQR Program be 

endorsed by a national consensus 

building entity, or by the NQF 

specifically. As discussed below, we 

believe the measure as developed 

exhibits sufficient levels of reliability, 

validity, and feasibility to be adopted 

for the Hospital OQR Program. We have 

also submitted this measure to the NQF 

for endorsement. 

Comment: A few commenters noted 

that the measure is currently being 

reviewed by the NQF All-Cause 

Admissions and Readmissions Standing 

Committee. Commenters were 

disappointed that the Committee’s 

minutes indicated there were no 

discussions of consideration of key 

elements of the measure’s construction 

and testing. 

Response: We thank the commenters 

for sharing their concerns. We believe 

the NQF process is rigorous and 

transparent. We understand the NQF 

All-Cause Admissions and 

Readmissions Standing Committee 

applies the four NQF criteria for 

measure endorsement 11 and votes on 

each criterion. In addition, our 

understanding is that the measure was 

discussed in detail by NQF working 

groups prior to the measure discussion 

at the All-Cause Admissions and 

Readmissions Standing Committee 

(http://www.qualityforum.org/Project

Materials.aspx?projectID=73619). 

NQF also seeks public comments on 

measures before endorsement. http:// 

www.qualityforum.org/comments_By_

Project.aspx?projectID=110&ActivityID=

762#p=3. (This link requires users to log 

in to the NQF Web site.) For questions 

related to NQF internal procedures, we 

suggest contacting the NQF directly at 

http://www.qualityforum.org/About_

NQF/Contact_NQF.aspx. 

Comment: Many commenters did not 

support CMS’ proposal to finalize OP– 

32, stating that complications from 

colonoscopies are rare and hospitals 

already take steps to ensure 

colonoscopies are conducted in such a 

way so as to eliminate preventable 

complications. Some commenters 

specifically noted that the literature 

indicates the measured incidence rate is 

less than 2 percent, and does not rise to 

the level of importance needed for a 

national quality measurement program. 

Response: Given the widespread use 

of colonoscopy for colorectal cancer 

screening in the outpatient setting, we 

consider measuring the quality of this 

high volume procedure to be a priority. 

We agree that the incidence of 

colonoscopy complications is relatively 

low. However, serious adverse events, 

such as perforation of the bowel and 

bleeding, may occur following 

colonoscopies. We view OP–32 as a 

critical outcome measure for which the 

goal is to drive toward and sustain zero 

harm. In addition, some literature 

suggests that many facilities performing 

colonoscopies are unaware of patients 

accessing hospital-based care with 

adverse events because patients return 

to different facilities, including other 

hospitals and emergency departments, 

and would not return to the same 

outpatient facility. For example, one 

study showed that physicians were 

unaware of nearly 75 percent of hospital 

admissions for adverse events following 

colonoscopy.12 While most 

colonoscopies are performed without 

subsequent complication, we note that, 

among Medicare patients aged 65 and 

older, 1.6 percent of outpatient 

colonoscopies resulted in an unplanned 

hospital visit within 7 days.13 This is 

based on a 20-percent sample of 

nationwide Medicare FFS patients. If we 

were to use full national data (that is, a 

100 percent sample), we estimate 1.7 

million colonoscopies would have been 

performed among Medicare FFS 

patients and nearly 27,000 unplanned 

hospitals visits would have occurred 

within 7 days of colonoscopy. These 

findings suggest that adverse events are 

not as rare or inconsequential as many 

believed and that quality measurement 

for colonoscopy procedures in the 

hospital outpatient setting is important. 

Comment: Many commenters 

expressed concern that OP–32 includes 

hospital visits unrelated to colonoscopy 

(counted in the numerator). Some 

commenters questioned why the 

measure uses an all-cause categorization 

versus only admissions attributable to 

colonoscopies. One commenter 

suggested that all high-risk 

colonoscopies (such as patients with 

multiple biopsies, patients with 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66951 

14 Day LW, Kwon A, Inadomi JM, et al. Adverse 

events in older patients undergoing colonoscopy: a 

systematic review and meta-analysis. 2011; 74:885– 

96. 

15 Ko CW, Dominitz JA. Complications of 

colonoscopy: Magnitude and management. 

Gastrointest Endosc Clin N Am 2010;20:659–71. 

16ASGE Standards of Practice Committee, Fisher 

DA, Maple JT, et al. Complications of colonoscopy. 

Gastrointest Endosc 2011;74:745–52. 

17Baudet JS, Diaz-Bethencourt D, Aviles J, et al. 

Minor adverse events of colonoscopy on ambulatory 

patients: The impact of moderate sedation. Eur J 

Gastroenterol Hepatol 2009; 21:656–61. 

18 Ko CW, Riffle S, Shapiro JA, et al. Incidence 

of minor complications and time lost from normal 

activities after screening or surveillance 

colonoscopy. 2007; 65:648–56. 

19Horwitz L, Grady J, Dorsey K, Zhang W, Keenan 

M, Keshawarz A, Cohen D, Ngo C, Okai M, Nwosu 

C, Lin Z, Bhat K, Krumholz H, Bernheim S. 2014 

Measures Updates and Specifications Report: 

Hospital-Wide All-Cause Unplanned 

Readmission—Version 3.0. 2014: Centers for 

Medicare & Medicaid Services, 2014. 

20Available at: http://www.cms.gov/Medicare/ 

Quality-Initiatives-Patient-Assessment-Instruments/ 

HospitalQualityInits/Measure-Methodology.html. 

inflammatory bowel disease, and 

diverticulitis) should be excluded from 

the measure. Commenters 

recommended that OP–32 should be 

limited to low-risk surveillance and 

screening colonoscopies as well as 

nontherapeutic colonoscopies for 

Medicare patients. One commenter 

appreciated that OP–32 includes a 

mechanism for excluding hospital visits 

for certain ‘‘planned’’ procedures, but 

encouraged CMS to expand that list to 

also include bone fractures and 

behavioral health disorders. 

Response: We clarify that this 

measure is purposely designed to use a 

broad outcome of hospital visits 

following surgery rather than a narrow 

set of easily identifiable complications. 

From a patient and health care system 

perspective, the goal of this measure is 

to encourage and inform provider efforts 

to minimize all potential acute 

complications, not just those narrowly 

related to procedural technique. This is 

important as the literature 14 15 16 17 18

suggests that hospital visits following 

colonoscopy occur due to a range of 

adverse events relating to the bowel 

preparation, anesthesia, the 

colonoscopy procedure itself, and 

follow-up care. These adverse events 

include a range of symptoms and signs 

such as abdominal pain, bloating, 

dizziness and collapse, electrolyte 

disturbances, and cardiorespiratory 

symptoms (from sedation use) in 

addition to other complications, such as 

bleeding and bowel perforation, that are 

directly related to procedural 

techniques. The broad outcome of 

unplanned hospital visits captures all of 

these potential acute complications of 

colonoscopy. 

As to the suggestion of expanding the 

list to include bone fractures and 

behavioral health disorders, we note 

that inpatient admissions for bone 

fracture and behavioral health disorders 

(such as depression and anxiety) are 

typically acute and are not generally 

considered as ‘‘planned’’ admissions. 

We do not expect planned admissions 

for these conditions within the first 7- 

days following colonoscopy. 

Furthermore, we have adapted the 

planned readmission algorithms 

developed by CMS independent of OP– 

32. This algorithm has been validated 

against medical record (chart-extracted) 

data to ensure it only removes planned 

admissions. 

Our goal for including the measure is 

to encourage providers to be mindful of 

reducing post-colonoscopy admission 

caused by prior colonoscopy procedures 

performed at a HOPD. For example, 

patients may be at higher risk of falls 

post-colonoscopy secondary to 

dehydration following the bowel 

preparation for the procedure, and there 

may be opportunities for providers to 

minimize this risk. Furthermore, we 

removed planned admissions from the 

measure outcome by adapting CMS’ 

Planned Readmission Algorithm version 

3.0.19 20 This algorithm removes 

nonacute admissions for scheduled 

procedures (for example, total hip 

replacement) and other types of care 

always considered planned (for 

example, rehabilitation or maintenance 

chemotherapy) from the outcome 

because these admissions do not reflect 

differences in colonoscopy quality of 

care. 

Comment: One commenter noted that 

CMS stated that the statistical risk 

adjustment model includes 15 clinically 

relevant risk- adjustment variables (such 

as number of polyps removed) that are 

strongly associated with risk of hospital 

visits within seven days following 

colonoscopy and certain patients 

receiving colonoscopies that would be 

more likely to have a subsequent visit 

were excluded. The commenter stated 

that CMS did not report the variation 

between hospitals in the application for 

NQF-endorsement. The commenter 

raised the possibility of no statistically 

significant difference between a 

hospital’s risk-adjusted visit rate and the 

national average. The commenter 

believed this scenario would make it 

impossible to identify poor performers 

and good performers for this measure. 

Without this type of differentiation, the 

commenter did not understand how this 

measure will be actionable for care 

improvement. The commenter suggested 

that CMS conduct a root cause analysis 

for specific related readmission after 

colonoscopy or test of the variation of 

the measure between hospital providers. 

The commenter also suggested that The 

Joint Commission’s guidelines and 

relevant Conditions of Participation 

standards would enhance care 

improvement efforts. 

Response: We thank the commenter 

for their suggestions to enhance 

improvement efforts for colonoscopy. 

We clarify that, in the application for 

NQF endorsement, we noted that the 

measure, following risk-adjustment, is 

able to detect statistically significant 

variation (good and poor performers) 

between outpatient facilities by 

demonstrating measure score variation 

using the 2010 Healthcare Cost and 

Utilization Project (HCUP) data from 

four States (California, New York, 

Nebraska, and Florida). Using a very 

conservative bootstrapping (sampling 

with replacement) statistical technique, 

we constructed 95 percent interval 

estimates (similar to confidence 

intervals) around the facility measure 

score and used the estimates to place 

facilities into three performance 

categories: worse than expected; no 

different than expected; and better than 

expected. Based on this analysis, we 

identified 5 outlier facilities among a 

total of 992 ASCs and HOPDs. This 

analysis included only about one-tenth 

of all outpatient facilities in the United 

States, and typically we see greater 

variation between facilities when 100 

percent of nationwide facilities are 

included for actual measure 

implementation and reporting due to 

increased precision related to greater 

sample size. 

We disagree with the notion that there 

is a possibility of no statistically 

significant difference between a 

hospital’s risk-adjusted visit rate and the 

national average. Our analysis shows 

statistically significant facility variation. 

Some facilities have a hospital visit rate 

that is higher than the expected national 

average rate and this is statistically 

significant. Also, we only tested 

provider variation using data from 4 

States. We expect greater variation and 

more outliers using nationwide data. 

We are committed to filling the 

performance gaps in colonoscopy 

performed in the outpatient setting. 

Therefore, we believe this measure is 

appropriate for the outpatient setting. 

However, in response to comments, to 

allow sufficient time to conduct further 

analysis of this measure, we are 

finalizing this measure beginning with 

the CY 2018 payment determination, 

rather than the CY 2017 payment 

determination as proposed. We plan to 

perform a dry run of the measure in 


tkelley on DSK3SPTVN1PROD with RULES2
66952 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

2015. From our perspective, a dry run 

is a preliminary analysis of data in 

which HOPDs may review their measure 

results, and ask questions about and 

become familiar with the measure 

methodology. Dry runs will include 3 to 

4 years of paid Medicare FFS claims. 

We will use the most recent complete 

claims samples (usually 6 to 9 months 

prior to the start date) for dry runs. For 

example, if the dry run begins in March 

2015, the most recent data available may 

be July 2011 to June 2014 (assuming we 

use 3 years of data). Because we use 

paid Medicare FFS claims, HOPDs will 

not need to submit any additional data 

for the dry run. General information 

about dry run as well as confidential 

reports will be made available for 

hospitals to review on their accounts at 

https://www.qualitynet.org. The dry run 

will generate confidential reports at the 

patient level, indicating whether the 

patient had a hospital visit, the type of 

visit (admission, emergency department 

visit, or observational stay), the 

admitting facility, and the principal 

discharge diagnosis. Further, the dry 

run will enable HOPDs to see the 

measure score reports and have the 

opportunity to receive individual 

patient data and information contained 

within individual patient records. In 

addition, we will continue to generate 

these reports for HOPDs after we 

implement the measure beginning with 

the CY 2018 payment determination. 

HOPDs can use the information to 

identify performance gaps and develop 

quality improvement strategies. 

Dry run results are not linked to 

public reporting, payment 

determinations, or reliability testing. We 

expect the dry run to take 

approximately one month to conduct, 

during which facilities will be provided 

the confidential report and the 

opportunity to review their performance 

and provide feedback to us. The 

measure will have no payment impact 

until the CY 2018 payment 

determination and subsequent years. 

Public display of data will occur on or 

after December 1, 2017, but there will be 

no public display of the dry run data. 

We agree that adhering to The Joint 

Commission’s guidelines and relevant 

Conditions of Participation standards 

could enhance care improvement efforts 

and hospitals’ rates on this measure, 

and we encourage hospitals to follow 

these guidelines and standards. We also 

believe that issuing reports to hospitals, 

such as those that we will provide 

during the dry-run, would help 

hospitals to identify the root cause 

(practices and conditions) that could 

cause hospital visits after colonoscopy. 

Comment: Many commenters 

expressed concern that OP–32 is not 

sufficiently reliable to be included in 

the Hospital OQR Program; specifically, 

the measure developer has indicated 

that the measure is only ‘‘fairly’’ 

reliable, with an interclass correlation 

coefficient (ICC) of 0.335. These 

commenters contended that ‘‘fair’’ 

reliability is not sufficient for publicly 

reported quality metrics since such 

information could misinform the public, 

and urged CMS to conduct an analysis 

on the measure’s reliability to 

understand the amount of data required 

to achieve ‘‘good’’ reliability. Several 

commenters argued that ‘‘good’’ 

reliability should result in an ICC of at 

least 0.60. Other commenters believed 

that reliability will improve with several 

years’ worth of data. Another 

commenter requested that data from this 

measure be withheld from public 

reporting until concerns about its 

reliability and validity can be 

thoroughly assessed. 

Response: We disagree with 

commenters and believe that OP–32 is 

sufficiently reliable to be included in 

the Hospital OQR Program. The ICC 

value submitted in the initial NQF 

application (0.335) was calculated using 

a split sample of data from 2 years. We 

randomly split the patient cohort at 

each hospital into two equal halves, 

calculated the measure using each half, 

and then calculated the agreement 

between these two (the ‘test’ and the 

‘retest’). After submitting the measure to 

NQF for endorsement review, we 

conducted additional calculations of the 

reliability testing score, this time using 

the Spearman-Brown prophecy formula. 

The Spearman-Brown prophecy formula 

is an accepted statistical method which 

estimates the ICC if the sample were 

increased. Therefore, it allows us to 

estimate what the reliability score 

would be if all observations were used 

for public reporting rather than using a 

split sample. Our Spearman-Brown 

prophecy formula calculations resulted 

in a higher ICC of 0.43. 

The NQF considers the ICC values 

ranging from 0.21 to 0.40 as ‘‘fair’’ 

reliability and values ranging from 0.41 

to 0.60 as ‘‘moderate’’ reliability. 

Therefore, the ICC values of 0.335 and 

0.43 are interpreted as ‘‘fair’’ and 

‘‘moderate’’ reliability, respectively. 

These ICC values are also in line with 

other NQF-endorsed outcome measures 

used in other CMS programs. For 

example, in the Hospital Readmissions 

Reduction Program, the Inpatient Acute 

Myocardial Infarction (AMI) 30-day Risk 

Standardized Readmission measure 

(NQF #0505) (76 FR 51667) has an ICC 

of 0.369, and the Pneumonia (PN) 30- 

day Risk Standardized Readmission 

measure (NQF #0506), also in the 

Hospital Readmissions Reduction 

Program (76 FR 51667), has an ICC of 

0.406. Both measures are NQFendorsed. 

Regarding the concerns that the 

public may be misinformed and that we 

should withhold public reporting until 

the measure’s reliability and validity is 

addressed, as stated above, we believe 

the reliability of the measure is 

sufficiently reliable for inclusion in the 

Hospital OQR Program and do not agree 

that the public may be misinformed or 

that we should withhold public 

reporting. In addition to our 

calculations above, reliability testing 

previously conducted by the measure 

steward demonstrated the measure data 

elements produced were repeatable; that 

is, the same results were produced a 

high proportion of the time when 

assessed in the same population in the 

same time period. Also, validity testing 

by the measure steward demonstrated 

that the measure data elements produce 

measure scores that correctly reflect the 

quality of care provided and that 

adequately identify differences in 

quality. 

As the commenters suggested, the 

measure reliability may be further 

improved by using several years’ worth 

of data; however, we must balance the 

reliability of the measure with the 

timeliness of the measure. As discussed, 

at this time, we believe that 1 year of 

data appropriately balances these 

competing interests for payment 

determination purposes, but we will 

continue to assess this belief during the 

dry run. Also, we will consider 

conducting additional reliability 

assessments of the measure using an 

extended data period. 

Moreover, we believe it is important 

to include this measure in the program 

because colonoscopy is a high volume, 

common procedure performed at 

outpatient facilities and is frequently 

performed on relatively healthy patients 

to screen for colorectal cancer (CRC). 

Given the widespread use of 

colonoscopy, understanding and 

minimizing procedure-related adverse 

events is a high priority. These adverse 

events, such as abdominal pain, 

bleeding, and intestinal perforation, can 

result in unanticipated hospital visits 

post procedure. Physicians performing 

colonoscopies are often unaware that 

patients seek acute care at hospitals 

following the procedure and the 

associated adverse events are potentially 

preventable. We strongly believe that 

the measure would promote 

improvement in patient care over time 

because transparency in publicly 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66953 

reporting measure scores would make 

patient unplanned hospital visits 

(emergency department visits, 

observation stays, and inpatient 

admissions) following colonoscopies 

more visible to HOPDs and patients and 

incentivize HOPDs to incorporate 

quality improvement activities in order 

to reduce these visits. 

Finally, we believe this measure 

should be included in the program 

because currently, this risk-standardized 

colonoscopy quality measure is the only 

measure available that would address 

this information gap and promote 

quality improvement by providing 

feedback to facilities and physicians, as 

well as transparency for patients on the 

rates and variation across facilities in 

unplanned hospital visits after 

colonoscopy. There are no publicly 

available quality of care reports for 

HOPDs that conduct outpatient 

colonoscopies. Therefore, adoption of 

this measure provides an opportunity to 

enhance the information available to 

patients choosing among HOPDs that 

offer this elective procedure. We believe 

this measure would reduce adverse 

patient outcomes associated with 

preparation for colonoscopy, the 

procedure itself, and follow-up care by 

capturing and making more visible to 

HOPDs and patients all unplanned 

hospital visits following the procedure. 

In addition, providing outcome rates to 

HOPDs would make visible to clinicians 

meaningful quality differences and 

incentivize improvement. 

In response to comments, however, to 

allow sufficient time to conduct further 

analysis of this measure, we are 

finalizing this measure beginning with 

the CY 2018 payment determination, 

rather than the CY 2017 payment 

determination as proposed. We plan to 

perform a dry run (a preliminary 

analysis) of the measure in 2015. We 

refer readers to our discussion of the dry 

run above, in response to a previous 

comment. 

With national implementation of a 

dry run of this measure, we will also 

review the appropriate cutoff volume for 

facilities, if necessary, in reporting the 

measure score. We require a minimum 

volume (cutoff volume) of 

colonoscopies per facility to be able to 

calculate a reliable measure score for the 

facility. We have yet to determine the 

minimum volume per facility (that is, 

the cutoff colonoscopy volume). 

Because we used a Medicare 20 percent 

sample to develop the measure, we 

could not estimate this cutoff during 

measure development. However, testing 

during the measure dry-run with 100 

percent of the sample per facility will 

help us to determine the appropriate 

cutoff volume of colonoscopies per 

facility. HOPDs will be notified via the 

QualityNet Web site of the cutoff 

volume of colonscopies per facility. 

While some HOPDs perform too few 

colonoscopies for us to calculate a 

measure score, and we would not 

publicly report their data, these 

facilities would remain in the measure 

cohort. Typically, for public reporting of 

hospital measures on the Hospital 

Compare Web site, the measure score is 

reported as ‘‘Number of cases too small’’ 

for hospitals with fewer cases than the 

cutoff. We will use the same protocol 

when the measure is publicly reported 

for the Hospital OQR Program, and will 

report a measure score as ‘‘Number of 

cases too small’’ for HOPDs with fewer 

cases than the cutoff on the QualityNet 

Web site. 

Comment: Many commenters were 

concerned that HOPDs may not have 

actionable information generated from 

OP–32. Specifically, commenters were 

concerned that claims would not 

accurately capture the data of patients 

who had initial colonoscopy at a facility 

but had a subsequent hospital visit at a 

different facility. Several of these 

commenters questioned whether this 

measure will benefit facilities or 

patients if each facility only receives a 

report with an aggregate number of 

claims based on historical data. 

Commenters requested that CMS clarify 

its plan to report detailed patient-level 

data confidentially to facilities that 

indicate whether the patient had a 

hospital visit, the type of visit 

(admission, emergency department visit, 

and observational stay), the admitting 

facility, and the principal discharge 

diagnosis. These reports would enable 

facilities to understand their 

performance and take steps where 

remediation is needed. One commenter 

also recommended that CMS allow at 

least a two-quarter black-out period so 

that hospitals have ample time to review 

and request corrections to their data. 

Response: We do not believe that 

claims data will be difficult to capture 

at a facility different from where the 

colonoscopy was performed. Hospitals 

are responsible for accurately 

populating claims, regardless of where 

the patient had the procedure done. 

In addition, due to commenters’ 

concerns, we intend to conduct a dry 

run (discussed in detail above) and 

provide detailed facility specific 

information containing confidential 

patient-level data to all HOPDs. The dry 

run will generate confidential reports at 

the patient level, indicating whether the 

patient had a hospital visit, the type of 

visit (admission, emergency department 

visit, or observational stay), the 

admitting facility, and the principal 

discharge diagnosis. Further, it will 

enable HOPDs to see the measure score 

reports and have the opportunity to 

receive individual patient data and 

information contained within 

individual patient records. In addition, 

we will continue to generate these 

reports for HOPDs after we implement 

the measure beginning with the CY 2018 

payment determination. HOPDs can use 

the information to identify performance 

gaps and develop quality improvement 

strategies. As we previously stated, dry 

runs have no payment impact and are 

not linked to public reporting. The main 

purpose of the dry run is to provide 

opportunities for hospitals to review 

their measure results and ask questions 

about measure methodology. 

Comment: A few commenters stated 

that the measure methodology should 

include risk adjustment for 

socioeconomic factors so the results are 

accurate and reflect differences in 

socioeconomic burden and racial 

composition of patients across hospitals. 

Commenters were concerned that 

without proper risk adjustment, a 

hospital that serves a disproportionate 

share of low-income patients with 

confounding socioeconomic factors may 

have more unplanned visits following 

outpatient procedures. Commenters 

stated that the measure score can be 

skewed by factors such as race, 

homelessness, cultural and linguistic 

barriers, and low literacy. Commenters 

also stated that the readmissions of lowincome patients with confounding 

socioeconomic factors are caused by 

factors beyond the control of the 

hospital and, therefore, do not reflect 

the quality of care being provided. 

Several commenters recommended that, 

after the NQF has reviewed OP–32, CMS 

consider submitting this measure as part 

of the socioeconomic status (SES) trial 

period created by the NQF Board of 

Directors. 

Response: We do not believe that the 

measure is biased for low-income 

patients with confounding 

socioeconomic factors. When 

developing the measure, we tested how 

the measure score varied among 

outpatient facilities with varying 

proportion of low SES patients. Using 

patient dual eligibility status as an 

indicator of low SES, we noted that the 

median measure score, and the measure 

score distribution, was similar among 

facilities with many low SES patients 

compared to facilities with a few low 

SES patients. Based on our testing as 

well as input from the measure 

developer and the national technical 

expert panel, we concluded that 

facilities with a high proportion of low 


tkelley on DSK3SPTVN1PROD with RULES2
66954 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

21Available at: http://www.qualityforum.org/AllCause_Admissions_and_Readmissions_

Measures.aspx. 

22Center for Medicare and Medicaid Services, 

‘‘Facility 7-Day Risk-Standardized Hospital Visit 

Rate after Outpatient Colonoscopy,’’ National 

Quality Form Measure Submission Form, 20. 

SES patients were not biased by this 

measure and that the measure score was 

unaffected by SES status. These findings 

were presented to the NQF All-Cause 

Admissions and Readmissions Measures 

Standing Committee on May 6, 2014.21

Also, we thank the commenters for 

the suggestions to submit the measure as 

part of the SES trial period, which is a 

trial for a defined period that would 

assess the impact and implications of 

risk adjusting relevant quality measures 

for sociodemographic factors and was a 

recommendation of the Consensus 

Standards Approval Committee 

following its review of the NQF Expert 

Panel’s report Risk Adjustment for 

Socioeconomic Status and Other 

Sociodemographic Factors. (http://

www.qualityforum.org/Press_Releases/

2014/NQF_Board_Approves_Trial_Risk_

Adjustment.aspx). We will take this 

suggestion into consideration in future 

years. 

Comment: One commenter requested 

clarification of how the measure 

numerator and denominator for OP–32 

are calculated. 

Response: The measure score is the 

ratio of predicted hospital visits 

(numerator) over the expected hospital 

visits (denominator) multiplied by the 

crude national rate. The measure score 

numerator is the predicted rate, which 

is the number of unplanned hospital 

visits the facility is predicted to have 

within 7 days of colonoscopy, and it 

accounts for the observed unplanned 

hospital visit rate, the number of 

colonoscopies performed at the facility, 

and the facility’s case mix. This is 

sometimes referred to as the ‘‘adjusted 

actual rate.’’ 

The measure score denominator is the 

expected rate, which is the number of 

unplanned hospital visits the facility is 

expected to have based on the nation’s 

performance with that facility’s case and 

mix. It is the sum of all patients’ 

expected probabilities of a hospital visit, 

given their risk factors and the risk of 

readmission at an average facility. The 

contribution of each risk factor (for 

example, age) to the patient’s risk of a 

hospital admission is calculated based 

on all of the patients in the measure 

cohort. The crude national rate is the 

average rate of hospital visits following 

colonoscopy observed in the entire 

measure cohort. We also refer readers to 

the measure discussion above and 

measure specifications (http://

www.qualityforum.org/WorkArea/

linkit.aspx?LinkIdentifier=id&Item

ID=75057) for a more detailed 

discussion of how the numerator and 

denominator are calculated. 

Comment: Commenters believed that 

the Medicare 3-day window payment 

policy for hospitals does not allow 

HOPDs to generate a claim when there 

is an inpatient admission during the 3- 

day window payment policy, that is, 

during the 3 days subsequent to the 

colonoscopy. Commenters stated that 

HOPDs may be advantaged with 

systematic undercounting of hospital 

visits while ASCs get a full count of all 

hospital visits within 7 days subsequent 

to outpatient colonoscopy. Commenters 

did not believe the methodological 

solution proposed by the measure 

developer, using physician claims with 

an HOPD Place of Service (POS) code, 

is adequate due to the high error rates 

in POS coding on physician claims. 

Commenters were concerned that these 

challenges would make comparisons of 

HOPD and ASC data impossible, and 

significantly reduce the validity of the 

measure in the HOPD setting. 

Response: We agree that the ability to 

detect meaningful variation is an 

important indication of the value of a 

measure. We have shown facility 

variation in unplanned hospital visits 

following colonoscopy in both 

nationwide Medicare data from HOPDs 

and also in the 2010 Healthcare Cost 

and Utilization Project (HCUP) data. We 

have also shown facility variation in 

unplanned hospital visits among ASCs 

alone using HCUP data from California. 

ASCs are unaffected by the 3-day 

payment window policy.22 We are 

confident that the variation shown is a 

reflection of facility variation in quality 

and not as a result of any issues to do 

with the 3-day window payment policy. 

We are aware of the impact of the 3-day 

window payment policy and will ensure 

HOPD colonoscopies affected by the 3- 

day window payment policy are 

included in the measure cohort and 

outcome to the fullest extent possible. 

Based on our internal testing with 

claims data, we believe our current 

algorithm is appropriate and accurate. 

However, since we always strive for 

improvement, we will evaluate the 

colonoscopy measure dry run data and 

work with HOPDs and ASCs to further 

review and refine the algorithm if 

necessary. 

We clarify that HOPD colonoscopy 

claims for calculation of the measure are 

identified using both the physician and 

the facility claims. We did not intend to 

imply that colonoscopies performed in 

HOPDs are solely identified from 

physician claims. For both ASCs and 

HOPDs, the measure first identifies 

colonoscopy claims using both the 

physician claim and the corresponding 

facility claim to ensure that each 

colonoscopy claim is attributed to the 

appropriate facility. As a second step, 

the measure matches (1) physician 

claims that contain HOPD as the POS 

that do not have a matching facility 

claim with (2) inpatient claims to 

identify potential HOPD colonoscopies 

that have a subsequent inpatient 

admission within the measure’s 

timeframe of interest. This second step 

identifies HOPD colonoscopy claims 

affected by the 3-day window payment 

policy. 

An OIG review (http://oig.hhs.gov/

oas/reports/region10/11000516.pdf), 

concluded that, based on a sample of 

2009 claims, inaccuracies in physician 

POS coding often occur where a 

procedure occurs at a HOPD or ASC and 

a facility claim exists, yet the physician 

claimed a nonfacility POS. By matching 

both facility and physician colonoscopy 

claims for any given patient, we ensure 

that we accurately identify colonoscopy 

claims to the fullest extent possible and 

attribute the colonoscopy to the 

appropriate provider including HOPD 

colonoscopies affected by the 3-day 

window payment policy. 

We also have taken steps to educate 

providers about the appropriate POS 

coding and actively audit providers to 

improve the accuracy of POS coding. 

Beginning in 2012, we also introduced 

the ‘‘PD’’ modifier to indicate physician 

claims affected by the 3-day window 

payment policy. 

Regarding the comment concerning 

challenges in comparing HOPD and 

ASC data, the measure includes 

colonoscopies from all outpatient 

settings to ensure that the expected 

hospital visit rate for any facility is 

estimated using the full national 

experience of colonoscopy patients. We 

appreciate the concern that there are 

structural differences in claims across 

HOPD and ASC settings. However, the 

measure links claims across multiple 

settings to identify outpatient 

colonoscopy claims, comorbidities for 

risk-adjustment, and patient outcomes. 

Linking patient claims across multiple 

settings largely mitigates the impact of 

potential difference in coding practice 

among settings and allows comparisons 

of colonoscopy quality across settings. 

Comment: One commenter was 

concerned that the low occurrence rate 

may make the measure unreportable. 

Response: On Hospital Compare, we 

report measure rates, but may refrain 

from publishing numerator and/or 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66955 

denominator data if either are less than 

11. Consistent with the CMS Policy for 

Privacy Act Implementation & Breach 

Notification, 2007, CMS statistical, 

aggregate or summarized information 

created as a result of analysis conducted 

using identifiable CMS data obtained 

under CMS-approved projects/studies 

may only be disclosed if the data are not 

individual-specific and the data are 

aggregated to a level where no data cells 

contain 10 or fewer individuals https:// 

www.cms.gov/Research-Statistics-Dataand-Systems/CMS-InformationTechnology/SystemLifecycleFramework/

downloads/privacypolicy.pdf. 

Comment: Many commenters 

expressed concern that, if finalized, the 

OP–32 measure’s data collection period 

would begin July 1, 2014, several 

months before adoption of the measure 

is finalized. These commenters 

requested that CMS delay the beginning 

of the data submission period until at 

least 30 days after the rule is finalized. 

Response: After consideration of the 

public comments we received, we are 

not finalizing our proposal to use paid 

Medicare FFS claims from a 12-month 

period from July 1 of the year 3 years 

before the payment determination year 

to June 30 of the following year. We will 

not use administrative claims data for 

services that occur prior to January 1, 

2015. Instead, after the dry run, we will 

use paid Medicare FFS claims from a 

12-month period from January 1 to 

December 31 of the year 2 years before 

a payment determination year. 

Specifically, since we are finalizing this 

measure beginning with the CY 2018 

payment determination, and we will 

start with paid Medicare FFS claims 

from January 1, 2016 to December 31, 

2016. 

Comment: Some commenters 

suggested that CMS consider developing 

additional outcomes measures specific 

to colonoscopies, such as a measure of 

whether colonoscopy patients remain 

cancer free. 

Response: We appreciate the 

commenters’ suggestions and will take 

them into consideration for future 

measure selection. 

We continue to believe that quality of 

care measurement in the clinical area of 

outpatient colonoscopy is an important 

gap area with ample room for 

improvement and that this measure has 

sufficient reliability and validity for use 

in the Hospital OQR Program. 

Therefore, after consideration of the 

public comments we received, we are 

finalizing our proposal to adopt the OP– 

32: Facility Seven-Day RiskStandardized Hospital Visit Rate after 

Outpatient Colonoscopy measure for the 

Hospital OQR Program. However, to 

allow HOPDs sufficient time to review 

their measure data from the dry run and 

utilize the confidential facility reports 

with patient-level associated hospital 

event information, we are finalizing to 

make this measure required beginning 

with the CY 2018 payment 

determination and subsequent years, 

instead of the CY 2017 payment 

determination and subsequent years as 

proposed. 

We plan to perform a dry run of the 

measure in 2015. Also, with national 

implementation of a dry run of this 

measure, we will also review the 

appropriate cutoff volume for facilities, 

if necessary, in reporting the measure 

score. We refer readers to our discussion 

of the dry run and the cutoff volume 

above, in responses to previous 

comments. 

The finalized measure set for the 

Hospital OQR Program CY 2017 

payment determination and subsequent 

years, which includes previously 

finalized measures, is listed below. 

FINALIZED HOSPITAL OQR PROGRAM MEASURE SET FOR THE CY 2017 PAYMENT DETERMINATION AND SUBSEQUENT

YEARS

NQF No. Measure name 

N/A ............... OP–1: Median Time to Fibrinolysis. 

0288 ............. OP–2: Fibrinolytic Therapy Received Within 30 Minutes of ED Arrival. ** ** 

0290 ............. OP–3: Median Time to Transfer to Another Facility for Acute Coronary Intervention. 

0286 ............. OP–4: Aspirin at Arrival. 

0289 ............. OP–5: Median Time to ECG. 

0514 ............. OP–8: MRI Lumbar Spine for Low Back Pain. 

N/A ............... OP–9: Mammography Follow-up Rates. 

N/A ............... OP–10: Abdomen CT—Use of Contrast Material. 

0513 ............. OP–11: Thorax CT—Use of Contrast Material. 

N/A ............... OP–12: The Ability for Providers with HIT to Receive Laboratory Data Electronically Directly into their ONC-Certified EHR System as Discrete Searchable Data. 

0669 ............. OP–13: Cardiac Imaging for Preoperative Risk Assessment for Non Cardiac Low Risk Surgery. 

N/A ............... OP–14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus Computed Tomography (CT). 

N/A ............... OP–15: Use of Brain Computed Tomography (CT) in the Emergency Department for Atraumatic Headache. 

N/A ............... OP–17: Tracking Clinical Results between Visits. 

0496 ............. OP–18: Median Time from ED Arrival to ED Departure for Discharged ED Patients. 

N/A ............... OP–20: Door to Diagnostic Evaluation by a Qualified Medical Professional. 

0662 ............. OP–21: Median Time to Pain Management for Long Bone Fracture. 

N/A ............... OP–22: ED—Left Without Being Seen. *** 

0661 ............. OP–23: ED—Head CT or MRI Scan Results for Acute Ischemic Stroke or Hemorrhagic Stroke who Received Head CT or MRI 

Scan Interpretation Within 45 minutes of Arrival. 

N/A ............... OP–25: Safe Surgery Checklist Use. 

N/A ............... OP–26: Hospital Outpatient Volume on Selected Outpatient Surgical Procedures. * 

0431 ............. OP–27: Influenza Vaccination Coverage among Healthcare Personnel. 

0658 ............. OP–29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for Normal Colonoscopy in Average Risk Patients. 

0659 ............. OP–30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps—Avoidance of 

Inappropriate Use. 

1536 ............. OP–31: Cataracts—Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery. ** 

* OP–26: Procedure categories and corresponding HCPCS codes are located at: http://qualitynet.org/dcs/BlobServer?blobkey=

id&blobnocache=true&blobwhere=1228889963089&blobheader=multipart%2Foctet-stream&blobheadername1=Content-Disposition&blobheader

value1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata&blobtable=MungoBlobs. 

** Measure voluntarily collected as set forth in section XIII.D.3.b. of this final rule with comment period. 

*** Name has been updated to correspond with NQF-endorsed name. 


tkelley on DSK3SPTVN1PROD with RULES2
66956 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

The finalized measure set for the 

Hospital OQR Program CY 2018 

payment determination and subsequent 

years, which includes previously 

finalized measures, and which includes 

the newly adopted measure, OP–32, is 

listed below. 

FINALIZED HOSPITAL OQR PROGRAM MEASURE SET FOR THE CY 2018 PAYMENT DETERMINATION AND SUBSEQUENT

YEARS

NQF No. Measure name 

N/A ............... OP–1: Median Time to Fibrinolysis. 

0288 ............. OP–2: Fibrinolytic Therapy Received Within 30 Minutes of ED Arrival.   

0290 ............. OP–3: Median Time to Transfer to Another Facility for Acute Coronary Intervention. 

0286 ............. OP–4: Aspirin at Arrival. 

0289 ............. OP–5: Median Time to ECG. 

0514 ............. OP–8: MRI Lumbar Spine for Low Back Pain. 

N/A ............... OP–9: Mammography Follow-up Rates. 

N/A ............... OP–10: Abdomen CT—Use of Contrast Material. 

0513 ............. OP–11: Thorax CT—Use of Contrast Material. 

N/A ............... OP–12: The Ability for Providers with HIT to Receive Laboratory Data Electronically Directly into their ONC-Certified EHR System as Discrete Searchable Data. 

0669 ............. OP–13: Cardiac Imaging for Preoperative Risk Assessment for Non Cardiac Low Risk Surgery. 

N/A ............... OP–14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus Computed Tomography (CT). 

N/A ............... OP–15: Use of Brain Computed Tomography (CT) in the Emergency Department for Atraumatic Headache. 

N/A ............... OP–17: Tracking Clinical Results between Visits. 

0496 ............. OP–18: Median Time from ED Arrival to ED Departure for Discharged ED Patients. 

N/A ............... OP–20: Door to Diagnostic Evaluation by a Qualified Medical Professional. 

0662 ............. OP–21: Median Time to Pain Management for Long Bone Fracture. 

N/A ............... OP–22: ED—Left Without Being Seen. ** * 

0661 ............. OP–23: ED—Head CT or MRI Scan Results for Acute Ischemic Stroke or Hemorrhagic Stroke who Received Head CT or MRI 

Scan Interpretation Within 45 minutes of Arrival. 

N/A ............... OP–25: Safe Surgery Checklist Use. 

N/A ............... OP–26: Hospital Outpatient Volume on Selected Outpatient Surgical Procedures. * 

0431 ............. OP–27: Influenza Vaccination Coverage among Healthcare Personnel. 

0658 ............. OP–29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for Normal Colonoscopy in Average Risk Patients. 

0659 ............. OP–30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps—Avoidance of 

Inappropriate Use. 

1536 ............. OP–31: Cataracts—Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery. ** 

N/A ............... OP–32: Facility 7-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy. **** 

* OP–26: Procedure categories and corresponding HCPCS codes are located at: http://qualitynet.org/dcs/BlobServer?blobkey=id&

blobnocache=true&blobwhere=1228889963089&blobheader=multipart%2Foctet-stream&blobheadername1=Content-Disposition&blobheader

value1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata&blobtable=MungoBlobs. 

** Measure voluntarily collected as set forth in section XIII.D.3.b. of this final rule with comment period. 

*** Name has been updated to correspond with NQF-endorsed name. 

**** New measure finalized for the CY 2018 payment determination and subsequent years. 

F. Possible Hospital OQR Program 

Measures and Topics for Future 

Consideration 

The current measure set for the 

Hospital OQR Program includes 

measures that assess processes of care, 

imaging efficiency patterns, care 

transitions, ED throughput efficiency, 

the use of health information technology 

(health IT), care coordination, patient 

safety, and volume. For future payment 

determinations, we are considering 

expanding these measure areas and 

creating measures in new areas. 

Specifically, we are exploring (1) 

electronic clinical quality measures; (2) 

partial hospitalization measures; (3) 

behavioral health measures; and (4) 

other measures that align with the 

National Quality Strategy and the CMS 

Quality Strategy domains. 

1. Electronic Clinical Quality Measures 

HHS believes all patients, their 

families, and their health care providers 

should have consistent and timely 

access to their health information in a 

standardized format that can be securely 

exchanged between the patient, 

providers, and others involved in the 

patient’s care. (HHS August 2013 

Statement, ‘‘Principles and Strategy for 

Accelerating Health Information 

Exchange’’ (http://www.healthit.gov/

sites/default/files/

acceleratinghieprinciples_strategy.pdf). 

The Department is committed to 

accelerating health information 

exchange (HIE) through the use of 

electronic health records (EHRs) and 

other types of health information 

technology (health IT) across the 

broader care continuum through a 

number of initiatives including: (1) 

Alignment of incentives and payment 

adjustments to encourage provider 

adoption and optimization of health IT 

and HIE services through Medicare and 

Medicaid payment policies; (2) adoption 

of common standards and certification 

requirements for interoperable health 

IT; (3) support for privacy and security 

of patient information across all HIEfocused initiatives; and (4) governance 

of health information networks. 

More information on the governance 

of health information networks and its 

role in facilitating interoperability of 

health information systems can be 

found at: http://www.healthit.gov/sites/

default/files/ONC10yearInteroperability

ConceptPaper.pdf. 

These initiatives are designed to 

encourage HIE among health care 

providers, including professionals and 

hospitals eligible for the Medicare and 

Medicaid EHR Incentive Programs as 

well as those who are not eligible for 

those programs, and are designed to 

improve care delivery and coordination 

across the entire care continuum. For 

example, the Transition of Care Measure 

#2 in Stage 2 of the Medicare and 

Medicaid EHR Incentive Programs (77 

FR 54017 through 54020) requires HIE 

to share summary records for more than 

10 percent of care transitions. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66957 

23http://www.cms.gov/Research-Statistics-Dataand-Systems/Statistics-Trends-and-Reports/

Reports/downloads/Leung_PHP_PPS_2010.pdf. 

We anticipate that as EHR technology 

evolves and more infrastructure is 

operational, we will begin to accept 

electronic reporting of many measures 

from EHR technology certified under the 

ONC health IT Certification Program. 

We are working diligently toward this 

goal. We believe that submitting data for 

the Hospital OQR Program 

electronically would significantly 

reduce the administrative burden 

associated with reporting chartabstracted measures. We recognize that 

considerable work needs to be done by 

measure owners and health IT 

developers and implementers to make 

this possible with respect to the clinical 

quality measures targeted for electronic 

specifications (e-specifications). This 

work includes completing especifications for measures, pilot 

testing, reliability and validity testing, 

and implementing such specifications 

in certified EHR technology to capture 

and calculate the results. 

We received the following comments 

on these future measures. 

Comment: Many commenters 

supported CMS’ efforts to establish 

electronic clinical quality measures after 

validation and testing, but expressed 

concerns and offered suggestions. One 

commenter specifically noted the 

importance of health information 

exchanges in disseminating infection 

prevention and control information 

across the care continuum. Some 

commenters encouraged CMS to obtain 

input from ONC and hospital staff, for 

the purpose of ensuring the maturity of 

e-specifications and the ability of 

certified EHRs to support valid, feasible, 

and reliable electronic clinical quality 

measures for implementation in 

different programs. Some commenters 

urged CMS to proceed in a phased 

approach to implementing electronic 

clinical quality measures. 

Response: We agree that health 

information exchanges are critical in 

quality care improvement, including 

infection prevention and control. To the 

greatest extent feasible, we strive to 

work with ONC and stakeholders, 

including hospital staff, to develop and 

specify electronic clinical quality 

measures before their adoption. If we 

decide to propose electronic clinical 

quality measures in the future, we will 

consider a phased approach. 

Comment: One commenter stated that 

it is premature to expand the measure 

set to include electronic clinical quality 

measures at this time because 

tremendous work in developing or 

defining e-specifications, pilot testing, 

and validity and reliability testing is 

still needed. 

Response: We recognize that much 

work needs to be done before the 

adoption of electronic clinical quality 

measures. However, we also believe that 

implementation of electronic clinical 

quality measures will ultimately reduce 

provider burden and facilitate care 

coordination and patient engagement. 

We will weigh and balance these 

concerns when we propose to adopt 

electronic clinical quality measures in 

the future. 

Comment: One commenter stated that 

the additional time needed to develop 

electronic clinical quality measures will 

allow hospitals to optimize their EHRs 

and develop information sharing 

networks. 

Response: We thank the commenter 

for raising this concern. We believe, to 

the extent feasible, it is important to 

ensure that hospitals are ready to 

implement EHRs and will continue to 

work with them as we implement 

electronic clinical quality measures. 

We thank the commenters for their 

views and will consider them as we 

develop and implement future 

electronic clinical quality measures. 

2. Partial Hospitalization Program 

Measures 

We seek to develop a comprehensive 

set of quality measures to be available 

for widespread use for informed 

decision-making and quality 

improvement in the hospital outpatient 

setting. Therefore, in the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75106), we stated that, 

through future rulemaking, we intended 

to propose new measures that help us 

further our goal of achieving better 

health care and improved health for 

Medicare beneficiaries who receive 

health care in hospital outpatient 

settings, such as partial hospitalization 

programs (PHPs) that are part of HOPDs. 

Partial hospitalization is an intensive 

outpatient program of psychiatric 

services provided to patients as an 

alternative to inpatient psychiatric care 

for individuals who have acute mental 

illness. The PHP was designed to assist 

individuals with acute psychiatric 

illness in managing debilitating 

symptoms and prevent the need for 

hospitalization or rehospitalization. 

Behavioral health treatments and 

services have improved and evolved 

through medication advances, recoverybased therapy, and evidenced-based 

interventions, including peer supports. 

PHP services have had the opportunity 

to evolve to provide individuals with a 

unique setting that can contribute to 

maintaining social and community 

connectivity while focusing on 

sustained recovery to prevent initial 

hospitalization during a given episode 

and subsequent rehospitalization. 

Currently, the Hospital OQR Program 

has not adopted measures applicable to 

PHPs. 

Although we believe that the PHP is 

an important program offering an 

alternative to inpatient stays, we note 

that PHP utilization has been 

declining.23 Therefore, as we consider 

implementing PHP measures in future 

years, we invited public comment 

regarding the utility of including 

measures for this care setting in the 

Hospital OQR Program. 

We specifically requested public 

comment on three PHP measures we 

submitted to the MAP for consideration 

as part of the ‘‘MAP Pre-Rulemaking 

Report: 2014 Recommendations on 

Measures for More than 20 Federal 

Programs’’ (http://

www.qualityforum.org/Publications/

2014/01/MAP_Pre-Rulemaking_Report_

_2014_Recommendations_on_

Measures_for_More_than_20_Federal_

Programs.aspx (formerly referred to as 

the ‘‘List of Measures Under 

Consideration’’)): 

• 30-Day Readmission; 

• Group Therapy; and 

• No Individual Therapy. 

These measures are included in the 

Program for Evaluating Payment 

Patterns Electronic Reports (PEPPERs) 

developed under the Comprehensive 

Error Rate Testing (CERT) Program. 

Further information on these claimsbased measures that provide indicators 

of quality of care can be found at 

http://www.pepperresources.org/

LinkClick.aspx?fileticket=

stK9uUmQWlM%3d&tabid=148. 

We also requested public input on 

other possible quality measures for 

partial hospitalization services for 

inclusion in the Hospital OQR Program 

in future years. 

Comment: Some commenters 

supported CMS’ consideration of PHP 

measures, noting that these measures 

will encourage hospitals to monitor 

their performance over time and 

identify opportunities for quality 

improvement. 

Response: We thank the commenters 

for their support. We agree that PHPs 

are an important alternative to inpatient 

stays and there may be value in 

collecting and reporting this data. 

Comment: Many commenters did not 

support PHP quality metrics in the 

Hospital OQR Program, stating that 

there are significant differences between 

outpatient and PHP treatment services, 


tkelley on DSK3SPTVN1PROD with RULES2
66958 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

24O’Connor E, Whitlock E, Beil T, et al. Screening 

for depression in adult patients in primary care 

settings: a systematic evidence review. Annals of 

Internal Medicine 2009 December 1:151(11):793– 

803. 

25Stephen F. Jencks, M.D., M.P.H., Mark V. 

Williams, M.D., and Eric A. Coleman, M.D., M.P.H. 

structure, and supervision, as well as 

other concerns. Commenters 

recommended that CMS adopt PHP 

measures that have been NQF-endorsed 

and are MAP-recommended, noting that 

the three PHP measures mentioned in 

the proposed rule were not 

recommended by the MAP because they 

were not well-defined or required 

additional evidence relating to their 

value. Commenters suggested that CMS 

address the MAP’s concerns before 

proposing these measures for use in the 

Hospital OQR Program. 

Response: We disagree that PHP 

measures are not appropriate for the 

Hospital OQR Program based on 

differences between outpatient and PHP 

treatment services, structure, and 

supervision. Because PHP services are 

provided by HOPDs, are an important 

alternative to inpatient stays, and are 

utilized by Medicare beneficiaries, we 

believe that there may be value in 

collecting and reporting quality measure 

data for these services. However, at this 

time, we are not proposing any PHP 

measures for the Hospital OQR Program. 

The PHP measures on which we invited 

comment have not been recommended 

by the MAP. The MAP stated that it 

needed further information on the 30- 

Day Readmission measure and 

recommended that the No Individual 

Therapy and Group Therapy measures 

be submitted for NQF endorsement 

before they are adopted by the Hospital 

OQR Program (http://

www.qualityforum.org/Publications/

2014/01/MAP_Pre-Rulemaking_Report_

_2014_Recommendations_on_

Measures_for_More_than_20_Federal_

Programs.aspx). 

If we do consider proposing PHP 

measures in the future, to the extent 

feasible, we intend to propose to adopt 

measures which are NQF-endorsed and 

have been MAP-recommended. Before 

adopting a measure, we try to address 

stakeholder concerns, including the 

differences in the outpatient and PHP 

settings. Finally, if we choose to 

propose the three measures discussed in 

the proposed rule, we will consider the 

comments of the MAP and address them 

to the extent feasible. We note, however, 

that not all of the measures adopted by 

the Hospital OQR Program are NQFendorsed, nor is NQF endorsement a 

program requirement (section 

1833(t)(17)(C)(i) of the Act). 

Comment: Some commenters believed 

that using PHP measures in the Hospital 

OQR Program would constitute a 

duplication of efforts because the 

measures are already included in 

PEPPER. Other commenters also viewed 

PEPPER measures as auditing tools 

rather than quality measures. 

Response: We will consider the 

commenters’ viewpoint if we propose to 

adopt the PEPPER measures in future 

rulemaking. We note that these 

measures, while addressing areas of 

payment concern, also address areas of 

quality of care concern and that the 

PEPPER measures are not publicly 

reported at the facility level. 

Comment: Commenters expressed 

concerns about the 30-day readmissions 

measure because this patient population 

tends to be readmitted for behavioral 

conditions due to social issues for 

which hospitals have little control. 

Commenters stated that PHP patients’ 

clinical needs evolve over time, that 

readmissions are often needed to 

stabilize patients, and that measuring 

facilities on readmission rates could 

cause unintended consequences. 

Commenters further stated that the 

readmission measure is not sufficiently 

risk-adjusted. 

Response: We thank the commenters 

for raising these concerns. We will 

consider these concerns if we propose to 

adopt the 30-day readmission PEPPER 

measure for the Hospital OQR Program 

in future rulemaking. 

Comment: Some commenters stated 

that CMS should better understand the 

challenges facing PHP and readmissions 

before imposing PHP quality measures 

because quality measures could further 

destabilize the PHP rate and threaten 

access to this service. 

Response: We understand that 

utilization of PHP services has been 

decreasing and that many challenges 

may be unique to the PHP setting. We 

will consider these issues before 

proposing to adopt any PHP measures in 

future rulemaking. 

Comment: One commenter 

recommended that CMS include the 60+ 

Days of Service measure in the PHP 

measure suite as well as assessments of 

intensive outpatient programs that treat 

individuals with substance use 

disorders. 

Response: We thank the commenter 

for the recommendation and will 

consider this measure if we propose to 

adopt PHP measures in future 

rulemaking. We note that Medicare does 

not cover intensive outpatient program 

(IOP) services, and this could affect the 

usefulness of the recommended measure 

for the Hospital OQR Program. 

Comment: Some commenters 

encouraged CMS to develop specific 

PHP measures such as: (1) Requiring 

PHPs to identify a specific appointment 

within 14 days; (2) requiring continuing 

care information be provided directly to 

the follow-up provider; and (3) 

establishing Quality Service Criteria for 

use in judging performance, including 

criteria relating to access, treatment 

intensity, discharge planning, and 

continuity of care. 

Response: We appreciate the 

commenters’ suggestions. We support 

coordination of care efforts and will 

consider developing these types of 

measures for the Hospital OQR Program. 

Comment: One commenter argued 

that the Group Therapy measure should 

only be adopted as a percentage rating 

of group therapy as a comparison to all 

interventions billed. The commenter 

also noted that both group therapy and 

individual psychotherapy are needed 

for optimal success. 

Response: We thank the commenter 

for sharing its views. We are unclear 

what the commenter means by ‘‘a 

percentage rating of group therapy’’ and 

so cannot respond at this time. 

However, we welcome clarification and 

will consider all of the commenter’s 

concerns if we propose to adopt PHP 

measures in future rulemaking. 

Comment: One commenter voiced 

support for our efforts in working 

toward electronic quality of care 

measures in the PHP setting of care. 

Response: We note that we did not 

specifically discuss electronic qualityof-care measures for the PHP setting in 

the proposed rule. However, we are 

working diligently to implement 

electronic measures across the quality 

reporting programs, and we may 

consider electronic clinical quality 

measures for the PHP setting in the 

future. 

We thank the commenters for their 

views and will consider them as we 

develop future policies. 

3. Behavioral Health Measures 

In addition to PHP measures, we are 

considering other measures specific to 

behavioral health in the outpatient 

setting, including measures addressing 

depression and alcohol abuse. Major 

depression is a leading cause of 

disability in the United States, 

complicates the treatment of other 

serious illnesses, and is associated with 

an increased risk of suicide. Major 

depression is a common mental health 

condition, affecting 6 to 9 percent of 

those over 55 years of age.24 Along with 

other serious mental health conditions, 

it has a higher Medicare inpatient 

readmission rate than all other 

conditions with the exception of heart 

failure.25 Alcohol use disorders are the 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66959 

Rehospitalizations among Patients in the Medicare 

Fee-for-Service Program. N Engl J Med 

2009;360:1418–28. 

26Stephen Ross. Alcohol Use Disorders in the 

Elderly. Psychiatry Weekly (no date) Available at: 

http://www.psychweekly.com/aspx/article/

ArticleDetail.aspx?articleid=19. 

27AL Mirand and JW Welte. Alcohol 

consumption among the elderly in a general 

population, Erie County, New York. Am J Public 

Health. 1996 July; 86(7): 978–984. 

most prevalent type of addictive 

disorder in individuals ages 65 and 

over.26 Roughly 6 percent of the elderly 

are considered to be heavy users of 

alcohol.27 Alcohol abuse is often 

associated with depression and 

contributes to the etiology of serious 

medical conditions, including liver 

disease and coronary heart disease. 

Because of the prevalence of depression 

and alcohol abuse and their impact on 

the Medicare population, we believe 

that we should consider measures in 

these and other behavioral health areas 

for use in future Hospital OQR Program 

payment determination years. 

Therefore, we invited public comment 

on measures applicable to these areas 

that would be suitable for the Hospital 

OQR Program. 

Comment: Many commenters 

supported CMS’ efforts to develop and 

implement quality measurement tools 

related to alcohol abuse and depression 

because of the prevalence of these 

conditions within the Medicare 

population and the need to improve 

care coordination for these conditions. 

Commenters encouraged CMS to 

incorporate measures that address the 

following principles: (1) The patient’s 

readiness for treatment; (2) the 

treatment will address mental health 

issues in conjunction with the alcohol 

abuse; and (3) the patient’s willingness 

to participate in an alcohol abuse 

program without the need for coerced 

efforts. 

Response: We thank commenters for 

their support, and we will consider 

these principles if we choose to propose 

to adopt behavioral health measures in 

the future. 

Comment: One commenter suggested 

adopting a measure that evaluates 

screening for psychological/physical or 

sexual trauma, arguing that trauma 

informed care is critical to successful 

recovery and better engagement and 

retention in ambulatory care. 

Response: We agree that this clinical 

topic is important, and we will consider 

adopting a measure screening for trauma 

in the future. 

Comment: Some commenters argued 

that behavioral health measures are 

more suited to the IPFQR Program. 

Response: We disagree with this view. 

We believe all care settings should seek 

to improve the behavioral health 

outcomes of their patients. 

Comment: One commenter 

recommended that CMS work with the 

NQF to develop appropriate measures 

related to beneficiary wellness concerns. 

The commenter noted that behavioral 

health quality measures are used in the 

nursing home and home health care 

settings, and that these measures should 

be reviewed to determine if they are 

applicable to the outpatient setting. The 

commenter believed that any measures 

used should be claims-based and not 

generated by chart abstraction to 

minimize administrative burden. 

Response: We interpret ‘‘beneficiary 

wellness concerns’’ to mean measures of 

behavioral health. We endeavor to adopt 

measures that are NQF-endorsed and 

believe it is critical to work with 

stakeholders to develop measures. 

However, we note that not all of the 

measures adopted by the Hospital OQR 

Program are NQF-endorsed, nor is NQF 

endorsement a program requirement 

(section 1833(t)(17)(C)(i) of the Act) as 

consensus among affected parties can be 

reflected through means other than NQF 

endorsement. In addition, to the extent 

feasible, we believe it is important to 

align measures across all our quality 

reporting programs, and we will look to 

other settings for measures of behavioral 

health. Finally, we will continue to 

examine options for less burdensome 

reporting mechanisms for these and 

other program measures in the future; 

this includes claims-based and 

electronically submitted data. 

Comment: Some commenters 

recommended that behavioral health 

quality measures not be considered at 

this time for the Hospital OQR Program, 

arguing that additional research and 

education needs to be done to develop 

helpful behavioral measures. 

Response: We will continue to 

research appropriate measures and work 

with stakeholders as we consider 

behavioral health measures for the 

Hospital OQR Program in the future. 

Comment: One commenter urged 

CMS to work with its behavioral health 

Technical Experts Panel (TEP) and the 

MAP to identify and bring forward 

behavioral health measures that are 

suitable for this population and for 

consideration by all stakeholders. 

Response: We convene TEPs, groups 

of stakeholders and experts, to provide 

technical input on the development, 

selection, and maintenance of measures. 

Convening TEPs is one important step 

in the measure development or 

reevaluation process to ensure 

transparency and it provides an 

opportunity to receive multistakeholders input early in the process. 

We refer readers to http://www.cms.gov/ 

Medicare/Quality-Initiatives-PatientAssessment-Instruments/MMS/

TechnicalExpertPanels.html for more 

information on TEPs. We believe it is 

important to work with stakeholders as 

we develop and adopt behavioral health 

measures. We will leverage both TEPs 

and the MAP as we consider future 

measures. 

Comment: One commenter 

recommended that CMS incorporate 

standardized behavioral health 

measures that are currently in 

widespread use, such as the National 

Center for Quality Assurance’s 

behavioral health measures. 

Response: We thank the commenter 

for its recommendation, and we will 

consider these measures for future 

rulemaking. 

Comment: Some commenters 

supported CMS’ efforts to identify 

depression and depression-related 

issues in the Medicare population. The 

commenters believed that an 

identification tool should be used for 

any new patient encounter and 

recommended that every Medicare 

provider should be required to use a 

depression screening tool at any initial 

patient screening/encounter. Some 

commenters, however, noted that 

depression screening in the ambulatory 

setting is nearly universal, and, 

therefore, such a measure may be 

‘‘topped-out’’ even before adoption. 

Response: We thank commenters for 

their support. We interpret the 

commenters’ suggestions to mean that 

we should include measures that 

encourage providers to screen patients 

to identify depression. We will consider 

depression screening measures in the 

future. 

We thank the commenters for their 

views on behavioral health measures in 

the outpatient setting and will consider 

them as we develop future policies. 

4. National Quality Strategy and CMS 

Quality Strategy Measure Domains 

In considering future Hospital OQR 

Program measures, we are focusing on 

the following National Quality Strategy 

and CMS Quality Strategy measure 

domains: make care safer, strengthen 

person and family engagement, promote 

effective communication and 

coordination of care, promote effective 

prevention and treatment, work with 

communities to promote best practices 

of healthy living, and make care 

affordable. We believe measures in these 

areas will promote better care and align 

measures across multiple CMS quality 

programs, in particular, the Hospital 

OQR, Hospital IQR, and ASCQR 

Programs. 


tkelley on DSK3SPTVN1PROD with RULES2
66960 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

We received the following comments 

on these future measures. 

Comment: Many commenters 

supported the Hospital OQR Program’s 

effort to align future measures with the 

NQS priorities and CMS quality 

strategy, noting that doing so will make 

the Hospital OQR Program more 

consistent with the Hospital IQR 

Program. Commenters urged CMS to 

further align our measures with other 

quality reporting programs. One 

commenter stated that CMS should 

respond to all MAP recommendations as 

part of any proposed rule so that 

stakeholders may gain a better 

understanding of our decisions, 

particularly when a MAP 

recommendation is not being followed. 

Response: We thank the commenters 

for their support. To the extent 

practicable, we strive to align measures 

across our quality reporting programs. 

We also appreciate the feedback of the 

MAP and work to address its concerns 

before adopting measures in the 

Hospital OQR Program. As we stated 

above, to the extent feasible, we strive 

to state and address the MAP concerns 

when adopting a measure. 

Comment: Some commenters 

recommended that CMS introduce 

measures to track and monitor radiation 

dose exposure and contrast dose 

exposure, including organ-specific 

radiation exposure based on patient 

weight and contrast administration, and 

a meaningful tracking mechanism for 

patient longitudinal exposure. One 

commenter noted that the PQRS 

program has included some similar 

measures giving radiologists an 

incentive to track patient exposure. In 

addition, the commenter noted that The 

Joint Commission, the FDA, and the 

EPA have all issued guidance 

recommending that exposure to 

radiation through medical devices be 

minimized. 

Response: We thank the commenters 

for their recommendations, and we may 

consider these types of measures in 

future years. 

Comment: One commenter urged 

CMS to require hospitals to comply with 

all manufacturing standards for imaging 

equipment to facilitate patient safety 

and promote the overall quality of 

patient care in hospitals. The 

commenter also recommended a 

measure tracking the demonstrated 

reduction in suboptimal or 

nondiagnostic echocardiograms and the 

resulting improvements in diagnosis 

and reductions in costs to Medicare and 

beneficiaries. 

Response: We thank the commenter 

for its recommendation, and we may 

consider these types of measures in 

future years. 

Comment: One commenter 

encouraged the implementation of a 

CAHPS survey used to encourage 

patient experience improvement across 

the ambulatory surgery sector. The 

commenter urged CMS to continue to 

analyze and address the role of the 

survey and discuss the comparative 

roles of surveys across other care 

settings and quality reporting programs. 

Another commenter encouraged CMS to 

involve consumers and purchasers in 

refinement of the CAHPS survey for the 

outpatient setting. 

Response: We thank the commenters 

for these suggestions. We intend to 

include such survey measures for the 

outpatient setting on our December 1, 

2014 Measures under Consideration 

(MUC) List for MAP review. We 

currently use patient experience-of-care 

surveys in a variety of health care 

settings. For example, both the ESRD 

QIP and the Hospital IQR Program use 

patient experience-of-care surveys, the 

In-center Hemodialysis Consumer 

Assessment of Healthcare Providers and 

Systems (ICH CAHPS) and the Hospital 

Consumer Assessment of Healthcare 

Providers and Systems (HCAHPS), 

respectively. We agree that, to the extent 

feasible, survey instruments should be 

aligned and coordinated across settings. 

The developmental process of CAHPS 

and patient experience-of-care surveys 

involves several opportunities for input 

from patients, patient advocates, and 

stakeholders from the HOPD and ASC 

industry, including professional 

associations, clinicians, accreditation 

organizations, and the government. 

These opportunities include serving on 

the TEP, responding to the Federal 

Register notice requesting measures, 

topics, or public domain questionnaires, 

and providing comment on the survey 

through the OMB clearance process. 

Comment: One commenter 

recommended that CMS target high 

volume procedures that may be 

unnecessary at the composite, 

individual hospital, and physician 

levels, including those that are part of 

the Choosing Wisely campaign. 

Response: We thank the commenter 

for its recommendation, and we may 

consider these types of measures in 

future years. 

Comment: One commenter requested 

that CMS risk-adjust measures of 

clinical outcomes for SES in order to 

avoid disadvantaging hospitals, 

particularly safety-net hospitals that are 

evaluated on these outcomes. 

Response: We thank the commenter 

for this feedback. We addressed the 

topic of risk adjustment with respect to 

the Hospital IQR and Hospital 

Readmissions Reduction Programs in 

the FY 2015 IPPS/LTCH PPS final rule 

(79 FR 50219 and 50026 through 50027), 

and we believe the same approach 

would apply to risk adjustment for 

Hospital OQR Program measures 

because the Hospital OQR Program 

outcome measures are risk-adjusted, and 

this approach aligns with outcome 

measures methodology used in other 

programs across settings. The purpose of 

risk adjustment when comparing 

outcome rates for two different 

outpatient facilities is to statistically 

compensate (or adjust) for risk factor 

differences in the two facilities so that 

the outcome rates can be compared 

legitimately despite the differences in 

risk factors. 

We appreciate the commenters’ 

suggestions on the importance of 

addressing SES in the Hospital OQR 

Program. We continue to consider and 

evaluate stakeholder concerns regarding 

the impact of patients’ SES on Hospital 

OQR measures. 

Comment: Many commenters urged 

CMS to adopt only NQF-endorsed 

measures for its quality reporting and 

pay-for-performance programs, arguing 

that the consensus-based process 

validates quality measures’ rigor and 

ensures that the measures have been are 

reliable and have been carefully tested, 

validated, and scrutinized. Commenters 

also commended CMS for considering 

the MAP’s input in selecting measures, 

particularly because the MAP considers 

NQF endorsement, measures’ feasibility 

of implementation, stakeholder input, 

and validity. 

Response: We thank commenters for 

their support for the MAP process. To 

the extent feasible, we seek to adopt 

measures that have been NQF-endorsed. 

However, we also note that consensus 

among affected parties can be reflected 

through means other than NQF 

endorsement. We also refer readers to 

our discussion above in section XIII.E. 

of this final rule with comment period 

in response to a similar comment. 

Comment: Commenters suggested that 

CMS consider adopting measures of 

HAIs, such as SSI, CLABSI, CAUTI, 

MRSA, and C. difficile, or infection 

control process measures, such as 

MRSA colonization at admission or 

hand hygiene adherence, use of barrier 

precautions, or other process measures. 

Commenters noted that infections such 

as MRSA and C. difficile are a 

significant source of morbidity and 

mortality. One commenter encouraged 

CMS to develop composite measures of 

common surgical infections; another 

commenter requested that CMS adopt 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66961 

measures that have aligned data 

elements with the CDC’s NHSN. 

Response: We agree that it is 

important to minimize infection events 

that present significant health risks to 

patients. We also believe that infection 

prevention measures provide 

information critical to quality 

improvement efforts. We note that 

several measures that focus on these 

infections are already included in the 

Hospital IQR Program (79 FR 50202) 

and are aligned with the CDC’s NHSN. 

We will consider including these types 

of measures for the outpatient setting in 

the Hospital OQR Program and aligning 

them with other quality reporting 

programs, such as the Hospital IQR 

Program, to the extent feasible in future 

years. 

Comment: One commenter suggested 

that CMS consider measures of adverse 

outcomes from high-volume procedures 

such as cataract removals, other eye 

procedures, endoscopies, 

musculoskeletal procedures, and 

colonoscopies. 

Response: We thank the commenter 

for its suggestion and may consider 

these types of measures in future years. 

We thank the commenters for their 

views and will consider them as we 

develop future policies. 

G. Payment Reduction for Hospitals 

That Fail To Meet the Hospital 

Outpatient Quality Reporting (OQR) 

Program Requirements for the CY 2015 

Payment Update 

1. Background 

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

applies to subsection (d) hospitals (as 

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

the Act), states that hospitals that fail to 

report data required to be submitted on 

the measures selected by the Secretary, 

in the form and manner, and at a time, 

required by the Secretary will incur a 

2.0 percentage point reduction to their 

Outpatient Department (OPD) fee 

schedule increase factor; that is, the 

annual payment update factor. Section 

1833(t)(17)(A)(ii) of the Act specifies 

that any reduction applies only to the 

payment year involved and will not be 

taken into account in computing the 

applicable OPD fee schedule increase 

factor for a subsequent payment year. 

The application of a reduced OPD fee 

schedule increase factor results in 

reduced national unadjusted payment 

rates that apply to certain outpatient 

items and services provided by 

hospitals that are required to report 

outpatient quality data in order to 

receive the full payment update factor 

and that fail to meet the Hospital OQR 

Program requirements. Hospitals that 

meet the reporting requirements receive 

the full OPPS payment update without 

the reduction. For a more detailed 

discussion of how this payment 

reduction was initially implemented, 

we refer readers to the CY 2009 OPPS/ 

ASC final rule with comment period (73 

FR 68769 through 68772). 

The national unadjusted payment 

rates for many services paid under the 

OPPS equal the product of the OPPS 

conversion factor and the scaled relative 

payment weight for the APC to which 

the service is assigned. The OPPS 

conversion factor, which is updated 

annually by the OPD fee schedule 

increase factor, is used to calculate the 

OPPS payment rate for services with the 

following status indicators (listed in 

Addendum B to this proposed rule, 

which is available via the Internet on 

the CMS Web site): ‘‘P,’’ ‘‘Q1,’’ ‘‘Q2,’’ 

‘‘Q3,’’ ‘‘R,’’ ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘U.’’ We 

note that we are finalizing our proposal 

to delete status indicator ‘‘X’’’ as 

described in sections II.A.3. and X. of 

this final rule with comment period. We 

also note that we are finalizing our 

proposal to develop status indicator 

‘‘J1’’ as part of our comprehensive APC 

policy, effective for CY 2015, discussed 

in section II.A.2.e. of the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 74861 through 74910) and 

sections II.A.2.e. of the CY 2015 OPPS/ 

ASC proposed rule and this final rule 

with comment period. Payment for all 

services assigned to these status 

indicators will be subject to the 

reduction of the national unadjusted 

payment rates for hospitals that fail to 

meet Hospital OQR Program 

requirements, with the exception of 

services assigned to New Technology 

APCs with assigned status indicator ‘‘S’’ 

or ‘‘T.’’ We refer readers to the CY 2009 

OPPS/ASC final rule with comment 

period (73 FR 68770 through 68771) for 

a discussion of this policy. 

The OPD fee schedule increase factor 

is an input into the OPPS conversion 

factor, which is used to calculate OPPS 

payment rates. To reduce the OPD fee 

schedule increase factor for hospitals 

that fail to meet reporting requirements, 

we calculate two conversion factors—a 

full market basket conversion factor 

(that is, the full conversion factor), and 

a reduced market basket conversion 

factor (that is, the reduced conversion 

factor). We then calculate a reduction 

ratio by dividing the reduced 

conversion factor by the full conversion 

factor. We refer to this reduction ratio as 

the ‘‘reporting ratio’’ to indicate that it 

applies to payment for hospitals that fail 

to meet their reporting requirements. 

Applying this reporting ratio to the 

OPPS payment amounts results in 

reduced national unadjusted payment 

rates that are mathematically equivalent 

to the reduced national unadjusted 

payment rates that would result if we 

multiplied the scaled OPPS relative 

payment weights by the reduced 

conversion factor. For example, to 

determine the reduced national 

unadjusted payment rates that applied 

to hospitals that failed to meet their 

quality reporting requirements for the 

CY 2010 OPPS, we multiplied the final 

full national unadjusted payment rate 

found in Addendum B of the CY 2010 

OPPS/ASC final rule with comment 

period by the CY 2010 OPPS final 

reporting ratio of 0.980 (74 FR 60642). 

In the CY 2009 OPPS/ASC final rule 

with comment period (73 FR 68771 

through 68772), we established a policy 

that the Medicare beneficiary’s 

minimum unadjusted copayment and 

national unadjusted copayment for a 

service to which a reduced national 

unadjusted payment rate applies would 

each equal the product of the reporting 

ratio and the national unadjusted 

copayment or the minimum unadjusted 

copayment, as applicable, for the 

service. Under this policy, we apply the 

reporting ratio to both the minimum 

unadjusted copayment and national 

unadjusted copayment for services 

provided by hospitals that receive the 

payment reduction for failure to meet 

the Hospital OQR Program reporting 

requirements. This application of the 

reporting ratio to the national 

unadjusted and minimum unadjusted 

copayments is calculated according to 

§ 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 


tkelley on DSK3SPTVN1PROD with RULES2
66962 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

meet the quality data reporting 

requirements, the hospitals’ costs are 

compared to the reduced payments for 

purposes of outlier eligibility and 

payment calculation. We established 

this policy in the OPPS beginning in the 

CY 2010 OPPS/ASC final rule with 

comment period (74 FR 60642). For a 

complete discussion of the OPPS outlier 

calculation and eligibility criteria, we 

refer readers to section II.G. of this final 

rule with comment period. 

2. Reporting Ratio Application and 

Associated Adjustment Policy for CY 

2015 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41017), we proposed to 

continue our established policy of 

applying the reduction of the OPD fee 

schedule increase factor through the use 

of a reporting ratio for those hospitals 

that fail to meet the Hospital OQR 

Program requirements for the full CY 

2015 annual payment update factor. For 

the CY 2015 OPPS, the proposed 

reporting ratio is 0.980, calculated by 

dividing the proposed reduced 

conversion factor of $72.692 by the 

proposed full conversion factor of 

$74.176. We proposed to continue to 

apply the reporting ratio to all services 

calculated using the OPPS conversion 

factor. For the CY 2015 OPPS, we 

proposed to apply the reporting ratio, 

when applicable, to all HCPCS codes to 

which we have assigned status 

indicators ‘‘P,’’ ‘‘Q1,’’ ‘‘Q2,’’ ‘‘Q3,’’ ‘‘R,’’ 

‘‘S,’’ ‘‘T,’’ ‘‘V,’’ and ‘‘U’’ (other than new 

technology APCs to which we have 

assigned status indicators ‘‘S’’ and ‘‘T’’). 

We note that we are finalizing our 

proposal to delete status indicator ‘‘X’’ 

as described in sections II.A.3. and X. of 

the proposed rule and this final rule 

with comment period. We note that we 

are finalizing our proposal to develop 

status indicator ‘‘J1’’ as part of our CY 

2015 comprehensive APC policy, 

discussed in sections II.A.2.e. of the CY 

2015 OPPS/ASC proposed rule and this 

final rule with comment period and to 

apply the reporting ratio to the 

comprehensive APCs. We proposed to 

continue to exclude services paid under 

New Technology APCs. We proposed to 

continue to apply the reporting ratio to 

the national unadjusted payment rates 

and the minimum unadjusted and 

national unadjusted copayment rates of 

all applicable services for those 

hospitals that fail to meet the Hospital 

OQR Program reporting requirements. 

We also proposed to continue to apply 

all other applicable standard 

adjustments to the OPPS national 

unadjusted payment rates for hospitals 

that fail to meet the requirements of the 

Hospital OQR Program. Similarly, we 

proposed to continue to calculate OPPS 

outlier eligibility and outlier payment 

based on the reduced payment rates for 

those hospitals that fail to meet the 

reporting requirements. 

We did not receive public comments 

on our proposal. Therefore, we are 

finalizing our proposal to apply the 

Hospital OQR Program reduction in the 

manner described above. We also are 

finalizing our proposal, with 

modification, to reflect the CY 2015 

OPPS status indicators to which the 

adjustment would apply. For the CY 

2015 OPPS, the final reporting ratio is 

0.980, calculated by dividing the final 

reduced conversion factor of $72.661 by 

the final full conversion factor of 

$74.144. 

As a result, for the CY 2015 OPPS, we 

are applying a reporting ratio of 0.980 to 

the national unadjusted payments, 

minimum unadjusted copayments, and 

national unadjusted copayments for all 

applicable services for those hospitals 

failing to meet the Hospital OQR 

Program reporting requirements. This 

reporting ratio applies to HCPCS codes 

assigned status indicators ‘‘J1,’’ ‘‘P,’’ 

‘‘Q1,’’ ‘‘Q2,’’ ‘‘Q3,’’ ‘‘R,’’ ‘‘S,’’ ‘‘T,’’ ‘‘U,’’ 

or ‘‘V,’’ excluding services paid under 

New Technology APCs. All other 

applicable standard adjustments to the 

OPPS national unadjusted payment 

rates for hospitals that fail to meet the 

requirements of the Hospital OQR 

Program will continue to apply. We 

continue to calculate OPPS outlier 

eligibility and outlier payment based on 

the reduced rates for those hospitals that 

fail to meet the reporting requirements. 

H. Requirements for Reporting Hospital 

OQR Program Data for the CY 2017 

Payment Determination and Subsequent 

Years 

1. Administrative Requirements for the 

CY 2017 Payment Determination and 

Subsequent Years 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75108 through 75109) for 

a discussion of the Hospital OQR 

Program procedural requirements for 

the CY 2015 payment determination and 

subsequent years. In that final rule with 

comment period, we codified these 

procedural requirements at 42 CFR 

419.46(a). 

2. Form, Manner, and Timing of Data 

Submitted for the Hospital OQR 

Program 

a. General Procedural Requirements 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75110 through 75111) for 

a discussion of Hospital OQR Program 

general procedural requirements. In that 

final rule with comment period, we 

finalized our proposal to codify these 

general procedural requirements at 42 

CFR 419.46(c). 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41042), we proposed to 

correct a typographical error in 42 CFR 

419.46(c). This section states, ‘‘Except as 

provided in paragraph (d) of this 

section, hospitals that participate in the 

Hospital OQR Program must submit to 

CMS data on measures selected under 

section 1833(17)(C) of the Act . . .’’ We 

proposed to correct the erroneous 

reference of ‘‘section 1833(17)(C)’’ to 

‘‘section 1833(t)(17)(C).’’ 

We invited public comment on this 

proposal. 

We did not receive any public 

comments on this proposal. Therefore, 

we are finalizing the typographical 

correction as proposed. 

b. Requirements for Chart-Abstracted 

Measures Where Data Are Submitted 

Directly to CMS for the CY 2017 

Payment Determination and Subsequent 

Years 

The following chart-abstracted 

measures finalized previously and 

retained in the Hospital OQR Program 

require data to be submitted for the CY 

2017 payment determination and 

subsequent years: 

• OP–1: Median Time to Fibrinolysis; 

• OP–2: Fibrinolytic Therapy 

Received Within 30 Minutes of ED 

Arrival (NQF # 0288); 

• OP–3: Median Time to Transfer to 

Another Facility for Acute Coronary 

Intervention (NQF # 0290); 

• OP–4: Aspirin at Arrival (NQF# 

286) 

• OP–5: Median Time to ECG (NQF # 

0289); 

• OP–18: Median Time from ED 

Arrival to ED Departure for Discharged 

ED Patients (NQF # 0496); 

• OP–20: Door to Diagnostic 

Evaluation by a Qualified Medical 

Professional; 

• OP–21: ED—Median Time to Pain 

Management for Long Bone Fracture 

(NQF # 0662); 

• OP–22: ED—Left Without Being 

Seen; 

• OP–23: ED—Head CT Scan Results 

for Acute Ischemic Stroke or 

Hemorrhagic Stroke who Received Head 

CT Scan Interpretation Within 45 

Minutes of Arrival (NQF # 0661); 

• OP–29: Endoscopy/Polyp 

Surveillance: Appropriate Follow-up 

Interval for Normal Colonoscopy in 

Average Risk Patients (NQF # 0658); and 

• OP–30: Endoscopy/Polyp 

Surveillance: Colonoscopy Interval for 

Patients with a History of Adenomatous 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66963 

Polyps—Avoidance of Inappropriate 

Use (NQF # 1536). 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68481 through 68484) for 

a discussion of the form and manner for 

data submission of these measures. 

As we noted in the CY 2015 OPPS/

ASC proposed rule (79 FR 41042), we 

neither proposed new chart-abstracted 

measures where patient-level data is 

submitted directly to CMS nor proposed 

new requirements for data submission 

for chart-abstracted measures. 

c. Claims-Based Measure Data 

Requirements for the CY 2017 and CY 

2018 Payment Determination and 

Subsequent Years 

We proposed one additional claimsbased measure for the CY 2017 payment 

determination and subsequent years, 

OP–32: Facility 7-Day RiskStandardized Hospital Visit Rate after 

Outpatient Colonoscopy (79 FR 41036 

through 41039). However, as discussed 

in section XIII.E. of this final rule with 

comment period, we are finalizing this 

measure for the CY 2018 payment 

determination and subsequent years 

instead of the CY 2017 payment 

determination and subsequent years as 

proposed. As discussed in section 

XIII.E. of this final rule with comment 

period, we will use claims data from 

January 1, 2016–December 31, 2016 to 

calculate OP–32 for the CY 2018 

payment determination in order to use 

the most recently available data. 

Therefore, we are finalizing that to 

calculate OP–32, we will use claims 

data from January 1—December 31 of 

the calendar year 2 years prior to the 

payment determination year (for 

example, for the CY 2018 payment 

determination, we will use data from 

January 1, 2016—December 31, 2016). 

Therefore, there will be a total of 

seven claims-based measures for the CY 

2017 payment determination and 

subsequent years: 

• OP–8: MRI Lumbar Spine for Low 

Back Pain (NQF # 0514); 

• OP–9: Mammography Follow-Up 

Rates; 

• OP–10: Abdomen CT—Use of 

Contrast Material; 

• OP–11: Thorax CT—Use of Contrast 

Material; 

• OP–13: Cardiac Imaging for 

Preoperative Risk Assessment for NonCardiac Low Risk Surgery (NQF # 0669); 

• OP–14: Simultaneous Use of Brain 

Computed Tomography (CT) and Sinus 

Computed Tomography (CT); and 

• OP–15: Use of Brain Computed 

Tomography (CT) in the Emergency 

Department for Atraumatic Headache. 

For the CY 2018 payment 

determination and subsequent years, 

there will be a total of eight claimsbased measures: 

• OP–8: MRI Lumbar Spine for Low 

Back Pain (NQF # 0514); 

• OP–9: Mammography Follow-Up 

Rates; 

• OP–10: Abdomen CT—Use of 

Contrast Material; 

• OP–11: Thorax CT—Use of Contrast 

Material; 

• OP–13: Cardiac Imaging for 

Preoperative Risk Assessment for NonCardiac Low Risk Surgery (NQF # 0669); 

• OP–14: Simultaneous Use of Brain 

Computed Tomography (CT) and Sinus 

Computed Tomography (CT); 

• OP–15: Use of Brain Computed 

Tomography (CT) in the Emergency 

Department for Atraumatic Headache; 

and 

• OP–32: Facility 7-Day RiskStandardized Hospital Visit Rate after 

Outpatient Colonoscopy. 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75111 through 75112) for 

a discussion of the claims-based 

measure data submission requirements 

for the CY 2015 payment determination 

and subsequent years. 

In the CY 2012 OPPS/ASC final rule 

with comment period, we deferred the 

public reporting of OP–15 (76 FR 

74456). We extended the postponement 

of public reporting for this measure in 

the CY 2013 and CY 2014 OPPS/ASC 

final rules with comment period (77 FR 

68481, 78 FR 75111). As we noted in the 

CY 2015 OPPS/ASC proposed rule (79 

FR 41042), we did not propose any 

changes to this policy. Public reporting 

for OP–15 continues to be deferred, and 

this deferral has no effect on any 

payment determinations; however, 

hospitals are still required to submit 

data as previously finalized (76 FR 

74456). 

Comment: One commenter supported 

the proposed deferral of the public 

reporting of OP–15. The commenter 

appreciated CMS’ concerns regarding 

inappropriate use of brain CT imaging 

and the need for an established clinical 

guideline to address this issue. 

However, the commenter did not 

believe older adults or adults on 

anticoagulant medications should be 

included in OP–15, and noted that 

current research suggests headaches are 

a potential contraindication. The 

commenter also expressed concern that 

claims are not detailed enough to 

capture the clinical indications needed 

for appropriate exclusions. As a result, 

the commenter was concerned that this 

measure may discourage clinically 

appropriate brain CTs for higher-risk 

older populations. The commenter 

believed that CMS should focus its 

efforts on other CT measures, 

particularly after trauma or suspected 

pulmonary embolism. Another 

commenter asked CMS to remove OP– 

15 from the measure set. 

Response: Given stakeholder 

concerns, including those of this 

commenter, we continue to evaluate 

whether OP–15 needs to be refined 

before being publicly reported. We 

continue to believe, for the reasons 

stated in the CY 2012 OPPS/ASC final 

rule with comment period (76 FR 

74456), that the measure has value, and 

we will continue to collect data with 

regard to this measure. However, we 

will also continue to defer public 

reporting until we have resolved these 

concerns. Because the measure is 

claims-based, this deferral does not 

affect data submission requirements for 

the Hospital OQR Program (that is, 

HOPDs do not submit data for claimsbased measures other than the actual 

FFS claims), and an HOPD’s payment 

determination will not be affected based 

on OP–15 while public reporting is 

deferred. 

d. Data Submission Requirements for 

Measure Data Submitted via the CMS 

Web-Based Tool for the CY 2017 

Payment Determination and Subsequent 

Years 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75112 through 75115) for 

a discussion of the requirements for 

measure data submitted via the Webbased tool on a CMS Web site (the 

QualityNet Web site) for the CY 2016 

payment determination and subsequent 

years. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41042), we did not propose 

any changes to the data submission 

requirements for data submitted via the 

CMS Web-based tool. 

e. Population and Sampling Data 

Requirements for the CY 2017 Payment 

Determination and Subsequent Years 

We refer readers to the CY 2011 

OPPS/ASC final rule with comment 

period (75 FR 72100 through 72103) and 

the CY 2012 OPPS/ASC final rule with 

comment period (76 FR 74482 through 

74483) for discussions of our policy that 

hospitals may voluntarily submit 

aggregate population and sample size 

counts for Medicare and non-Medicare 

encounters for the measure populations 

for which chart-abstracted data must be 

submitted. In the CY 2015 OPPS/ASC 

proposed rule (79 FR 41042), we did not 

propose any changes to this policy. 


tkelley on DSK3SPTVN1PROD with RULES2
66964 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

f. Review and Corrections Period for 

Chart-Abstracted Measures 

Under the Hospital OQR Program, 

hospitals submit chart-abstracted data to 

CMS on a quarterly basis. These data are 

typically due 4 months after the quarter 

has ended, unless we grant an extension 

or exception, as further described in 

section XIII.J. of this final rule with 

comment period. We refer readers to the 

CY 2014 OPPS/ASC final rule with 

comment period for a discussion of our 

previously finalized policies regarding 

submissions deadlines for chartabstracted measures (78 FR 68482). 

Hospitals may begin submitting data on 

the first discharge day of any reporting 

quarter and can modify this data up 

until the close of the submission period 

(or 4 months after the quarter has 

ended). For example, if a hospital enters 

data on January 2, it could continue to 

review, correct, and change these data 

until August 1, the first quarter 

submission deadline. We generally 

provide rates for the measures that have 

been submitted for chart-abstracted, 

patient-level data 24 to 48 hours 

following submission. Hospitals are 

encouraged to submit data early in the 

submission schedule so that they can 

identify errors and resubmit data before 

the quarterly submission deadline. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41042 through 41043), we 

proposed to formalize this 4-month 

period as the review and corrections 

period for chart-abstracted data for the 

Hospital OQR Program. During this 

review and corrections period, hospitals 

can enter, review, and correct data 

submitted directly to CMS. However, 

after the submission deadline, hospitals 

would not be allowed to change these 

data. We believe that 4 months is 

sufficient time for hospitals to perform 

these activities. 

We invited public comment on this 

proposal. 

Comment: Many commenters did not 

support CMS’ proposal to have the data 

submission period run concurrently 

with the review and corrections period, 

stating that CMS allows a separate time 

period for review and corrections for 

nearly all of CMS’ other quality 

reporting programs. Commenters 

specifically stated that, with the 

proliferation of quality measures in each 

of CMS’ quality reporting programs, 

hospitals need all of the time currently 

afforded to capture and report data 

accurately. Commenters recommended 

that CMS provide at least 30 days 

immediately after the submission 

deadline to allow hospitals to review 

and correct their data. 

Response: We disagree with the 

commenters who believed that our other 

quality reporting programs have a 

separate review and corrections period. 

Providers may review their data during 

the submission period, but are not 

afforded time after this period to correct 

their data. We note that our proposed 

review and corrections period is 

consistent with the informal review and 

corrections period of other quality 

reporting programs, including the 

Hospital IQR Program. 

As stated in the proposed rule (79 FR 

41042–41043), hospitals typically have 

4 months to submit, review, and correct 

their chart-abstracted data, and we 

merely proposed to formalize this time 

period as the review and corrections 

period. We believe that 4 months is 

adequate because hospitals have been 

using this period of time to submit, 

view, and correct their chart-abstracted 

data for the life of the program. We 

strongly encourage hospitals to submit 

their data as early as possible so they 

can take full advantage of the time 

needed for review and correction. In 

addition, the length of time for data 

submission for chart-abstracted data that 

is validated affects the timeliness of the 

validation process; additional time 

would further lengthen the time from 

when care is rendered to when data can 

be made publicly available. 

After consideration of the public 

comments we received, and consistent 

with our policy in other quality 

reporting programs, we are finalizing 

the 4 months review and corrections 

period as proposed. We strongly 

encourage hospitals to submit their data 

to CMS as early as possible to have the 

maximum time to review and correct 

their data. 

3. Hospital OQR Program Validation 

Requirements for Chart-Abstracted 

Measure Data Submitted Directly to 

CMS for the CY 2017 Payment 

Determination and Subsequent Years 

a. Background 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68484 through 68487) for 

a discussion of finalized policies 

regarding our validation requirements. 

We codified these policies at 42 CFR 

419.46(e). In the CY 2015 OPPS/ASC 

proposed rule (79 FR 41043 through 

41044), we proposed three changes to 

our validation procedures: (1) We 

proposed to change the eligibility 

requirements for hospitals selected for 

validation so that a hospital would be 

eligible if it submits at least one case to 

the Hospital OQR Program Clinical Data 

Warehouse during the quarter 

containing the most recently available 

data; (2) we proposed to give hospitals 

the option to either submit paper copies 

of patient charts or securely transmit 

electronic versions of medical 

information for validation; and (3) we 

proposed that a hospital must identify 

the medical record staff responsible for 

submission of records under the 

Hospital OQR Program to the designated 

CMS contractor. 

b. Selection of Hospitals for Data 

Validation of Chart-Abstracted Measures 

for the CY 2017 Payment Determination 

and Subsequent Years 

We refer readers to the CY 2012 and 

CY 2013 OPPS/ASC final rules with 

comment period (76 FR 74484 through 

74485 and 77 FR 68484 through 68485) 

for a discussion of finalized policies 

regarding our sampling methodology, 

including sample size, eligibility for 

validation selection, and encounter 

minimums for patient-level data for 

measures where data is obtained from 

chart abstraction and submitted directly 

to CMS from selected hospitals. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41043), we proposed one 

change to this process. Previously, to be 

eligible for random selection for 

validation, a hospital must have been 

coded as ‘‘open’’ in the CASPER system 

at the time of selection and must have 

submitted at least 10 encounters to the 

Clinical Data Warehouse during the data 

collection period for the applicable 

payment determination (76 FR 74484). 

We proposed that, beginning with the 

CY 2015 encounter period for the CY 

2017 payment determination and 

subsequent years, a hospital will be 

eligible for validation if it submits at 

least one case to the Hospital OQR 

Program Clinical Data Warehouse 

during the quarter containing the most 

recently available data. The quarter 

containing the most recently available 

data will be defined based on when the 

random sample is drawn. For example, 

if we draw a sample in December 2014, 

the most recent data available would be 

that from the second quarter of 2014, 

which ends June 2014, because the 

submission deadline for second quarter 

data would be November 1, 2014 

(https://www.qualitynet.org/dcs/Content

Server?c=Page&pagename=

QnetPublic%2FPage%2FQnetTier2&

cid=1205442125082; 78 FR 68482). As 

another example, if a sample is drawn 

in October 2014, the most recent 

available data would be from quarter 

one, which ended in March 2014, 

because data must have been submitted 

by August 1, 2014. We believe this 

change is necessary because it increases 

the probability that selected hospitals 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66965 

have current data in the Clinical Data 

Warehouse to be validated. Previously, 

hospitals that did not have data from the 

current year available could still be 

selected for validation. 

We invited public comment on this 

proposal. 

Comment: Many commenters 

supported CMS’ proposal to allow a 

hospital to be eligible for validation if it 

submits at least one case to the Hospital 

OQR Program Clinical Data Warehouse 

during the quarter with the most 

recently available data. One commenter, 

however, recommended that CMS 

change the number of cases for a facility 

to be eligible for validation from at least 

1 case to at least 12 cases because up to 

12 records are required per hospital per 

quarter for validation. Commenters also 

urged CMS to evaluate the 

appropriateness of hospital selection 

based on this narrower criterion and to 

propose refinements, if necessary, in the 

future. 

Response: We thank commenters for 

their support. We agree with the 

suggestion that a hospital should only 

be eligible for random selection for 

validation if it submits at least 12 cases 

to the Hospital OQR Program Clinical 

Data Warehouse during the quarter with 

the most recently available data. As the 

commenter noted, currently, when a 

hospital is selected for validation, we 

request up to 12 cases per quarter per 

hospital. We stated our rationale for 

requesting up to 12 cases per quarter in 

the CY 2012 OPPS/ASC final rule with 

comment period (76 FR 74486), where 

we explained that we attempt to balance 

burden to hospitals with data accuracy. 

Accordingly, we recognize that allowing 

a hospital to be eligible for random 

selection for validation if it is ‘‘open’’ or 

requiring only one case in the quarter 

containing the most recently available 

data may not allow us an adequate 

number of records to ensure data 

submitted by the hospital is valid and 

are modifying our proposal accordingly 

to align with our validation procedures 

and goals. 

After consideration of the public 

comments we received, and for the 

reasons stated above, we are finalizing 

our proposal with a modification that, 

beginning with the CY 2015 encounter 

period for the CY 2017 payment 

determination and subsequent years, a 

hospital will be eligible for random 

selection for validation if it submits at 

least 12 cases, instead of just 1 as 

proposed, to the Hospital OQR Program 

Clinical Data Warehouse during the 

quarter containing the most recently 

available data. The quarter containing 

the most recently available data will be 

defined based on when the random 

sample is drawn. 

c. Targeting Criteria for Data Validation 

Selection for the CY 2017 Payment 

Determination and Subsequent Years 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68485 through 68486) for 

a discussion of our targeting criteria. In 

the CY 2015 OPPS/ASC proposed rule 

(79 FR 41043), we did not propose any 

changes to these policies. 

d. Methodology for Encounter Selection 

for the CY 2017 Payment Determination 

and Subsequent Years 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68486) for a discussion of 

our methodology for encounter 

selection. In the CY 2015 OPPS/ASC 

proposed rule (79 FR 41043), we did not 

propose any changes to this policy. 

e. Medical Record Documentation 

Requests for Validation and Validation 

Score Calculation for the CY 2017 

Payment Determination and Subsequent 

Years 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68486 through 68487) for 

a discussion of our previously finalized 

procedures for requesting medical 

record documentation for validation and 

validation score calculation. In the CY 

2014 OPPS/ASC final rule with 

comment period (78 FR 75118), we 

codified these procedures at 42 CFR 

419.46(e)(1) and (e)(2). In the CY 2015 

OPPS/ASC proposed rule (79 FR 41043 

through 41044), we proposed two 

changes to these policies for the CY 

2017 payment determination and 

subsequent years: (1) We proposed to 

give hospitals the option to either 

submit paper copies of patient charts or 

securely transmit electronic versions of 

medical information for validation; and 

(2) we proposed that a hospital must 

identify the medical record staff 

responsible for submission of records 

under the Hospital OQR Program to the 

designated CMS contractor. 

For records stored electronically, 

hospitals expend additional resources 

printing records onto paper that may be 

more efficiently transmitted 

electronically. In addition, the length of 

paper charts has been increasing, and 

the paper used to submit these records 

has an environmental impact. Therefore, 

we proposed to give hospitals the option 

to either submit copies of paper patient 

charts or securely transmit electronic 

versions of medical information, which 

has the potential to significantly reduce 

administrative burden, cost, and 

environmental impact. We have already 

finalized a similar policy for the 

Hospital IQR Program in the FY 2014 

IPPS/LTCH PPS final rule (78 FR 50834 

through 50836) that allows hospitals for 

the Hospital IQR Program to submit 

electronic records through the mail on 

a CD, DVD, or flash drive. In addition, 

in the FY 2015 IPPS/LTCH PPS final 

rule for the Hospital IQR Program (79 

FR 50269), we finalized our proposal to 

also allow hospitals to submit patient 

charts using a Secure File Transfer 

Portal on the QualityNet Web site. 

The current Hospital OQR Program 

regulation at § 419.46(e)(1) states: 

‘‘Upon written request by CMS or its 

contractor, a hospital must submit to 

CMS supporting medical record 

documentation that the hospital used 

for purposes of data submission under 

the program . . . .’’ We proposed that 

this requirement may be met by 

employing either of the following 

options for the CY 2017 payment 

determination and subsequent years: (1) 

A hospital may submit paper medical 

records, the form in which we have 

historically requested them; or (2) a 

hospital may securely transmit 

electronic versions of medical 

information. 

For the CY 2017 payment 

determination and subsequent years, we 

proposed that hospitals that chose to 

securely transmit electronic versions of 

medical information should either: (1) 

Download or copy the digital image 

(that is, PDF) of the patient chart onto 

CD, DVD, or flash drive and ship the 

electronic media following instructions 

specified on the QualityNet Web site; or 

(2) securely submit digital images 

(PDFs) of patient charts using a Secure 

File Transfer Portal on the QualityNet 

Web site. The Secure File Transfer 

Portal would allow hospitals to transfer 

files through either a Web-based portal 

or directly from a client application 

using a secure file transfer protocol. The 

system provides a mechanism for 

securely exchanging documents 

containing sensitive information such as 

Protected Health Information (PHI) or 

Personally Identifiable Information (PII). 

Detailed instructions on how to use this 

system are available in the Secure File 

Transfer 1.0 User Manual available on 

QualityNet at: http://www.qualitynet.

org/dcs/ContentServer?c=Page&

pagename=QnetPublic%2FPage%2

FQnetBasic&cid=1228773343598. 

In addition, in the CY 2013 OPPS/

ASC final rule with comment period (77 

FR 68486 through 68487), we stated that 

our validation contractor would request 

medical documentation from each 

hospital selected for validation via 

certified mail or other trackable method. 


tkelley on DSK3SPTVN1PROD with RULES2
66966 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

This request would be sent to ‘‘the 

hospital’s medical record staff identified 

by the hospital for the submission of 

records under the Hospital IQR Program 

(that is, the hospital’s medical records 

staff identified by the hospital to the 

State QIO)’’ (77 FR 68487). Quality 

Improvement Organizations (QIOs) are 

CMS contractors required by the Act 

(section 1152 through 1154) tasked 

with, among other responsibilities, 

assisting hospitals with quality 

improvement activities. Due to the 

evolution of the structure of the QIO 

program, beginning with CY 2015 for 

the CY 2017 payment determination and 

subsequent years, we proposed that a 

hospital must identify the medical 

record staff responsible for submission 

of records under the Hospital OQR 

Program to the designated CMS 

contractor; this CMS contractor may be 

a contractor other than the State QIO. 

Finally, we noted that a typographical 

error exists in our validation language in 

§ 419.46(e). This section states, ‘‘CMS 

may validate one or more measures 

selected under section 1833(17)(C) of 

the Act . . . .’’ ‘‘[S]ection 1833(17)(C)’’ 

should instead state ‘‘section 

1833(t)(17)(C).’’ We proposed to make 

this change in the regulation text. 

We invited public comment on these 

proposals. 

Comment: Commenters supported 

CMS’ proposal to offer hospitals the 

option to submit, for validation 

purposes, either paper copies of patient 

charts or to securely transmit electronic 

versions of medical information using 

either electronic media (for example, 

CD, DVD, flash drive) or PDFs submitted 

using the Secure File Transfer Portal on 

the QualityNet Web site. Commenters 

noted that the prevalence of electronic 

medical records lends itself well to 

electronic submission of records. 

Response: We thank commenters for 

their support and we agree with their 

comments. 

Comment: Commenters supported 

CMS’ proposal to require hospitals to 

identify the medical record staff 

responsible for submitting validation 

records for the Hospital OQR Program, 

but requested that CMS make every 

effort to work with State hospital 

associations to ensure that the correct 

individuals have been identified 

through this new process. Commenters 

also requested that CMS require 

contractors to update their lists 

quarterly to ensure that information is 

kept current. 

Response: We thank commenters for 

their support. We will consider 

commenters’ concerns when instructing 

our contractors to keep validation 

contacts up-to-date, and, to the extent 

feasible, we will attempt to work with 

state hospital associations. 

After consideration of the public 

comments we received, we are 

finalizing our proposals: (1) To give 

hospitals the option to either submit: (a) 

Paper copies of patient charts; or (b) 

electronic versions of medical 

information by: (i) Downloading or 

copying the digital image (that is, PDF) 

of the patient chart onto encrypted CD, 

DVD, or flash drive and shipping the 

encrypted electronic media following 

instructions specified on the QualityNet 

Web site; or (ii) securely submitting 

PDFs of patient charts using a Secure 

File Transfer Portal on the QualityNet 

Web site; (2) that hospitals must identify 

the medical record staff responsible for 

submission of records under the 

Hospital OQR Program to the designated 

CMS contractor as proposed; and (3) to 

correct our typographical error in 

regulation text to read ‘‘section 

1833(t)(17)(C)’’ as proposed. 

I. Hospital OQR Program 

Reconsideration and Appeals 

Procedures for the CY 2017 Payment 

Determination and Subsequent Years 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68487 through 68489) and 

the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75118 through 

75119) for a discussion of our 

reconsideration and appeals procedures. 

We codified this process by which 

participating hospitals may submit 

requests for reconsideration at 42 CFR 

419.46(f). We also codified language at 

§ 419.46(f)(3) stating that a hospital that 

is dissatisfied with a decision made by 

CMS on its reconsideration request may 

file an appeal with the Provider 

Reimbursement Review Board. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41044), we did not propose 

any changes to the reconsideration and 

appeals procedures. 

J. Extension or Exception Process for the 

CY 2017 Payment Determination and 

Subsequent Years 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68489), the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75119 through 75120), 

and 42 CFR 419.46(d) for a complete 

discussion of our extraordinary 

circumstances extension or waiver 

process under the Hospital OQR 

Program. In the CY 2015 OPPS/ASC 

proposed rule (79 FR 41044), we did not 

propose any substantive changes to 

these policies or the processes. 

However, in the future, we will refer 

to the process as the Extraordinary 

Circumstances Extensions or 

Exemptions process, instead of the 

Extraordinary Circumstances Extensions 

or Waiver process. We are in the process 

of revising the Extraordinary 

Circumstances/Disaster Extension or 

Waiver Request form (CMS–10432), 

approved under OMB control number 

0938–1171. We are updating the forms 

and instructions so that a hospital or 

facility may apply for an extension for 

all applicable quality reporting 

programs at one time. 

In addition, we proposed to make a 

conforming change from the phrase 

‘‘extension or waiver’’ to the phrase 

‘‘extension or exemption’’ in 42 CFR 

419.46(d). 

We proposed to revise the language in 

42 CFR 419.46(d) at 79 FR 41081 (July 

14, 2014) to state that CMS may grant 

an extension or exception of one or 

more data submission deadlines and 

requirements in the event of 

extraordinary circumstances beyond the 

control of the hospital, such as when an 

act of nature affects an entire region or 

locale or a systemic problem with one 

of CMS’ data collection systems directly 

or indirectly affects data submission. 

CMS may grant an extension or 

exception as follows: 

• Upon request by the hospital. 

Specific requirements for submission of 

a request for an extension or exception 

are available on the QualityNet Web 

site. 

• At the discretion of CMS. CMS may 

grant exceptions or extensions to 

hospitals that have not requested them 

when CMS determines that an 

extraordinary circumstance has 

occurred. 

We invited comments on this 

proposal. 

Comment: Commenters supported 

CMS’ decision to update the forms and 

instructions for the extension or 

exception process so that a hospital may 

apply for an extension for all applicable 

quality programs at one time. 

Response: We thank commenters for 

their support. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to change the 

phrase ‘‘extension or waiver’’ to the 

phrase ‘‘extension or exemption’’ at 42 

CFR 419.46(d) as proposed. 

XIV. Requirements for the Ambulatory 

Surgical Center Quality Reporting 

(ASCQR) Program 

A. Background 

1. Overview 

We refer readers to section XIII.A.1. of 

this final rule with comment period for 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66967 

a general overview of our quality 

reporting programs. 

2. Statutory History of the Ambulatory 

Surgical Center Quality Reporting 

(ASCQR) Program 

We refer readers to section XIV.K.1. of 

the CY 2012 OPPS/ASC final rule with 

comment period (76 FR 74492 through 

74493) for a detailed discussion of the 

statutory history of the ASCQR Program. 

3. Regulatory History of the ASCQR 

Program 

We refer readers to section XV.A.3. of 

the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75122) for an 

overview of the regulatory history of the 

ASCQR Program. 

B. ASCQR Program Quality Measures 

1. Considerations in the Selection of 

ASCQR Program Quality Measures 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68493 through 68494) for 

a detailed discussion of the priorities we 

consider for ASCQR Program quality 

measure selection. 

2. Policy for Removal of Quality 

Measures From the ASCQR Program 

We previously adopted a policy to 

retain measures from the previous year’s 

ASCQR Program measure set for 

subsequent years’ measure sets except 

when they are removed, suspended, or 

replaced as indicated (76 FR 74504; 77 

FR 68494 through 68495; 78 FR 75122). 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41045), we proposed a 

process for removing adopted measures. 

In the FY 2010 IPPS/LTCH PPS final 

rule (74 FR 43863 through 43865), we 

finalized a process for immediate 

retirement (a term we later changed to 

‘‘removal’’) of RHQDAPU Program (now 

referred to as the Hospital IQR Program) 

measures based on evidence that the 

continued use of the measure as 

specified raised patient safety concerns. 

We stated that we believe immediate 

retirement of quality measures should 

occur when the clinical evidence 

suggests that continued collection of the 

data may result in harm to patients. For 

example, we removed the AMI–6: Beta 

Blocker at Arrival measure from the 

Hospital IQR Program because it 

encouraged care that raised potential 

safety concerns according to newly 

published research suggesting that betablockers could increase mortality risks 

for certain patient populations (74 FR 

43863). Under such circumstances, we 

may not be able to wait until the annual 

rulemaking cycle or until we have had 

the opportunity to obtain input from the 

public to retire a measure because of the 

need to discourage potentially harmful 

practices, which may result from 

continued collection of the measure. 

In these situations, we would 

promptly retire the measure and notify 

hospitals and the public of the 

retirement of the measure and the 

reasons for its retirement through the 

usual communication channels. Further, 

we would confirm the retirement of the 

measure that was the subject of 

immediate retirement in the next 

program rulemaking. Finally, we stated 

that, in other circumstances where we 

do not believe that continued use of a 

measure raises specific safety concerns, 

we intend to use the rulemaking process 

to retire the measure. For the same 

reasons stated for the Hospital IQR 

Program, we believe that this process 

also would be appropriate for the 

ASCQR Program. Therefore, in the CY 

2015 OPPS/ASC proposed rule (79 FR 

41045), we proposed to adopt this same 

removal process for the ASCQR 

Program. Under this process, we would 

immediately remove an ASCQR 

Program measure based on evidence 

that the continued use of the measure as 

specified raised patient safety concerns. 

In these situations, we would promptly 

remove the measure and notify ASCs 

and the public of the removal of the 

measure and the reasons for its removal 

through the ASCQR Program ListServe 

and the ASCQR Program QualityNet 

Web site at: http://www.qualitynet.org/

dcs/ContentServer?c=Page&pagename=

QnetPublic%2FPage%2FQnetTier2&

cid=1228772879650. Further, we would 

confirm the removal of the measure that 

was the subject of immediate removal in 

the next OPPS/ASC rulemaking. 

For situations where we do not 

believe the continued use of a measure 

raises specific safety concerns, we 

proposed to use the regular rulemaking 

process to remove a measure to allow 

for public comment. In the FY 2013 

IPPS/LTCH PPS final rule (77 FR 53505 

through 53506), we listed the criteria we 

have used to determine whether to 

remove measures from the Hospital IQR 

Program. These criteria are: (1) Measure 

performance among hospitals is so high 

and unvarying that meaningful 

distinctions and improvements in 

performance can no longer be made 

(‘‘topped out’’ measures); (2) availability 

of alternative measures with a stronger 

relationship to patient outcomes; (3) a 

measure does not align with current 

clinical guidelines or practice; (4) the 

availability of a more broadly applicable 

(across settings, populations, or 

conditions) measure for the topic; (5) 

the availability of a measure that is more 

proximal in time to desired patient 

outcomes for the particular topic; (6) the 

availability of a measure that is more 

strongly associated with desired patient 

outcomes for the particular topic; and 

(7) collection or public reporting of a 

measure leads to negative unintended 

consequences other than patient harm. 

These criteria were suggested through 

public comment on proposals for the 

Hospital IQR Program, and we agreed 

that these criteria should be considered 

in evaluating the Hospital IQR Program 

quality measures for removal (75 FR 

53506). We believe that these criteria 

also are applicable in evaluating ASCQR 

Program quality measures for removal 

because we have found them useful for 

evaluating measures in the Hospital IQR 

Program and our other quality reporting 

programs, which share similar goals to 

the ASCQR Program. Accordingly, we 

proposed to adopt these measure 

removal criteria for the ASCQR 

Program. 

We invited public comment on these 

proposals. 

Comment: Many commenters 

supported CMS’ proposed measure 

removal policy and commended CMS 

for fostering an aligned approach for 

measures removal criteria across our 

quality reporting and value-based 

purchasing programs. 

Response: We thank the commenters 

for their support. We agree that for 

consistency, an approach to removing 

measures should be aligned across our 

quality reporting and value-based 

purchasing programs to the extent 

possible. 

Comment: One commenter supported 

CMS’ proposal to immediately remove 

measures that raise public safety 

concerns. The commenter 

recommended that CMS notify ASCs by 

mail and also post notification on the 

CMS Web site on the ASCQR Web page 

under the ‘‘Announcements’’ heading, 

in addition to communication through 

the ASCQR Program ListServe and the 

QualityNet Web site. 

Response: We thank the commenter 

for supporting our proposal and the 

suggestions for notifying ASCs. Past 

experience indicates that the current 

notification process using the 

QualityNet Web site and the ASCQR 

Program ListServe is a fast, efficient, 

and effective means of publicly 

communicating information about the 

ASCQR Program, and using this process 

would be consistent with how other 

ASCQR Program information is 

provided. Therefore, we are not 

including these additional modes of 

communication with ASCs for purposes 

of ASCQR Program notices at this time. 

Comment: One commenter believed 

that proposed measure removal criteria 

(2) (availability of alternative measures 


tkelley on DSK3SPTVN1PROD with RULES2
66968 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

with a stronger relationship to patient 

outcomes) and (6) (the availability of a 

measure that is more strongly associated 

with desired patient outcomes for the 

particular topic) are duplicative, and 

that criterion (2) should read as 

‘‘performance or improvement on a 

measure does not result in better patient 

outcomes.’’ The commenter also 

suggested that criterion (3) (a measure 

does not align with current clinical 

guidelines or practice) and criterion (7) 

(collection or public reporting of a 

measure leads to negative unintended 

consequences other than patient harm) 

should be applied to all measures, but 

the remaining criteria should be applied 

more selectively on a measure-bymeasure basis. 

Response: We thank the commenter 

for these recommendations. We disagree 

with the commenter that criterion (2) 

and criterion (6) are the same and that 

criterion (2) should be reworded as 

suggested. Criterion (2) applies when 

there is more than one alternative 

measure with a stronger relationship to 

patient outcomes that is available, and 

criterion (6) applies where there is only 

one measure that is strongly and 

specifically associated with desired 

patient outcomes for the particular topic 

that is available. For criterion (2), there 

may be different alternative measures 

available that meet this criterion to 

different degrees. The suggestion to 

rephrase criterion (2) to read 

‘‘performance or improvement on a 

measure does not result in better patient 

outcomes’’ would change the meaning 

of criterion (2). 

As we discuss earlier, the measure 

removal criteria have been developed 

through public comment on proposals 

for the Hospital IQR Program. We 

believe that these criteria also are 

applicable in evaluating the ASCQR 

Program quality measures for removal, 

because we have found them useful for 

evaluating measures in the Hospital IQR 

Program as well as other quality 

reporting programs, which share similar 

goals to the ASCQR Program. We note 

that we did not propose any changes to 

criterion (2) in the CY 2015 OPPS/ASC 

proposed rule. Further, based on our 

experience with the Hospital IQR 

Program, we believe criterion (2) is 

appropriate and do not believe that 

additional refinement is necessary. 

Therefore, we are not revising this 

criterion. We thank the commenters for 

their views and will take them into 

consideration as we continuously assess 

these criteria. 

With respect to the commenter’s 

suggestion that criteria (3) and (7) apply 

to all measures but the remaining 

criteria be applied more selectively on 

a case-by-case basis, we disagree with 

respect to selective application of the 

criteria. We intend for all the criteria, 

including criteria (3) and (7), to apply to 

all measures to the extent possible. In 

any given situation, we will focus only 

on removal criteria that are relevant to 

a particular set of circumstances. If more 

than one of the measure removal criteria 

appears to be relevant, we intend to take 

a balanced approach in assessing the 

value of each of the different criteria in 

a given situation before removing any 

measure. 

After consideration of the public 

comments we received, we are 

finalizing our proposal without 

modification on the measure removal 

process and criteria. Specifically, we 

will immediately remove an ASCQR 

Program measure based on evidence 

that the continued use of the measure as 

specified raises patient safety concerns. 

In these situations, we will promptly 

remove the measure and notify ASCs 

and the public of the removal of the 

measure and the reasons for its removal 

through the ASCQR Program ListServe 

and the ASCQR Program QualityNet 

Web site. Further, we will confirm the 

removal of the measure that was the 

subject of immediate removal in the 

next OPPS/ASC rulemaking. 

For situations where we do not 

believe the continued use of a measure 

raises specific safety concerns, we will 

use the regular rulemaking process to 

remove a measure to allow for public 

comment. In these situations, we will 

use the following criteria to determine 

whether to remove the measures from 

the ASCQR Program: (1) measure 

performance among ASCs is so high and 

unvarying that meaningful distinctions 

and improvements in performance can 

no longer be made (‘‘topped out’’ 

measures); (2) availability of alternative 

measures with a stronger relationship to 

patient outcomes; (3) a measure does 

not align with current clinical 

guidelines or practice; (4) the 

availability of a more broadly applicable 

(across settings, populations, or 

conditions) measure for the topic; (5) 

the availability of a measure that is more 

proximal in time to desired patient 

outcomes for the particular topic; (6) the 

availability of a measure that is more 

strongly associated with desired patient 

outcomes for the particular topic; and 

(7) collection or public reporting of a 

measure leads to negative unintended 

consequences other than patient harm. 

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

Measures 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41045 through 41046), we 

proposed to define criteria for when we 

would consider a measure to be 

‘‘topped-out.’’ A measure is ‘‘toppedout’’ when measure performance among 

ASCs is so high and unvarying that 

meaningful distinctions and 

improvements in performance can no 

longer be made (‘‘topped-out’’ 

measures). We do not believe that 

measuring ASC performance on 

‘‘topped-out’’ measures provides 

meaningful information on the quality 

of care provided by ASCs. We further 

believe that quality measures, once 

‘‘topped-out,’’ represent care standards 

that have been widely adopted by ASCs. 

We believe such measures should be 

considered for removal from the ASCQR 

Program because their associated 

reporting burden may outweigh the 

value of the quality information they 

provide. 

Specifically, we proposed that a 

measure under the ASCQR Program is 

‘‘topped-out’’ when it meets both of the 

following criteria: 

• Statistically indistinguishable 

performance at the 75th and 90th 

percentiles; and 

• A truncated coefficient of variation 

less than or equal to 0.10. 

To identify if a measure has 

statistically indistinguishable 

performance at the 75th and 90th 

percentiles, we would determine 

whether the difference between the 75th 

and 90th percentiles for an ASC’s 

measure is within two times the 

standard error of the full dataset. The 

coefficient of variation (CV) is a 

descriptive statistic that expresses the 

standard deviation as a percentage of 

the sample mean; this provides a 

statistic that is independent of the units 

of observation. Applied to this analysis, 

a large CV would indicate a broad 

distribution of individual ASC scores, 

with large and presumably meaningful 

differences between ASCs in relative 

performance. A small CV would 

indicate that the distribution of 

individual facility scores is clustered 

tightly around the mean value, 

indicating that it is not useful to draw 

distinctions among individual ASCs on 

measure performance. The truncated CV 

excludes observations whose rates are 

below the 5th percentile and above the 

95th percentile; this avoids undue 

effects of the highest and lowest outlier 

values, which, if included, can 

inappropriately widen the dispersion of 

the distribution. These same criteria for 

when we would consider a measure to 

be ‘‘topped-out’’ have been adopted in 

the Hospital VBP Program (79 FR 

50055), the Hospital IQR Program (79 

FR 50204), and the Hospital OQR 

Program (section XIII.C.2 of this final 

rule with comment period). 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66969 

We invited public comment on this 

proposal. 

Comment: Many commenters 

supported CMS’ proposed ‘‘topped-out’’ 

criteria for measure removal and the 

alignment of these criteria across the 

Hospital IQR and Hospital VBP 

Programs. One commenter suggested 

that CMS refine the first criterion to 

ensure that measures exhibit sufficient 

lack of variability before they are 

removed. Several commenters suggested 

that CMS have a mechanism in place to 

identify a significant decline in 

adherence rates after a measure has been 

removed. 

Response: We thank the commenters 

for their support of the proposed 

topped-out criteria. We expect ASCs to 

always follow appropriate standards-ofcare and clinical guidelines, regardless 

of whether a quality measure exists. We 

believe that ASCs are committed to 

providing quality care to patients, and 

we do not have any indication that 

ASCs will stop doing so when measures 

are removed. 

While it is possible that removing a 

measure could result in reduced 

performance, we have guarded against 

this possibility by setting topped-out 

criteria that evidence very high, 

unvarying levels of performance. 

Further, we intend to continue to work 

with quality measurement stakeholders 

to ensure that performance does not 

decline significantly after removing a 

measure. However, we must balance the 

costs of continued monitoring of a 

successful measure with high levels of 

performance with the adoption of other 

measures where there are opportunities 

for improvement in clinical quality. 

Regarding the suggestion to further 

refine the first criterion, which refers to 

determining that a measure exhibits 

sufficient lack of variability before 

removal, we proposed topped-out 

criteria that evidence very high, 

unvarying levels of performance and, at 

this time, do not believe additional 

refinement that would make the criteria 

more stringent is necessary. However, 

we will consider the need for 

refinement and, if we determine 

changes may be necessary, we will 

propose such changes in future 

rulemaking. In addition, we will not use 

our topped-out criteria exclusively 

when evaluating the retention or 

removal of a measure; a measure that 

meets our topped-out criteria could be 

retained for other program reasons as 

discussed below. 

Comment: One commenter cautioned 

against removing measures solely based 

on the proposed ‘‘topped out’’ criteria, 

and was concerned that these criteria 

might lead to the removal of valuable 

program measures. The commenter 

cited the example of patient safety 

measures and surgical site infection 

rates, which are intended to drive 

toward and sustain zero harm. The 

commenter believed that these types of 

measures could have performance 

scores that meet the topped out criteria 

over time. However, the commenter 

believed they would have enduring 

value to consumers and providers. Some 

commenters urged CMS to assess 

‘‘topped-out’’ measures individually, 

that is, case-by-case, and in a broader 

context before removing them from the 

ASCQR Program. 

Response: We agree that some 

measures that are quantitatively 

‘‘topped-out’’ may still be appropriate 

for other reasons. Therefore, as we do 

for the Hospital IQR Program and the 

Hospital VBP Program, and consistent 

with our discussion above in section 

XIV.B.3. of this final rule with comment 

period, we will evaluate several factors 

in considering the removal of measures 

for the ASCQR Program. We will assess 

the benefits of retaining a measure on a 

case-by-case basis before proposing to 

remove a measure from a quality data 

reporting program and will not remove 

a measure solely on the basis of meeting 

any specific criterion. 

Comment: One commenter requested 

clarification whether ASC–5: 

Prophylactic IV antibiotic timing is 

topped-out because this measure is 

topped-out in the HOPD setting. 

Response: We thank the commenter 

for this request. In response, we have 

reviewed data collected under the 

ASCQR Program. Our analysis indicated 

that performance for the prophylactic IV 

antibiotic timing measure is relatively 

high. However, because we continue to 

have some facilities with completeness 

of reporting issues and data have been 

collected for a relatively short time, we 

do not believe we have sufficient data 

to support a topped out analysis for the 

purposes of measure removal for the 

ASCQR Program at this time. 

Furthermore, we believe that a 

prophylactic antibiotic timing measure 

remains relevant clinically or for quality 

improvement purposes under the 

ASCQR Program. 

After consideration of the public 

comments we received, we are 

finalizing the proposed ‘‘topped-out’’ 

criteria. Specifically, we are finalizing a 

policy that a measure under the ASCQR 

Program is ‘‘topped-out’’ when it meets 

both of the following criteria: (1) 

Statistically indistinguishable 

performance at the 75th and 90th 

percentiles; and (2) a truncated 

coefficient of variation less than or 

equal to 0.10. To identify if a measure 

has statistically indistinguishable 

performance at the 75th and 90th 

percentiles, we will determine whether 

the difference between the 75th and 

90th percentiles for an ASC’s measure is 

within two times the standard error of 

the full dataset. 

As we do for the Hospital IQR 

Program and the Hospital VBP Program, 

and consistent with our discussion 

above in section XIV.B.3. of this final 

rule with comment period, we will 

evaluate several factors in considering 

the removal of measures for the ASCQR 

Program. We will assess the benefits of 

retaining a measure on a case-by-case 

basis before proposing to remove a 

measure from the ASCQR Program and 

will not remove a measure solely on the 

basis of meeting any specific criterion. 

4. ASCQR Program Quality Measures 

Adopted in Previous Rulemaking 

In the CY 2012 OPPS/ASC final rule 

with comment period (76 FR 74492 

through 74517), we implemented the 

ASCQR Program beginning with the CY 

2014 payment determination. In the CY 

2012 OPPS/ASC final rule with 

comment period, we adopted five 

claims-based measures for the CY 2014 

payment determination and subsequent 

years, two measures with data 

submission via an online Web page for 

the CY 2015 payment determination and 

subsequent years, and one process of 

care, healthcare-associated infection 

measure for CY 2016 payment 

determination and subsequent years (76 

FR 74496 to 74511). In the CY 2014 

OPPS/ASC final rule with comment 

period, we adopted three chartabstracted measures for the CY 2016 

payment determination and subsequent 

years (78 FR 75124 to 75130). 

The quality measures that we 

previously adopted are listed in the 

chart below. 


tkelley on DSK3SPTVN1PROD with RULES2
66970 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

28Russo A, Elixhauser A, Steiner C, Wier L. 

Hospital-Based Ambulatory Surgery, 2007: 

Statistical Brief #86. Healthcare Cost and 

Utilization Project (HCUP) Statistical Briefs. 

Rockville (MD) 2006. 

29Seeff LC, Richards TB, Shapiro JA, et al. How 

many endoscopies are performed for colorectal 

cancer screening? Results from CDC’s survey of 

endoscopic capacity. Gastroenterology. Dec 2004; 

127(6):1670–1677. 

30Rathgaber SW., Wick TM. Colonoscopy 

completion and complication rates in a community 

gastroenterology practice. Gastrointest Endosc. 

2006; 64:556–62. 

31Rabeneck L, Saskin R, Paszat LF. Onset and 

clinical course of bleeding and perforation after 

outpatient colonoscopy: a population-based study. 

Gastrointest Endosc. 2011; 73:520–3. 

32 Ko CW, Riffle S, Michael L, et al. Serious 

complications within 30 days of screening and 

surveillance colonoscopy are uncommon. Clin 

Gastroenterol Hepatol. 2010; 8:166–73. 

33 Ko CW, Riffle S, Shapiro JA, et al. Incidence 

of minor complications and time lost from normal 

activities after screening or surveillance 

colonoscopy. Gastrointest Endosc. Apr 2007;65 

(4):648–656. 34Leffler DA, Kheraj R, Garud S, et al. The 

incidence and cost of unexpected hospital use after 

scheduled outpatient endoscopy. Arch Intern Med. 

Oct 25 2010; 170(19):1752–1757. 

35Chukmaitov AS, Menachemi N, Brown SL, 

Saunders C, Tang A, Brooks R. Is there a 

relationship between physician and facility 

volumes of ambulatory procedures and patient 

outcomes? J Ambul Care Manage. Oct–Dec 2008; 

31(4):354–369. 

ASC PROGRAM MEASURE SET PREVIOUSLY ADOPTED FOR THE CY 2016 PAYMENT DETERMINATION AND SUBSEQUENT

YEARS

ASC # NQF # Measure name 

ASC–1 ....................................... 0263 ......................................... Patient Burn. 

ASC–2 ....................................... 0266 ......................................... Patient Fall. 

ASC–3 ....................................... 0267 ......................................... Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, Wrong Implant. 

ASC–4 ....................................... 0265 ......................................... Hospital Transfer/Admission. 

ASC–5 ....................................... 0264 ......................................... Prophylactic Intravenous (IV) Antibiotic Timing. 

ASC–6 ....................................... N/A ........................................... Safe Surgery Checklist Use. 

ASC–7 ....................................... N/A ........................................... ASC Facility Volume Data on Selected ASC Surgical Procedures. 

Procedure categories and corresponding HCPCS codes are located at: http:// 

qualitynet.org/dcs/ContentServer?c=Page&pagename=

QnetPublic%2FPage%2FQnetTier2&cid=1228772475754. 

ASC–8 ....................................... 0431 ......................................... Influenza Vaccination Coverage among Healthcare Personnel. 

ASC–9 ....................................... 0658 ......................................... Endoscopy/Polyp Surveillance: Appropriate Follow-Up Interval for Normal 

Colonoscopy in Average Risk Patients. 

ASC–10 ..................................... 0659 ......................................... Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps-Avoidance of Inappropriate Use. 

ASC–11 ..................................... 1536 ......................................... Cataracts: Improvement in Patient’s Visual Function within 90 Days Following 

Cataract Surgery.* 

* Measure voluntarily collected as set forth in section XIV.E.3.c. of this final rule with comment period. 

The comments we received on these 

previously adopted measures and our 

responses are set forth below. 

Comment: Some commenters asked 

CMS to remove some previously 

adopted measures for ASCs, because 

they believed these measures were 

either inappropriate or too burdensome 

for ASCs. 

Response: We thank the commenters 

for their suggestions. At this time, we 

are not removing any of the measures 

suggested by commenters. We did not 

propose to remove any measures from 

the ASCQR Program in the CY 2015 

OPPS/ASC proposed rule. Further, there 

is no evidence that continued use of the 

measures as specified raises patient 

safety concerns that would require 

immediate removal of the measures 

based on the process we are finalizing 

in this final rule with comment period. 

However, we will take these suggestions 

into consideration in future years using 

the measure removal criteria we are 

adopting in this final rule with 

comment period. 

5. New ASCQR Program Quality 

Measure for the CY 2018 Payment 

Determination and Subsequent Years 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75124) for a detailed 

discussion of our approach to ASCQR 

measure selection. In the CY 2015 

OPPS/ASC proposed rule (79 FR 41046 

through 41048), we proposed to adopt 

one new claims-based measure into the 

ASCQR Program for the CY 2017 

payment determination and subsequent 

years: ASC–12: Facility Seven-Day RiskStandardized Hospital Visit Rate after 

Outpatient Colonoscopy. 

Colonoscopy is the most commonly 

performed ambulatory surgery in the 

United States.28 The most recent data 

available indicate that, in 2002 alone, 

physicians performed an estimated 14 

million colonoscopies in the United 

States.29 Colonoscopies are associated 

with a range of well-described and 

potentially preventable adverse events 

that can lead to hospital visits, repeat 

procedures, or surgical intervention for 

treatment, including colonic 

perforation, gastrointestinal (GI) 

bleeding, and cardiopulmonary events 

such as hypoxia, aspiration pneumonia, 

and cardiac arrhythmias. While hospital 

visits are generally unexpected after 

outpatient colonoscopy, the literature 

suggests that the majority of these visits 

occur within the first 7 days.30 31 32

Reported hospital visit rates after 

outpatient colonoscopy range from 0.8 

to 1.0 percent at 7 to 14 days post 

procedure, and from 2.4 to 3.8 percent 

at 30 days post procedure.33 34 35 Some 

adverse events such as bleeding occur 

after day 7, but based on input from 

clinical experts, public comment, and 

empirical analyses, we concluded that 

unplanned hospital visits within 7 days 

is the optimal outcome to ensure 

capture of procedure-related adverse 

events and to minimize capture of 

hospital visits unrelated to the 

procedure. This measure provides the 

opportunity for ASCs to improve quality 

of care and to lower the rates of adverse 

events leading to hospital visits after 

outpatient colonoscopy; this would 

encourage ASCs to achieve the outcome 

rates of the best performers. 

We believe it is important to reduce 

adverse patient outcomes associated 

with preparation for colonoscopy, the 

procedure itself, and follow-up care. 

Therefore, we proposed to include the 

ASC–12: Facility Seven-Day RiskStandardized Hospital Visit Rate after 

Outpatient Colonoscopy measure, 

which is calculated from paid Medicare 

FFS claims, in the ASCQR Program for 

the CY 2017 payment determination and 

subsequent years. We expect the 

measure would promote improvement 

in patient care over time because 

transparency in publicly reporting 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66971 

36Leffler DA, Kheraj R, Garud S, et al. The 

incidence and cost of unexpected hospital use after 

scheduled outpatient endoscopy. Arch Intern Med. 

Oct 25 2010; 170(19):1752–1757. 

measure scores would make patient 

unplanned hospital visits (emergency 

department visits, observation stays, 

and inpatient admissions) following 

colonoscopies more visible to ASCs and 

patients and incentivize ASCs to 

incorporate quality improvement 

activities in order to reduce these visits. 

ASCs are often unaware of 

complications following colonoscopy 

for which patients visit the hospital.36

This risk-standardized quality measure 

would address this information gap and 

promote quality improvement by 

providing feedback to facilities and 

physicians, as well as transparency for 

patients on the rates and variation 

across facilities in unplanned hospital 

visits after colonoscopy. 

The outcome measured in the ASC–12 

measure is all-cause, unplanned 

hospital visits (admissions, observation 

stays, and emergency department visits) 

within 7 days of an outpatient 

colonoscopy procedure. The measure 

score, also referred to as the facilitylevel risk-standardized hospital visit 

rate, is derived from the calculation of 

the ratio of the numerator to the 

denominator multiplied by the crude 

rate. The numerator is the number of 

predicted (meaning adjusted actual) 

hospital visits, which is the number of 

unplanned hospital visits within 7 days 

of colonoscopy that the facility is 

predicted to have based on its case-mix. 

The denominator is the number of 

expected hospital visits, which is the 

number of unplanned hospital visits the 

facility is expected to have based on the 

nation’s performance with the facility’s 

case-mix. The crude rate is the national 

unadjusted number of patients who had 

a hospital visit post-colonoscopy among 

all patients who had a colonoscopy. 

Based on discussions with clinical 

and technical panel experts, the 

measure excludes colonoscopies for 

patients undergoing concomitant highrisk upper GI endoscopy because these 

patients are at a higher risk for hospital 

visits than patients undergoing a typical 

colonoscopy, and patients with a history 

of inflammatory bowel disease (IBD) or 

diverticulitis in the year preceding the 

colonoscopy because we likely could 

not fully characterize and adjust for 

their pre-procedure risk of needing a 

post-procedure hospital visit or identify 

whether these admissions are planned 

or unplanned. The measure also 

excludes procedures for patients who 

lack continuous enrollment in Medicare 

FFS Parts A and B in the first month 

after the procedure to ensure all patients 

included in the analysis have complete 

data available for outcome assessment. 

The statistical risk adjustment model 

includes 15 clinically relevant riskadjustment variables that are strongly 

associated with risk of hospital visits 

within 7 days following a colonoscopy. 

Additional methodology details and 

information obtained from public 

comment for measure development are 

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

Medicare/Quality-Initiatives-PatientAssessment-Instruments/Hospital

QualityInits/MeasureMethodology.html. 

Section 1890A of the Act requires the 

Secretary to establish a pre-rulemaking 

process with respect to the selection of 

certain categories of quality and 

efficiency measures. Under section 

1890A(a)(2) of the Act, the Secretary 

must make available to the public by 

December 1 of each year a list of quality 

and efficiency measures that the 

Secretary is considering for the 

Medicare program. The measure that we 

proposed was reviewed by the MAP and 

was included on a publicly available 

document entitled ‘‘MAP PreRulemaking Report: 2014 

Recommendations on Measures for 

More than 20 Federal Programs’’ 

(formerly referred to as the ‘‘List of 

Measures Under Consideration’’) on the 

NQF Web site at: http://www.quality

forum.org/Publications/2014/01/MAP_

Pre-Rulemaking_Report__2014_

Recommendations_on_Measures_for_

More_than_20_Federal_Programs.aspx 

(‘‘MAP Report’’). We note that, at the 

time the measure was listed on the 

‘‘MAP Pre-Rulemaking Report: 2014 

Recommendations on Measures for 

More than 20 Federal Programs,’’ it was 

named ‘‘High-Acuity Care Visits after 

Outpatient Colonoscopy Procedure.’’ 

The MAP conditionally supported this 

measure for the ASCQR Program. 

The MAP Report stated that the 

measure ‘‘[s]hould be submitted for and 

receive NQF endorsement; Measure is 

promising but needs further 

development’’ (p. 187). Further, the 

MAP Report stated that the measure 

‘‘would provide valuable outcome 

information to inform consumer 

decision and drive quality 

improvement’’ and that the ‘‘NQF 

endorsement process would resolve 

questions about the reliability and 

validity of the measure.’’ The MAP also 

stated that NQF endorsement would 

resolve questions about ‘‘the feasibility 

of the algorithm for attributing claims 

data in light of possible effects of the 

Medicare three-day payment window’’ 

(p. 187, MAP Report). However, this 

concern with Medicare Part A hospital 

payments relates to the Hospital OQR 

Program and not the ASCQR Program. 

As required under section 1890A(a)(4) 

of the Act, we considered the input and 

recommendations provided by the MAP 

in selecting measures to propose for the 

ASCQR Program. 

We believe we have addressed the 

concerns raised by the MAP to the 

greatest extent possible. The measure 

was submitted to NQF for endorsement 

on February 21, 2014. The measure is 

well-defined and precisely specified for 

consistent implementation within and 

between organizations that will allow 

for comparability. Reliability testing 

demonstrated the measure data 

elements produced were repeatable; that 

is, the same results were produced a 

high proportion of the time when 

assessed in the same population in the 

same time period. Validity testing 

demonstrated that the measure data 

elements produce measure scores that 

correctly reflect the quality of care 

provided and that adequately identify 

differences in quality. 

Currently, there are no publicly 

available quality of care reports for 

ASCs that conduct outpatient 

colonoscopies. Therefore, adoption of 

this measure provides an opportunity to 

enhance the information available to 

patients choosing among ASCs that offer 

this elective procedure. We believe this 

measure would reduce adverse patient 

outcomes associated with preparation 

for colonoscopy, the procedure itself, 

and follow-up care by capturing and 

making more visible to ASCs and 

patients all unplanned hospital visits 

following the procedure. In addition, 

providing outcome rates to ASCs would 

make visible to clinicians meaningful 

quality differences and incentivize 

improvement. 

Sections 1833(i)(7)(B) and 

1833(t)(17)(C)(i) of the Act, when read 

together, require the Secretary, except as 

the Secretary may otherwise provide, to 

develop measures appropriate for the 

measurement of the quality of care 

furnished by ASCs, that reflect 

consensus among affected parties and, 

to the extent feasible and practicable, 

that include measures set forth by one 

or more national consensus building 

entities. As stated in the CY 2012 OPPS/ 

ASC final rule with comment period (76 

FR 74465 and 74505), we believe that 

consensus among affected parties can be 

reflected through means other than NQF 

endorsement, including consensus 

achieved during the measure 

development process, consensus shown 

through broad acceptance and use of 

measures, and consensus through public 

comment. We believe this proposed 

measure meets these statutory 


tkelley on DSK3SPTVN1PROD with RULES2
66972 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

requirements. We believe that this 

measure is appropriate for the 

measurement of quality of care 

furnished by ASCs because this 

procedure is commonly performed in 

ASCs and, as discussed above, can 

signify important issues in the care 

being provided in ASCs. We also believe 

this measure reflects consensus among 

affected parties because the MAP, which 

represents stakeholder groups, reviewed 

and conditionally supported the 

measure, and stated that it ‘‘would 

provide valuable outcome information 

to inform consumer decision and drive 

quality improvement.’’ Further, the 

measure was subject to public comment 

during the MAP and measure 

development processes, with some 

public commenters agreeing with the 

MAP’s conclusions on the measure (p. 

187, MAP Report, January 2014; http:// 

www.qualityforum.org/Publications/ 

2014/01/MAP_Pre-Rulemaking_

Report__2014_Recommendations_on_

Measures_for_More_than_20_Federal_

Programs.aspx). 

As discussed above, the statute also 

requires the Secretary, except as the 

Secretary may otherwise provide, to 

include measures set forth by one or 

more national consensus building 

entities to the extent feasible and 

practicable. This measure is not NQFendorsed; however, as noted above, this 

measure is currently undergoing the 

NQF endorsement process. We note that 

sections 1833(i)(7)(B) and (t)(17) of the 

Act do not require that each measure we 

adopt for the ASCQR Program be 

endorsed by a national consensus 

building entity, or by the NQF 

specifically. Further, under section 

1833(i)(7)(B) of the Act, section 

1833(t)(17)(C)(i) of the Act, which 

contains this requirement, applies to the 

ASCQR Program, except as the Secretary 

may otherwise provide. Under this 

provision, the Secretary has further 

authority to adopt nonendorsed 

measures. 

In summary, we proposed to adopt 

one new measure for the ASCQR 

Program for the CY 2017 payment 

determination and subsequent years. 

ASC # NQF # Proposed ASCQR measure for the CY 2017 payment determination and subsequent years. 

ASC–12 ..................................... Pending ................................... Facility Seven-Day Risk-Standardized Hospital Visit Rate after Outpatient 

Colonoscopy. 

We invited public comment on our 

proposal to include ASC–12: Facility 

Seven-Day Risk-Standardized Hospital 

Visit Rate after Outpatient Colonoscopy 

in the ASCQR Program beginning with 

the CY 2017 payment determination. 

Comment: Several commenters agreed 

that the ASC–12 measure addresses an 

important area to monitor for quality 

improvement, given the number of 

colonoscopy procedures performed 

annually in ASCs. 

Response: We thank the commenters 

for their support. We agree that the 

quality of care associated with 

colonoscopy procedures is an important 

clinical care area to assess quality of 

care for ASCs. 

Comment: Many commenters urged 

CMS not to adopt ASC–12 until it is 

NQF-endorsed. Several of these 

commenters also noted that the MAP 

supported this measure on condition of 

NQF-endorsement, noting that the NQF 

process would resolve a number of 

questions about the reliability, validity 

and feasibility of this measure. These 

commenters requested that, in general, 

CMS only include measures in the 

ASCQR Program that have been NQFendorsed in order to avoid later 

suspending or removing these measures. 

Response: We appreciate the 

commenters’ concerns. Under sections 

1833(i)(7)(B) and (t)(17)(C)(i) of the Act, 

except as the Secretary may otherwise 

provide, the Secretary must develop 

measures that reflect consensus among 

affected parties and, to the extent 

feasible and practicable, must include 

measures set forth by a national 

consensus building entity. Whenever 

possible, we strive to adopt NQFendorsed measures because these 

measures will meet these requirements. 

However, we believe the requirements 

that measures reflect consensus among 

affected parties can be achieved in other 

ways, including through the measure 

development process, through broad 

acceptance and use of the measure, and 

through public comments. 

Further, it may not be feasible or 

practicable to adopt an NQF-endorsed 

measure, such as when an NQFendorsed measure does not exist. 

Section 1833(t)(17)(C)(i) of the Act does 

not require that each measure we adopt 

for the ASCQR Program be endorsed by 

a national consensus building entity, or 

by the NQF specifically. Moreover, 

section 1833(i)(7)(B) of the Act states 

that section 1833(t)(17) of the Act, 

which contains this requirement, 

applies to the ASCQR Program, except 

as the Secretary may otherwise provide. 

Under this provision, the Secretary has 

further authority to adopt measures that 

do not reflect consensus among affected 

parties and that are not endorsed by a 

national consensus building entity. 

Therefore, not all of the measures 

adopted for the ASCQR Program are 

required to be NQF-endorsed. 

As discussed below, we believe the 

measure as developed exhibits sufficient 

levels of reliability, validity, and 

feasibility to be adopted for the ASCQR 

Program. As noted above, we also have 

submitted this measure to NQF for 

endorsement. 

Comment: Many commenters did not 

support CMS’ proposal to finalize ASC– 

12 because complications from 

colonoscopies are very rare and ASCs 

already take steps to ensure 

colonoscopies are conducted to 

eliminate preventable complications. 

Many commenters noted that the 

literature on the measure indicates the 

incidence of complications following 

colonoscopy is less than 2 percent. 

These commenters suggested that this 

low incidence meant that the measure 

should not be included in the ASCQR 

Program as it may be topped out or that 

the quality concern addressed by the 

measure does not rise to the level of 

importance needed for a national 

quality measurement program. 

Response: Given the widespread use 

of colonoscopy for colorectal cancer 

screening in the outpatient setting, we 

consider colonoscopy a high volume 

procedure and measuring the quality of 

care associated with colonoscopies a 

high priority for us. We commend ASCs 

that are already taking steps to ensure 

colonoscopies are conducted to 

eliminate preventable complications. 

While we agree that the incidence of 

colonoscopy complications is relatively 

low, serious adverse events, such as 

perforation of the bowel and bleeding, 

may occur following colonoscopies. We 

view this measure as a critical outcome 

measure where the goal is to drive 

toward and sustain zero harm. 

In addition, some literature suggests 

that many facilities performing 

colonoscopies are unaware of patients 

accessing hospital-based care with 

adverse events because patients return 

to different facilities, including 

hospitals and emergency departments, 

and would not return to the ASC 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66973 

37Leffler DA, Kheraj R, Garud S, et al. The 

incidence and cost of unexpected hospital use after 

scheduled outpatient endoscopy. Arch Intern Med. 

Oct 25 2010;170(19):1752–1757. 

38 2010 Medicare 20 percent fee-for-service 

sample. Based on an analysis of 20 percent sample 

of Medicare FFS data from 2010 during measure 

development. The 20 percent sample included 

332,391 outpatient colonoscopies meeting the 

measure inclusion and exclusion criteria, and 1.6 

percent of these colonoscopies were followed by an 

unplanned hospital visit. This equates to 5,331 

unplanned hospital visits in the 20 percent sample. 

facility. For example, one study showed 

that physicians were unaware of nearly 

75 percent of hospital admissions for 

adverse events following colonoscopy.37

While most colonoscopies are 

performed without subsequent 

complication, we note that, in our 

analysis of Medicare FFS data, this 

measure showed that among Medicare 

patients aged ≥65, 1.6 percent of 

outpatient colonoscopies resulted in an 

unplanned hospital visit within 7 

days.38 This estimate is based on a 20 

percent sample of nationwide Medicare 

fee-for-service patients. If we were to 

use full national data (that is, a 100 

percent sample), we estimate 1.7 million 

colonoscopies would have been 

performed among Medicare FFS 

patients and nearly 27,000 unplanned 

hospitals visits would have occurred 

within 7-days of the procedure. These 

findings suggest adverse events are not 

as rare or inconsequential as many 

believed and that quality measurement 

for colonoscopy procedures in the 

outpatient setting is important. 

We agree with the commenters’ 

statement that the low incidence rate 

may suggest that the measure is toppedout, but in addition to the reasons for 

adopting this measure discussed above, 

we believe that a low incidence rate 

does not conclusively determine 

whether a measure has reached toppedout status. After the measure has been 

implemented, over time, we will assess 

it again for topped-out status using the 

two topped-out criteria we are finalizing 

in section XIV.B.3. of this final rule with 

comment period. 

Comment: Many commenters 

expressed concern that ASC–12 is not 

sufficiently reliable to be included in 

the ASCQR Program, specifically, that 

the measure developer has indicated 

that the measure is only ‘‘fairly’’ 

reliable, with an interclass correlation 

coefficient (ICC) of 0.335. These 

commenters contended that ‘‘fair’’ 

reliability is not sufficient for publicly 

reported quality metrics because such 

information could misinform the public, 

and urged CMS to conduct an analysis 

on the measure’s reliability to 

understand the amount of data required 

to achieve ‘‘good’’ reliability. Several 

commenters argued that ‘‘good’’ 

reliability should result in an ICC of at 

least 0.60. Other commenters believed 

that reliability will improve with several 

years’ worth of data. Another 

commenter requested that data from this 

measure be withheld from public 

reporting until concerns about its 

reliability and validity can be 

thoroughly assessed. 

Response: We disagree with 

commenters and believe that ASC–12 is 

sufficiently reliable to be included in 

the ASCQR Program. The ICC value 

submitted in the initial NQF application 

(0.335) was calculated using a split 

sample of data from 2 years. We 

randomly split the patient cohort at 

each hospital into two equal halves, 

calculated the measure using each half, 

and then calculated the agreement 

between these two (the ‘test’ and the 

‘retest’). After submitting the measure to 

NQF for endorsement review, we 

conducted additional calculations of the 

reliability testing score, this time using 

the Spearman-Brown prophecy formula. 

The Spearman-Brown prophecy formula 

is an accepted statistical method which 

estimates the ICC if the sample were 

increased. Therefore, it allows us to 

estimate what the reliability score 

would be if all observations were used 

for public reporting rather than using a 

split sample. Our Spearman-Brown 

prophecy formula calculations resulted 

in a higher ICC of 0.43. 

The NQF considers the ICC values 

ranging from 0.21 to 0.40 as ‘‘fair’’ 

reliability and values ranging from 0.41 

to 0.60 as ‘‘moderate’’ reliability. 

Therefore, the ICC values of 0.335 and 

0.43 are interpreted as ‘‘fair’’ and 

‘‘moderate’’ reliability, respectively. 

These ICC values are also in line with 

other NQF-endorsed outcome measures 

used in other CMS programs. For 

example, in the Hospital Readmissions 

Reduction Program (76 FR 51667), the 

Inpatient Acute Myocardial Infarction 

(AMI) 30-day Risk Standardized 

Readmission measure (NQF #0505) has 

an ICC of 0.369 and the Pneumonia (PN) 

30-day Risk Standardized Readmission 

measure (NQF #0506) has an ICC of 

0.406. Both measures are NQFendorsed. We consider the reliability of 

0.335, as noted in the proposed rule, 

acceptable for the ASCQR Program. 

Regarding the concerns that we 

should withhold public reporting until 

the measure’s reliability and validity is 

addressed, as stated above, we believe 

the reliability of the measure is 

sufficiently reliable for inclusion in the 

ASCQR Program and do not agree that 

the public may be misinformed or that 

we should withhold public reporting. In 

addition to our calculations above, 

reliability testing previously conducted 

by the measure steward demonstrated 

the measure data elements produced 

were repeatable; that is, the same results 

were produced a high proportion of the 

time when assessed in the same 

population in the same time period. 

Also, validity testing by the measure 

steward demonstrated that the measure 

data elements produce measure scores 

that correctly reflect the quality of care 

provided and that adequately identify 

differences in quality. 

As the commenters suggested, the 

measure reliability may be further 

improved by using several years’ worth 

of data; however, we must balance the 

reliability of the measure with the 

timeliness of the measure. As discussed, 

at this time, we believe that 1 year of 

data appropriately balances these 

competing interests for payment 

determination purposes, but we will 

continue to assess this belief during the 

dry run we discuss below. Also, we will 

consider conducting additional 

reliability assessments of the measure 

using an extended data period. 

Moreover, we believe it is important 

to include this measure in the program 

because colonoscopy is a high volume, 

common procedure performed at 

outpatient facilities and is frequently 

performed on relatively healthy patients 

to screen for colorectal cancer. Given 

the widespread use of colonoscopy, 

understanding and minimizing 

procedure-related adverse events is a 

high priority. These adverse events, 

such as abdominal pain, bleeding, and 

intestinal perforation, can result in 

unanticipated hospital visits post 

procedure. Physicians performing 

colonoscopies are often unaware that 

patients seek acute care at hospitals 

following the procedure and the 

associated adverse events are potentially 

preventable. We strongly believe that 

the measure would promote 

improvement in patient care over time 

because transparency in publicly 

reporting measure scores would make 

patient unplanned hospital visits 

(emergency department visits, 

observation stays, and inpatient 

admissions) following colonoscopies 

more visible to ASCs and patients and 

incentivize ASCs to incorporate quality 

improvement activities in order to 

reduce these visits. 

Finally, we believe this measure 

should be included in the program 

because currently this risk-standardized 

quality measure is the only measure 

available that would address this 

information gap and promote quality 

improvement by providing feedback to 

facilities and physicians, as well as 

transparency for patients on the rates 


tkelley on DSK3SPTVN1PROD with RULES2
66974 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

and variation across facilities in 

unplanned hospital visits after 

colonoscopy. There are no publicly 

available quality of care reports for 

ASCs that conduct outpatient 

colonoscopies. Therefore, adoption of 

this measure provides an opportunity to 

enhance the information available to 

patients choosing among ASCs that offer 

this elective procedure. We believe this 

measure would reduce adverse patient 

outcomes associated with preparation 

for colonoscopy, the procedure itself, 

and follow-up care by capturing and 

making more visible to ASCs and 

patients all unplanned hospital visits 

following the procedure. In addition, 

providing outcome rates to ASCs would 

make visible to clinicians meaningful 

quality differences and incentivize 

improvement. 

In response to comments, however, to 

allow sufficient time to conduct further 

analysis of this measure, we are 

finalizing the adoption of this measure 

beginning with the CY 2018 payment 

determination, rather than beginning 

with the CY 2017 payment 

determination as proposed. We plan to 

perform a dry run of the measure in 

2015. From our perspective, a dry run 

is a preliminary analysis of data in 

which ASCs may review their measure 

results, and ask questions about and 

become familiar with the measure 

methodology. Dry runs will include 

three to four years of paid Medicare FFS 

claims. We will use the most recent 

complete claims samples (usually 6 to 9 

months prior to the start date) for dry 

runs. For example, if the dry run begins 

in March 2015, the most recent data 

available may be July 2011 to June 2014 

(assuming 3 years of data). Because we 

use paid Medicare FFS claims, ASCs 

will not need to submit any data for the 

dry run. The general information on the 

dry run as well as the confidential dry 

run reports will be available for ASCs to 

review on their accounts at https://

www.qualitynet.org. The dry run will 

generate confidential reports at the 

patient level, indicating whether the 

patient had a hospital visit, the type of 

visit (admission, emergency department 

visit, or observational stay), the 

admitting facility, and the principal 

discharge diagnosis. Further, the dry 

run will enable ASCs to see the measure 

score reports and have the opportunity 

to receive individual patient data and 

information contained within 

individual patient records. ASCs can 

use the information to identify 

performance gaps and develop quality 

improvement strategies. Dry run results 

are not linked to public reporting or 

payment determinations. We expect the 

dry run to take approximately 1 month 

to conduct once data are obtained, after 

which facilities will be provided the 

confidential report and the opportunity 

to review their performance and provide 

feedback to us. 

In addition, we will continue to 

generate these reports for ASCs after we 

implement the measure beginning with 

the CY 2018 payment determination. 

The measure will have no payment 

impact until the CY 2018 payment 

determination and subsequent years. 

Public display of measure data will 

occur on or after December 1, 2017, but 

there will be no public display of the 

dry run data. 

With national implementation of a 

dry run of this measure, we also will 

review the appropriate cutoff volume for 

facilities, if necessary, in reporting the 

measure score. We require a minimum 

volume (cutoff volume) of 

colonoscopies per facility to be able to 

calculate a reliable measure score. We 

have yet to determine the minimum 

volume per facility (that is, the cutoff 

colonoscopy volume). Because we used 

a Medicare 20-percent sample to 

develop the measure, we could not 

estimate this cutoff during measure 

development. However, testing during 

the measure dry-run with 100 percent of 

the sample per facility will help us to 

determine the appropriate cutoff volume 

of colonoscopies per facility. ASCs will 

be notified via the QualityNet Web site 

of the cutoff volume of colonoscopies 

per facility, if any. 

While some ASCs perform too few 

colonoscopies for us to calculate a 

measure score and we would not 

publicly report their data, these 

facilities would remain in the measure 

cohort. Typically, for public reporting of 

hospital measures on the CMS Web site 

Hospital Compare, the measure score is 

reported as ‘‘Number of cases too small’’ 

for hospitals with fewer cases than the 

cutoff. We will use the same protocol 

when the measure is publicly reported 

for the ASCQR Program, and will report 

a measure score as ‘‘Number of cases too 

small’’ for ASCs with fewer cases than 

the cutoff on the QualityNet Web site. 

Comment: Several commenters 

pointed out that, from the perspective of 

using claims as a data source for this 

measure, the codes for ASCs are services 

rendered-driven, while the codes for 

HOPDs are diagnosis-driven. 

Commenters were concerned that the 

coded information and the associated 

risk-adjustment for this measure may 

not be able to capture the sensitivity and 

specificity of the clinical care following 

an outpatient colonoscopy. Given the 

difference in coding practices and 

claims architecture between HOPDs and 

ASCs, commenters recommended 

further testing for a fair performance 

comparison between HOPDs and ASCs. 

One commenter inquired if CMS plans 

to field test this measure prior to 

implementation. Commenters 

contended that the measure must be 

systematically assessed to assure the 

measure results are attributable to 

differences in quality alone. The 

commenters suggested that the measure 

score should be directly validated 

against outpatient medical records and 

measure results across settings must be 

assessed to ensure that any comparisons 

are valid. 

Response: We thank the commenters 

for expressing their concerns regarding 

possible effects of coding practices and 

claims architecture on the data available 

through administrative claims in 

capturing the sensitivity and specificity 

of the clinical care following an 

outpatient colonoscopy. The measure is 

designed, however, to mitigate any 

differences in coding practices across 

HOPDs and ASCs. For example, to 

capture comorbidities for risk 

adjustment, the measure uses claims 

across care settings, including physician 

outpatient claims, so differences in 

claims submitted during the procedure 

are not likely to affect the comorbidities 

assigned to the patient. In addition, the 

outcome counts hospital visits 

regardless of whether they are billed as 

admissions, emergency room visits, or 

observations stays; therefore, if there are 

differences between colonoscopies done 

at ASCs and HOPDs in the type of 

hospital visit a patient with 

complications incurs (for example, 

whether observation stays or ED visits 

are used), the measure will be 

insensitive to these differences. 

We recognize that the claims 

architecture differs for HOPDs and ASCs 

because the two facility types utilize 

different bill forms and have different 

payment systems. However, we do not 

agree that our measure specifications do 

not account for differences in claims 

architecture and necessary billing codes 

in discerning hospital events following 

colonoscopy. The measure includes 

colonoscopies from all outpatient 

settings to ensure that the expected 

hospital visit rate for any facility is 

estimated using the full national 

experience of colonoscopy patients. 

Specifically, we include all outpatient 

colonoscopies to make sure that: (1) The 

effects that risk factors exert on the 

outcome are estimated based on 

colonoscopies performed among all 

outpatient settings; and (2) the national 

average rate of hospital visits following 

colonoscopy is calculated based on all 

outpatient colonoscopies. Our approach 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66975 

39Center for Medicare and Medicaid Services, 

‘‘Facility 7-Day Risk-Standardized Hospital Visit 

Rate after Outpatient Colonoscopy,’’ National 

Quality Form Measure Submission Form, 20. 

40OIG, Physician services processed by Medicare 

Part B Contractors during Calendar Year 2009, 

September 2011, A–01–10–00516. 

includes all outpatient claims, including 

HOPD, ASC, and physician claims. To 

identify all outpatient colonoscopy 

claims, including claims affected by the 

Medicare 3-day payment window 

policy, the measure specifications link 

claims across multiple care settings 

(outpatient and inpatient). Furthermore, 

the measure specifications link claims 

across multiple care settings to derive 

comorbidity data to ensure the patient 

comorbidities are captured to the fullest 

extent possible for risk-adjustment and 

to identify patient outcomes. 

Linking patient claims across multiple 

settings largely mitigates the impact of 

potential difference in coding practice 

among settings and allows comparisons 

of colonoscopy quality across settings. 

For example, potential variation in the 

coding of comorbidities in the index 

colonoscopy claim may occur based on 

the setting. However, we derive 

comorbidities for risk adjustment from 

all inpatient and outpatient claims in 

the preceding 12 months. By using all 

claims in the preceding year, we capture 

patient comorbidities to the fullest 

extent possible and mitigate the impact 

of potential coding differences between 

settings that would occur if we used the 

index colonoscopy claim alone. 

Further, similar approaches to 

deriving comorbidities from claims data 

are used for other risk-adjusted outcome 

measures. The measure developer has 

validated the accuracy of this approach 

on multiple occasions for prior 

measures developed for the inpatient 

setting. For example, in the Hospital 

Readmissions Reduction Program (76 

FR 51667), the Inpatient Acute 

Myocardial Infarction (AMI) 30-day Risk 

Standardized Readmission measure 

(NQF #0505) has an ICC of 0.369, and 

the Pneumonia (PN) 30-day Risk 

Standardized Readmission measure 

(NQF #0506) has an ICC of 0.406. Both 

measures are NQF-endorsed. 

Regarding the suggestion that the 

measure score should be directly 

validated against outpatient medical 

records, at this time, we believe that it 

would be overly burdensome to validate 

the reported data, because of the limited 

experience that ASCs have with 

reporting quality data to CMS coupled 

with the low incidence of cases for this 

measure. In addition, as stated in 

section XIV.D.6. of this final rule with 

comment period, we refer readers to the 

FY 2013 IPPS/LTCH PPS final rule (77 

FR 53641 through 53642) for a complete 

discussion of our policy not to require 

validation of claims-based measures 

(beyond the usual claims validation 

activities conducted by our Medicare 

Administrative Contractors). 

We appreciate commenters’ concerns 

regarding factors that may impact 

HOPDs and ASCs. In response to 

comments, to allow sufficient time to 

conduct further analysis of this 

measure, we are finalizing the adoption 

of this measure beginning with the CY 

2018 payment determination, rather 

than beginning with the CY 2017 

payment determination as proposed. 

In addition, we plan to perform a dry 

run (a preliminary analysis) of the 

measure in 2015. We refer readers to our 

discussion of the dry run above, in 

response to a previous comment. 

Comment: Several commenters 

disagreed with the statement in the 

proposed rule (79 FR 41047) that the 

ASC–12 measure is ‘‘well-defined and 

precisely specified for consistent 

implementation within and between 

organizations that will allow for 

comparability.’’ These commenters 

raised the issue that the Medicare 

payment window policy that applies to 

hospitals will result in under-detection 

of hospital events for colonoscopies 

performed by HOPDs; the 3-day (or 1- 

day) payment window applies to 

outpatient services furnished by 

hospitals and hospitals that are wholly 

owned or wholly operated Part B 

entities. Hospitals are required to 

bundle the technical component of all 

outpatient diagnostic services and 

related nondiagnostic services (for 

example, therapeutic) with the claim for 

an inpatient stay when services are 

furnished to a Medicare beneficiary in 

the 3 days (or, in the case of a hospital 

that is not a subsection (d) hospital, 

during the 1-day) preceding an inpatient 

admission in compliance with section 

1886 of the Act. Commenters expressed 

their concern that as a result of this 

payment policy, HOPDs may have 

systematic undercounting of hospital 

visits while ASCs get a full count of all 

hospital visits within 7 days subsequent 

to outpatient colonoscopy. Commenters 

did not believe the methodological 

solution proposed by the measure 

developer, using physician claims with 

an HOPD Place of Service (POS) code 

indicating the colonoscopy was 

performed at an HOPD, is adequate due 

to the high error rates in POS coding on 

physician claims. Commenters were 

concerned that these challenges would 

make comparison of HOPD and ASC 

data impossible, and significantly 

reduce the validity of the measure in the 

HOPD setting. 

Response: We disagree with the 

commenters, and we continue to believe 

this measure is ‘‘well-defined and 

precisely specified for consistent 

implementation within and between 

organizations that will allow for 

comparability,’’ as we stated in the CY 

2015 OPPS/ASC proposed rule (79 FR 

41047). 

We agree that the ability to detect 

meaningful variation is an important 

indication of the value of a measure. As 

the commenter has correctly noted, we 

have shown facility variation in 

unplanned hospital visits following 

colonoscopy in both nationwide 

Medicare data from HOPDs and also in 

the 2010 Healthcare Cost and Utilization 

Project (HCUP) data. We have also 

shown facility variation in unplanned 

hospital visits among ASCs alone using 

HCUP data from California.39 The 

observed average hospital visit rate and 

the variation in unplanned hospital visit 

rates among ASCs, which are unaffected 

by the 3-day payment window policy, 

were very similar to HOPDs suggesting 

that the measure performs equally well 

in both settings. Accordingly, we are 

confident that the variation shown is a 

reflection of facility variation in quality 

and not as a result of any issues to do 

with the 3-day payment window policy. 

Based on our internal testing with 

claims data, we believe our current 

algorithm is appropriate and accurate. 

However, since we always strive for 

improvement, we will evaluate the 

colonoscopy measure dry run data and 

work with HOPDs and ASCs to further 

review and refine the algorithm if 

necessary. 

Regarding POS billing, the OIG has 

found billing errors incorrectly 

assigning the service site for both 

HOPDs and ASC-related claims on 

physician claims where there were 

matching HOPD or ASC claims and that 

the percentage of incorrectly billed 

claims was significantly higher for ASCrelated claims.40 Many physicians’ 

services can be furnished either in a 

facility setting such as an HOPD or ASC, 

or in a non-facility setting such as a 

physician’s office, urgent care center or 

independent clinic. For these services, 

Medicare has two different payment 

rates under the physician fee schedule 

(PFS). The PFS facility rate is generally 

lower to reflect the fact that certain 

resources are supplied by the facility, 

and Medicare makes a separate payment 

to the facility under another payment 

system. By matching both facility and 

physician colonoscopy claims for any 

given patient, the current measure 

methodology ensures that colonoscopy 

claims are identified to the fullest extent 


tkelley on DSK3SPTVN1PROD with RULES2
66976 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

41 Ko CW, Dominitz JA. Complications of 

colonoscopy: magnitude and management. 

Gastrointest Endosc Clin N Am 2010;20:659–71. 

42ASGE Standards of Practice Committee, Fisher 

DA, Maple JT, et al. Complications of colonoscopy. 

Gastrointest Endosc 2011;74:745–52. 

43Baudet JS, Diaz-Bethencourt D, Aviles J, et al. 

Minor adverse events of colonoscopy on ambulatory 

patients: the impact of moderate sedation. Eur J 

Gastroenterol Hepatol 2009;21:656–61. 

44 Ko CW, Riffle S, Shapiro JA, et al. Incidence 

of minor complications and time lost from normal 

activities after screening or surveillance 

colonoscopy. 2007;65:648–56. 

possible and attribute the colonoscopy 

to the appropriate provider when billing 

is affected by the 3-day window 

payment policy. 

We clarify that HOPD claims for 

colonoscopy procedures for calculation 

of the measure are identified using both 

physician and facility claims. We did 

not intend to imply that HOPD 

colonoscopy claims are identified solely 

from physician claims. For both ASCs 

and HOPDs, the measure first identifies 

colonoscopy claims using both the 

physician claim and the corresponding 

facility claim to ensure the site of the 

colonoscopy service is attributed to the 

appropriate provider. As a second step, 

the measure matches: (1) Physician 

claims that contain HOPD as the POS 

that do not have a matching facility 

claim with (2) inpatient claims to 

identify potential HOPD colonoscopies 

resulting in an inpatient admission. 

This second additional step identifies 

HOPD colonoscopy claims affected by 

the 3-day window payment policy. 

Therefore, we do not agree that ASCs 

will be adversely affected by use of POS 

billing to locate colonoscopies 

performed by physicians due to high 

levels of coding errors in POS coding on 

Part B for physician services because 

our measure calculation methodology 

addresses this concern. 

We also have taken steps to educate 

physicians about the appropriate POS 

coding and actively audit physicians to 

improve the accuracy of POS coding 

http://www.cms.gov/Outreach-andEducation/Medicare-Learning-NetworkMLN/MLNMattersArticles/downloads/

MM7502.pdf. In addition, from 2012 

onwards, Medicare billing introduced 

the ‘‘PD’’ modifier to indicate physician 

claims affected by the 3-day window 

payment policy. 

Comment: In reference to the 

statement in the CY 2015 OPPS/ASC 

proposed rule (79 FR 41047) that ‘‘there 

are no publicly available quality of care 

reports for ASCs that conduct outpatient 

colonoscopies,’’ one commenter stated 

that, on the Physician Compare Web 

site, CMS includes data on colonoscopy 

measures that provide a detailed look at 

the quality of colonoscopy services 

provided. This commenter suggested 

that CMS further enhance publicly 

available data by including measures 

captured by Qualified Clinical Data 

Registries to increase the robustness of 

publicly available data on colonoscopy 

provided across all sites of service. 

Response: We thank the commenter 

for providing this input, but note that 

the cited information is available at the 

physician level. We believe that quality 

of care measure information also should 

be reported at the facility level, and that 

facilities have a role in monitoring the 

surgical procedures performed at their 

facility and subsequent adverse 

outcomes. Patients and facilities should 

be able to review reported quality of 

care measure information at the ASCfacility level. We thank the commenter 

for the suggestion to include measures 

captured by Qualified Clinical Data 

Registries to further enhance publicly 

available data such as the colonoscopy 

data and we may take this into 

consideration in future rule making. 

Comment: While some commenters 

believed that a long collection period, 

such as three years, is needed in order 

to generate measure scores that are 

moderately reliable, they also were 

concerned that the publicly reported 

measure score would not be a reflection 

of current, or even recent, performance. 

Commenters were concerned that 

consumers could be misled by the 

outdated data. 

Response: As discussed previously, 

we agree with the commenter that a 

longer data collection period may 

increase measure reliability. However, 

we must balance the reliability of the 

measure with the timeliness of the 

measure and, as discussed later, at this 

time, we believe that 1 year of data 

appropriately balances these competing 

interests. We will continue to assess this 

belief during the dry run. 

Comment: Several commenters 

expressed concern that the measure that 

was put forth to NQF review retained 

elements of the inpatient measure. 

Commenters stated that including these 

elements was inappropriate, and 

interpreted this action to mean that the 

measure has not been thoroughly 

reviewed and fully adapted for 

outpatient use. These commenters gave 

examples of the alleged inappropriate 

inpatient elements: (1) Certain condition 

categories (CCs) are not included in risk 

adjustment if they are only recorded at 

the time of the colonoscopy, and yet 

they are considered to be possible 

adverse outcomes; and (2) although end 

stage renal disease (ESRD) would not be 

a complication of colonoscopy 

diagnosed and recorded at the time of 

the procedure, it was included on the 

list of CCs. Commenters urged CMS to 

ensure that revised specifications are 

developed and then independently 

reviewed to ensure outpatient 

adaptation is complete prior to measure 

implementation. 

Response: We appreciate the 

commenters’ concerns. In keeping with 

good practice, we have continued to 

review and seek comment on the 

measure specifications subsequent to 

measure development and 

implementation to ensure the measure 

remains up-to-date in view of any 

potential new information. As the 

commenters noted, the measure 

technical specifications included a list 

of CCs that the measure does not 

consider for risk adjustment if the CC(s) 

occurred at the time of colonoscopy. In 

view of the comments, we have revised 

the list of CCs and updated the measure 

specifications to ensure only conditions 

relevant to colonoscopy are included. Of 

note, the inclusion of ESRD on the list 

was an error; we have revised the list 

and will use the revised list in 

implementing the measure. We 

corrected the list in subsequent measure 

descriptions during the NQF public 

comment period. 

Comment: Many commenters 

expressed concern that the ASC–12 

measure includes hospital visits 

unrelated to colonoscopy. Some 

commenters requested explanation for 

why the measure uses an all-cause 

categorization rather than only 

admissions related to colonoscopies. 

Response: We clarify that this 

measure is purposely designed to use a 

broad outcome of hospital visits 

following surgery rather than a narrow 

set of easily identifiable complications. 

From a patient and health system 

perspective, the goal of this measure is 

to encourage and inform ASC efforts to 

minimize all potential acute 

complications, not just those narrowly 

related to procedural technique. This is 

important as the literature 

suggests,41, 42, 43, 44 that hospital visits 

following colonoscopy occur due to a 

range of adverse events relating to the 

bowel preparation, anesthesia, the 

colonoscopy procedure itself, and 

follow-up care. These include a range of 

symptoms and signs such as abdominal 

pain, bloating, dizziness and collapse, 

electrolyte disturbances, and 

cardiorespiratory symptoms (from 

sedation use), in addition to 

complications that are directly related to 

procedural technique such as bleeding 

and bowel perforation. The broad 

outcome of unplanned hospital visits 

captures all of these potential acute 

complications of colonoscopy. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66977 

45Horwitz L, Grady J, Dorsey K, Zhang W, Keenan 

M, Keshawarz A, Cohen D, Ngo C, Okai M, Nwosu 

C, Lin Z, Bhat K, Krumholz H, Bernheim S,. 2014 

Measures Updates and Specifications Report: 

Hospital-Wide All-Cause Unplanned 

Readmission—Version 3.0. 2014: Centers for 

Medicare & Medicaid Services, 2014. 

46Available at: http://www.cms.gov/Medicare/

Quality-Initiatives-Patient-Assessment-Instruments/

HospitalQualityInits/Measure-Methodology.html. 

47Leffler DA, Kheraj R, Garud S, et al. The 

incidence and cost of unexpected hospital use after 

scheduled outpatient endoscopy. Arch Intern Med 

2010;170:1752–7. 

48Efron, B. (1979). Bootstrap methods: Another 

look at jackknife. Ann. Stat. 7, 1–26. 

Our goal for the measure is to 

encourage ASCs to be mindful of 

reducing post-colonoscopy admissions 

caused by the prior colonoscopy 

procedure performed at their facility. 

For example, patients may be at higher 

risk of falls post-colonoscopy secondary 

to dehydration following the bowel 

preparation for the procedure and there 

may be opportunities for ASCs to 

minimize this risk. We removed 

planned admissions from the measure 

outcome adapting CMS’ Planned 

Readmission Algorithm version 3.0.45 46

This algorithm removes nonacute 

admissions for scheduled procedures 

(for example, total hip replacement) and 

other types of care always considered 

planned (for example, rehabilitation or 

maintenance chemotherapy) from the 

outcome. That is, we removed planned 

admissions from the outcome because 

planned admissions do not reflect 

differences in colonoscopy quality of 

care. 

Comment: One commenter requested 

that CMS clarify how the numerator and 

denominator for ASC–12 are calculated. 

Response: The measure score is the 

ratio of predicted hospital visits 

(numerator) over the expected hospital 

visits (denominator) multiplied by the 

crude national rate. The measure score 

numerator is the predicted rate, which 

is the number of unplanned hospital 

visits the facility is predicted to have 

within 7 days of colonoscopy, and it 

accounts for the observed unplanned 

hospital visit rate, the number of 

colonoscopies performed at the facility, 

and the facility’s case mix. This is 

sometimes referred to as the ‘‘adjusted 

actual rate.’’ 

The measure score denominator is the 

expected rate, which is the number of 

unplanned hospital visits the facility is 

expected to have, based on the nation’s 

performance with that facility’s casemix. It is the sum of all patients’ 

expected probabilities of a hospital visit, 

given their risk factors and the risk of 

readmission at an average hospital. The 

contribution of each risk factor (for 

example, age) to the patient’s risk of a 

hospital admission is based on all of the 

patients in the measure cohort. The 

crude national rate is the average rate of 

hospital visits following colonoscopy 

observed in the entire measure cohort. 

We also refer readers to the measure 

discussion above and measure 

specifications (http://www.quality

forum.org/WorkArea/linkit.aspx?Link

Identifier=id&ItemID=75057) for a more 

detailed discussion of how the 

numerator and denominator are 

calculated. 

Comment: Many commenters were 

concerned that facilities would lack 

actionable information generated from 

ASC–12. Several of these commenters 

questioned whether this measure will 

benefit facilities and patients because 

each facility will only receive a report 

with an aggregate number of claims that 

will be based on historical data, which 

will make it difficult for the facility to 

set a course for improvement if needed. 

Commenters requested that CMS clarify 

its plan to report detailed patient-level 

data confidentially to ASCs that 

indicates whether the patient had a 

hospital visit, the type of visit 

(admission, emergency department visit, 

or observational stay), the admitting 

facility, and the principal discharge 

diagnosis to assist facilities with quality 

improvement, to enable facilities to 

understand their performance and take 

steps where remediation is needed. 

Several commenters also noted that 

ASCs do not provide post-operative 

follow-up care after patient discharges 

and do not have direct access to the 

records of other health care facilities. 

Consequently, this constraint would 

limit their ability to identify 

improvements based on the data 

provided by this measure. 

Response: The primary purpose of 

this measure is to illuminate the quality 

differences in colonoscopies that are 

presently not visible to patients and 

may not be visible to some facilities. In 

measure development, we found the 

facility variations in the measure score 

suggest some facilities provide worse 

than expected care. We believe the 

detailed patient-level data that we will 

provide confidentially to ASCs will help 

them identify areas for improvement 

efforts. The data would indicate 

whether the patient had a hospital visit, 

the type of visit (admission, emergency 

department visit, or observational stay), 

the admitting facility, and the principal 

discharge diagnosis. The dry run will 

enable ASCs to see the measure score 

reports and have the opportunity to 

receive individual patient data and 

information contained within 

individual patient records. We will 

continue to generate these reports for 

ASCs after we implement the measure 

beginning with the CY 2018 payment 

determination. ASCs can use the 

information to identify performance 

gaps and develop quality improvement 

strategies. 

We understand the challenges 

involved in following up with ASC 

patients. The colonoscopy measure 

addresses these challenges by providing 

feedback to facilities and clinicians 

about the outcomes experienced by their 

patients following colonoscopy. Many 

clinical experts noted that facilities 

were often unaware of patients’ return 

visits to hospitals. They noted that 

many patients would often return to a 

different facility or an emergency 

department. One study noted that 

physicians were unaware of 75 percent 

of return hospital visits following 

colonoscopy at a major tertiary center.47

Comment: Several commenters 

expressed concern that ASC–12 does 

not include risk-adjustment to account 

for patient differences, stating that CMS 

does not report the variation between 

ASCs once this risk adjustment has been 

applied and that there may be no 

statistically significant difference 

between an ASC’s risk-adjusted visit 

rate and the national average making it 

impossible to identify low performers 

and high performers. One commenter 

specifically recommended that patients 

with conditions such as inflammatory 

bowel disease and diverticulitis should 

be included with appropriate risk 

adjustment. Commenters recommended 

CMS consider the drawbacks of the 

current methodology, conduct analysis 

to test the variation of the measure 

between ASCs, and reconsider this 

measure for inclusion in future 

proposals. 

Response: We thank the commenters 

for all the suggestions to improve the 

measure. In the measure application for 

NQF endorsement, we note that the 

measure, following risk-adjustment, is 

able to detect statistically significant 

variation between outpatient facilities 

by demonstrating measure score 

variation using the 2010 HCUP data 

from four States (California, New York, 

Nebraska, and Florida). Using a very 

conservative sampling technique 

(sampling with replacement),48 we 

constructed 95 percent interval 

estimates around the facility measure 

score (similar to confidence intervals) 

and used the estimates to place facilities 

into three performance categories: 

Worse than expected; no different than 

expected; and better than expected. 

Based on this analysis, we identified 5 

outlier facilities among a total of 992 


tkelley on DSK3SPTVN1PROD with RULES2
66978 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

ASCs and HOPDs. This analysis 

included only about one-tenth of all 

outpatient facilities in the United States. 

Typically, we see greater variation 

between facilities when 100 percent of 

nationwide facilities are included for 

actual measure implementation and 

reporting. 

As to the commenter’s 

recommendation to risk-adjust patients 

with certain conditions, we excluded 

patients with inflammatory bowel 

disease (IBD) and diverticulitis because 

it is difficult to assess from claims data 

whether these patients have an active or 

inactive disease which may alter their 

risk of the outcome. We determined that 

we could not adequately risk-adjust for 

the risk of the outcome for these 

patients. Second, our analysis suggested 

that nearly half of the patients with IBD 

and diverticulitis have postcolonoscopy hospital visits with a 

primary diagnosis of IBD and 

diverticulitis respectively. We could not 

tell from the claims data whether these 

visits were planned or unplanned. We 

did test for variation among ASCs and 

HOPDs independently using HCUP data 

from California (see Measure Technical 

Report). As we previously discussed, 

the measure was able to adequately 

detect variation in the measure score 

among ASCs. 

As for the inquiry about further 

testing the measure, we have more time 

to further test the measure because, in 

response to comments, we are finalizing 

the adoption of this measure beginning 

with the CY 2018 payment 

determination, rather than beginning 

with the CY 2017 payment 

determination as proposed. We plan to 

perform a dry run (a preliminary 

analysis) of the measure in 2015. We 

refer readers to our discussion of the dry 

run above, in response to a previous 

comment. 

Comment: One commenter expressed 

concern that ASCs would have 

difficulty gathering and reporting the 

information for the proposed ASC–12 

measure. 

Response: We thank the commenter 

for providing this input and note that 

this measure will be calculated 

completely from data obtained from 

paid Medicare FFS claims submitted by 

ASCs, hospitals, and physicians. For 

this reason, it will not require any 

additional information-gathering on the 

part of ASCs. 

We continue to believe that quality of 

care measurement in the clinical area of 

outpatient colonoscopy is an important 

gap area with ample room for 

improvement and that this measure has 

sufficient reliability and validity for use 

in the ASCQR Program. Therefore, after 

consideration of the public comments 

we received, we are finalizing our 

proposal to adopt the ASC–12: Facility 

Seven-Day Risk-Standardized Hospital 

Visit Rate after Outpatient Colonoscopy 

measure for the ASCQR Program. 

However, to allow ASCs sufficient time 

to review their measure data from the 

dry run and utilize the confidential 

facility reports with patient-level 

associated hospital event information, 

we are finalizing the adoption of this 

measure for the CY 2018 payment 

determination and subsequent years, 

instead of the CY 2017 payment 

determination and subsequent years as 

proposed. 

We plan to perform a dry run (a 

preliminary analysis) of the measure in 

2015. Also, with national 

implementation of a dry run of this 

measure, we also will review the 

appropriate cutoff volume for facilities, 

if necessary, in reporting the measure 

score. We refer readers to our discussion 

of the dry run and the cutoff volume 

above, in our response to a previous 

comment. 

The finalized measure set for the 

ASCQR Program CY 2017 payment 

determination and subsequent years, is 

listed below. 

FINALIZED ASC PROGRAM MEASURE SET FOR THE CY 2017 PAYMENT DETERMINATION AND SUBSEQUENT YEARS

ASC No. NQF No. Measure name 

ASC–1 ......... 0263 Patient Burn. 

ASC–2 ......... 0266 Patient Fall. 

ASC–3 ......... 0267 Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, Wrong Implant. 

ASC–4 ......... 0265 Hospital Transfer/Admission. 

ASC–5 ......... 0264 Prophylactic Intravenous (IV) Antibiotic Timing. 

ASC–6 ......... N/A Safe Surgery Checklist Use. 

ASC–7 ......... N/A ASC Facility Volume Data on Selected ASC Surgical Procedures. 

Procedure categories and corresponding HCPCS codes are located at: http://qualitynet.org/dcs/ContentServer?

c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772475754. 

ASC–8 ......... 0431 Influenza Vaccination Coverage among Healthcare Personnel. 

ASC–9 ......... 0658 Endoscopy/Polyp Surveillance: Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk Patients. 

ASC–10 ....... 0659 Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps-Avoidance of Inappropriate Use. 

ASC–11 ....... 1536 Cataracts: Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery.* 

* Measure voluntarily collected starting as set forth in section XIV.E.3.c. of this final rule with comment period. 

The finalized measure set for the 

ASCQR Program CY 2018 payment 

determination and subsequent years, 

which includes previously finalized 

measures and the newly-adopted 

measure, ASC–12, is listed below. 

FINALIZED ASC PROGRAM MEASURE SET FOR THE CY 2018 PAYMENT DETERMINATION AND SUBSEQUENT YEARS

ASC No. NQF No. Measure name 

ASC–1 ......... 0263 Patient Burn. 

ASC–2 ......... 0266 Patient Fall. 

ASC–3 ......... 0267 Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, Wrong Implant. 

ASC–4 ......... 0265 Hospital Transfer/Admission. 

ASC–5 ......... 0264 Prophylactic Intravenous (IV) Antibiotic Timing. 

ASC–6 ......... N/A Safe Surgery Checklist Use. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66979 

FINALIZED ASC PROGRAM MEASURE SET FOR THE CY 2018 PAYMENT DETERMINATION AND SUBSEQUENT YEARS— 

Continued 

ASC No. NQF No. Measure name 

ASC–7 ......... N/A ASC Facility Volume Data on Selected ASC Surgical Procedures. 

Procedure categories and corresponding HCPCS codes are located at: http://qualitynet.org/dcs/ContentServer?

c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772475754. 

ASC–8 ......... 0431 Influenza Vaccination Coverage among Healthcare Personnel. 

ASC–9 ......... 0658 Endoscopy/Polyp Surveillance: Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk Patients. 

ASC–10 ....... 0659 Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps-Avoidance of Inappropriate Use. 

ASC–11 ....... 1536 Cataracts: Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery.* 

ASC–12 ....... Pending Facility Seven-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy.** 

* Measure voluntarily collected starting as set forth in section XIV.E.3.c. of this final rule with comment period. 

** New measure finalized for CY 2018 payment determination and subsequent years. 

6. ASCQR Program Measures for Future 

Consideration 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68493 through 68494), 

where we finalized our approach to 

future measure selection for the ASCQR 

Program. We seek to develop a 

comprehensive set of quality measures 

to be available for widespread use for 

informed ‘‘patient decision-making and 

quality improvement in the ASC 

setting’’ (77 FR 68496). We also seek to 

align these quality measures with the 

National Quality Strategy (NQS), the 

CMS Strategic Plan (which includes the 

CMS Quality Strategy), and our other 

quality reporting and value-based 

purchasing programs, as appropriate. 

Accordingly, as we stated in the CY 

2015 OPPS/ASC proposed rule (79 FR 

41048 through 41049), in considering 

future ASCQR Program measures, we 

are focusing on the following NQS and 

CMS Quality Strategy measure domains: 

Make care safer; strengthen person and 

family engagement; promote effective 

communication and coordination of 

care; promote effective prevention and 

treatment; work with communities to 

promote best practices of healthy living; 

and make care affordable. 

Comment: Commenters supported 

CMS’ alignment efforts. One commenter 

supported the direction of the ASCQR 

Program to align future measures with 

the NQS priorities, noting that doing so 

will make the ASCQR Program more 

consistent with the Hospital IQR 

Program. Another commenter agreed 

with the goal of aligning measures in the 

ASCQR Program with the Hospital OQR 

Program and the Hospital IQR Program, 

and urged that the alignment should 

eliminate confusion and avoid 

disadvantaging ASCs. 

Response: We thank the commenters 

for supporting our alignment efforts. To 

the extent practicable, we strive to align 

measures with national priorities, 

including the NQS priorities as well as 

across our quality reporting and valuebased purchasing programs. 

Comment: Several commenters 

requested that CMS collaborate with 

stakeholder communities to develop 

and implement appropriate ophthalmic 

measures for the ASC setting, 

potentially including measures of 

incidence of toxic anterior segment 

syndrome in cataract surgery patients, 

incorrect intraocular lens implantation 

in cataract surgery patients, and 

unplanned anterior vitrectomy in 

cataract surgery patients. Another 

commenter suggested that CMS consider 

several new measures in the future, 

including adverse outcomes from highvolume procedures such as cataract 

removals, other eye procedures, 

endoscopies, musculoskeletal 

procedures, and colonoscopies. This 

commenter also encouraged CMS to 

develop composite measures of common 

surgical infections and to involve 

consumers and purchasers in 

refinement of the CAHPS survey for the 

outpatient setting. In addition, this 

commenter urged CMS to continue to 

analyze and address the role of the 

survey and discuss the comparative 

roles of PQRS CAHPS, ACO CAHPS, 

S–CAHPS, or the HOSD/ASC CAHPS 

surveys. 

Response: We thank the commenters 

for these recommendations and will 

consider these types of measures in 

future years. We have included an 

unplanned anterior vitrectomy in 

cataract surgery patients and patient 

experience of care survey measures in 

our Measures under Consideration 

(MUC) list for the MAP for the ASC 

setting. We agree that the adoption and 

implementation of appropriate cataract 

surgery measures are important for the 

ASCQR Program, given the number of 

such procedures performed on Medicare 

beneficiaries in this setting. 

We use patient experience of care 

surveys in a variety of health care 

settings. We agree that, to the extent 

feasible, survey instruments should be 

aligned and coordinated across settings. 

The developmental process of CAHPS 

and patient experience of care surveys 

involves several opportunities for input 

from patients, patient advocates, and 

stakeholders from the HOPD and ASC 

industry, including professional 

associations, clinicians, accreditation 

organizations, and the government. 

Comment: One commenter requested 

that CMS provide additional guidance 

with respect to the process for 

suggesting and submitting future 

ASCQR Program measures. This 

commenter further requested that CMS 

distinguish, when establishing reporting 

requirements, between ASCs that are 

equipped for the performance of sterile 

surgical operations and ambulatory 

endoscopy centers that are equipped to 

perform nonsurgical endoscopy 

procedures. 

Response: We generally request 

comments on future ASCQR Program 

measure topics through the rulemaking 

process and did so in the CY 2014 

OPPS/ASC proposed rule (78 FR 43664). 

We also accepted measures for 

consideration from associations through 

ONC’s measure project tracking system 

(http://oncprojectracking.org/); 

associations were invited via the CMS 

Listserv to attend a training session for 

how to submit measures into this 

system. Regarding distinguishing ASCs 

by the services provided, we are aware 

that ASCs vary in the types of services 

they provide. This variety presents 

challenges in devising a measure set 

that can glean applicable quality of care 

information across ASCs. With respect 

to current claims-based measures that 

include surgical procedures, at this 

time, we are not able to identify 

facilities that would never perform 

surgical procedures from the 


tkelley on DSK3SPTVN1PROD with RULES2
66980 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

information on claims. Therefore, we 

are not able to distinguish ineligibility 

for a measure from non-reporting. 

Comment: One commenter 

recommended that CMS consider the 

following measure topics for the ASCQR 

Program: (1) Equipment Reprocessing 

(for patient safety, high-level 

disinfection and sterilization, with a 

particular emphasis on endoscope 

reprocessing); and (2) Sedation Safety— 

A possible anesthesia-related measure 

could include the use of reversal agents 

to patients given moderate sedation 

agents (medications used to rescue 

patients from deeper levels of sedation 

than intended). 

Response: We thank the commenter 

for these recommendations and will 

consider these measure topics for the 

ASCQR Program in future years. 

Comment: One commenter noted that 

the program currently includes a 

measure on hospital transfer or 

admission after a procedure, which 

tracks whether patients are transferred 

or admitted directly to a hospital 

(including a hospital emergency room) 

upon discharge from an ASC. This 

commenter believed that this measure 

could be expanded to include patients 

who return home after the ASC 

procedure, but are admitted to a 

hospital shortly thereafter because of a 

problem related to the procedure 

because doing so would enable us to 

more comprehensively track patients 

who experience serious complications 

or medical errors related to an ASC 

procedure. 

Response: We thank the commenter 

for providing this information and note 

that the ASC–12: Facility Seven-Day 

Risk-Standardized Hospital Visit Rate 

after Outpatient Colonoscopy measure 

includes all unplanned hospital visits 

(emergency department visits, 

observation stays and inpatient 

admissions) within 7 days following the 

procedure. We will continue to consider 

additional measures that track hospital 

visits following ASC procedures as 

appropriate in the future. 

Comment: One commenter 

recommended that CMS develop a 

measure to track surgical site infection 

rates for ambulatory surgeries in ASCs. 

The commenter observed that CMS 

stated in the CY 2012 OPPS/ASC final 

rule with comment period (76 FR 74503 

through 74504) that we would consider 

proposing an SSI measure and requested 

an update. 

Response: We agree that it is 

important to encourage the reduction of 

SSIs. In the CY 2012 OPPS/ASC 

rulemaking, we proposed but did not 

finalize the Surgical Site Infection Rate 

measure (NQF #0299), but stated that 

we will consider proposing the measure 

once a suitable set of procedures and a 

protocol for ASCs and HOPDs has been 

developed (76 FR 74504). We are not 

aware of any updates to this measure, 

but will consider these types of 

measures in future years. 

Comment: One commenter 

recommended that the ASCQR Program 

should move to a value-based 

purchasing model no later than 2016, 

rewarding high-performing ASCs and 

penalizing low-performing ASCs. 

Response: We thank the commenter 

for this recommendation. As we noted 

in the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75122), we 

currently do not have express statutory 

authority to implement a value-based 

purchasing program for ASCs. 

Comment: One commenter requested 

that CMS publish each year, as part of 

the proposed rule, a 2-year or 3-year 

timeline of anticipated changes to the 

ASCQR Program to facilitate ASC 

facility planning. 

Response: We thank the commenter 

for the comment and note that we seek 

to provide information to ASC facilities 

in advance whenever possible to 

support future planning. For example, 

in the CY 2012 OPPS/ASC rulemaking, 

we finalized measures sets for the CY 

2014, CY 2015, and CY 2016 payment 

determinations (76 FR 74496 to 74511). 

Similarly, in the CY 2013 OPPS/ASC 

final rule with comment period, we 

finalized a data collection and 

processing period policy for claimsbased measures using QDCs for the CY 

2015 payment determination and 

subsequent years (77 FR 68497 through 

68498), and in the CY 2014 OPPS/ASC 

final rule with comment period, we 

finalized our policy regarding 

participation status for the CY 2016 

payment determination and subsequent 

years (78 FR 75134 through 75135). In 

this year’s rulemaking, we also are 

finalizing policies that span more than 

one year, such as including the ASC–12 

measure in the ASCQR Program 

measure set for the CY 2018 payment 

determination and subsequent years, the 

process for removing measures, and 

topped-out criteria. While we cannot 

commit to providing a 2-year or 3-year 

timeline at this point due to the rapidly 

evolving quality measurement and 

program environment, we will continue 

to provide information to ASCs through 

the QualityNet Web site, the ASCQR 

Program ListServe, and the rulemaking 

process as appropriate. 

Comment: Several commenters stated 

that they would welcome opportunities 

to work with CMS to explore alternative 

reporting options for measures that cut 

across CMS quality reporting programs, 

particularly measures that are included 

in both the ASCQR Program and PQRS. 

Response: We thank the commenters 

for their offer to collaborate with CMS 

on alternative reporting options. We 

will continue to look for opportunities 

to work with ASC community 

stakeholders to continuously improve 

the ASCQR Program. 

Comment: Several commenters 

expressed concern about the MAP, 

specifically the public comment process 

and the practice of submitting measure 

concepts for consideration. These 

commenters believed that the MAP does 

not adequately consider public 

comments, and stated that the MAP 

session agendas scheduled voting 

activities prior to public comments, 

which limited the ability of comments 

to impact voting, and that the public 

could not address the Coordinating 

Committee until after deliberations were 

completed. These commenters also 

stated that the public could comment on 

the draft MAP Pre-Rulemaking Report, 

but that these comments were not 

considered by the Coordinating 

Committee and, therefore, did not result 

in revisions to the final report. These 

commenters recommended that public 

comments be solicited prior to, rather 

than, after voting on agenda items, and 

that the MAP Coordinating Committee 

be required to formally consider and 

respond to public comments on the 

draft report. Several other commenters 

expressed concern regarding the MAP’s 

review of measure ‘‘concepts’’ that have 

not been fully developed, saying that 

recommendations are premature for 

measure concepts or measure drafts. 

These commenters recommended that 

when ‘‘concepts’’ are presented, the 

MAP should determine whether the 

measure concept/draft would fill a 

measure gap but reserve further 

judgment for the completed measure. 

These commenters are further 

concerned that the inclusion of measure 

‘‘concepts’’ results in an unreasonably 

large number of items for the MAP to 

consider, which can limit the time 

allotted to consider each measure. 

Response: We thank the commenters 

for their comments and concerns, but 

note that they do not directly address 

any proposals included in the CY 2015 

OPPS/ASC proposed rule; rather, they 

are directed towards MAP-specific 

processes. We invite the commenters to 

submit their MAP-specific concerns 

directly to the NQF, which convenes the 

MAP. 

In response to the comments 

concerning the MAP’s review of 

measure ‘‘concepts’’ that have not been 

fully developed, resulting in 

recommendations that are premature for 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66981 

measure concepts or measure drafts, we 

interpret the commenters’ use of the 

terms ‘‘concept’’ and ‘‘draft’’ to refer to 

measures under development as defined 

in our legend on page 87 of the List of 

Measures under Consideration for 

December 1, 2013 (https://www.google.

com/url?sa=t&rct=j&q=&esrc=s&

source=web&cd=1&cad=rja&uact=8&

ved=0CCAQFjAA&url=http%3A%2F

%2Fwww.qualityforum.org%2FSetting_

Priorities%2FPartnership%2F

Measures_Under_Consideration_List.

aspx&ei=aQUuVJrsM6nIsAT61IDQAg&

usg=AFQjCNFPjzG9-t7flmf-RFf-7o_

rSvpxxQ&sig2=V6Hi_

GdCM2OUcP5xkoudcw&bvm=bv.

76802529,d.cWc). We strive to ensure 

that the pre-rulemaking process allows 

for thorough review by the MAP and 

other stakeholders of all measures under 

consideration. 

Comment: Some commenters 

suggested that CMS consider developing 

additional outcomes measures specific 

to colonoscopies and consider 

developing a measure of whether or not 

colonoscopy patients remain cancer 

free, specifically suggesting that we 

work with stakeholders to improve 

existing measures. 

Response: We thank the commenter 

for their recommendations and will 

consider these types of measures in 

future years. 

We also thank all commenters for 

providing their views and we will 

consider them as we develop future 

measures for the ASCQR Program. 

7. Maintenance of Technical 

Specifications for Quality Measures 

We refer readers to the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74513 through 74514), 

where we finalized our proposal to 

follow the same process for updating the 

ASCQR Program measures that we 

adopted for the Hospital OQR Program 

measures, including the subregulatory 

process for making updates to the 

adopted measures. In the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68496 through 68497) and 

the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75131), we 

provided additional clarification 

regarding the ASCQR Program policy in 

the context of the previously finalized 

Hospital OQR Program policy, including 

the processes for addressing 

nonsubstantive and substantive changes 

to adopted measures. 

We maintain technical specifications 

for previously adopted ASCQR Program 

measures. These specifications are 

updated as we continue to develop the 

ASCQR Program. The manuals that 

contain specifications for the previously 

adopted measures can be found on the 

QualityNet Web site at: https://www.

qualitynet.org/dcs/ContentServer?c=

Page&pagename=QnetPublic%2FPage

%2FQnetTier2&cid=1228772475754. 

Many of the quality measures used in 

Medicare and Medicaid reporting 

programs are NQF-endorsed. We note 

that two of the measures previously 

adopted for the ASCQR Program are not 

NQF-endorsed, and NQF endorsement 

is not a program requirement. However, 

for those measures that are NQFendorsed, the NQF requires measure 

stewards to submit annual measure 

maintenance updates and undergo 

maintenance of endorsement review 

every 3 years as part of its regular 

maintenance process for NQF-endorsed 

performance measures. In the measure 

maintenance process, the measure 

steward (owner/developer) is 

responsible for updating and 

maintaining the currency and relevance 

of the measure and will confirm existing 

or minor specification changes with the 

NQF on an annual basis. The NQF 

solicits information from measure 

stewards for annual reviews, and it 

reviews measures for continued 

endorsement in a specific 3-year cycle. 

We note that the NQF’s annual or 

triennial maintenance processes for 

endorsed measures may result in the 

NQF requiring updates to measures in 

order to maintain endorsement status. 

Other non-NQF measures may undergo 

maintenance changes as well. We 

believe that it is important to have in 

place the subregulatory process that we 

have adopted for the ASCQR Program to 

incorporate nonsubstantive updates into 

the measure specifications for measures 

so that the measure specifications 

remain current. We also recognize that 

some changes to measures are 

substantive in nature and might not be 

appropriate for adoption using a 

subregulatory process. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41049), we did not propose 

any changes to this policy. 

8. Public Reporting of ASCQR Program 

Data 

In the CY 2012 OPPS/ASC final rule 

with comment period (76 FR 74514 

through 74515), we finalized a policy to 

make data that an ASC submitted for the 

ASCQR Program publicly available on a 

CMS Web site after providing an ASC an 

opportunity to review the data to be 

made public. When available, these data 

will be displayed at the CCN level; we 

intend to make data collected under the 

ASCQR program publicly available in 

CY 2015. In the CY 2015 OPPS/ASC 

proposed rule (79 FR 41049), we did not 

propose any changes to this policy. 

Comment: One commenter urged 

CMS to make the data submitted by 

ASCs available to the public after giving 

ASCs an opportunity to preview the 

data. 

Response: We thank the commenter 

for their comment, and note that in the 

CY 2012 OPPS/ASC final rule with 

comment period (76 FR 74514 through 

74515), we finalized a policy to make 

data that an ASC submitted for the 

ASCQR Program publicly available on a 

CMS Web site after providing an ASC an 

opportunity to review the data to be 

made public. These data will be 

displayed at the CCN level. We did not 

propose any changes to this policy (79 

FR 41049). 

C. Payment Reduction for ASCs That 

Fail To Meet the ASCQR Program 

Requirements 

1. Statutory Background 

We refer readers to section XV.C.1. of 

the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75131 through 

75132) for a detailed discussion of the 

statutory background regarding payment 

reductions for ASCs that fail to meet the 

ASCQR Program requirements. 

2. Reduction to the ASC Payment Rates 

for ASCs That Fail To Meet the ASCQR 

Program Requirements for a Payment 

Determination Year 

The national unadjusted payment 

rates for many services paid under the 

ASC payment system equal the product 

of the ASC conversion factor and the 

scaled relative payment weight for the 

APC to which the service is assigned. 

Currently, the ASC conversion factor is 

equal to the conversion factor calculated 

for the previous year updated by the 

MFP-adjusted CPI–U update factor, 

which is the adjustment set forth in 

section 1833(i)(2)(D)(v) of the Act. The 

MFP-adjusted CPI–U update factor is 

the Consumer Price Index for all urban 

consumers (CPI–U), which currently is 

the annual update for the ASC payment 

system, minus the MFP adjustment. As 

discussed in the CY 2011 MPFS final 

rule with comment period (75 FR 

73397), if the CPI–U is a negative 

number, the CPI–U would be held to 

zero. Under the ASCQR Program, any 

annual update will be reduced by 2.0 

percentage points for ASCs that fail to 

meet the reporting requirements of the 

ASCQR Program. This reduction 

applied beginning with the CY 2014 

payment rates. For a complete 

discussion of the calculation of the ASC 

conversion factor, we refer readers to 

section XII.G. of this final rule with 

comment period. 


tkelley on DSK3SPTVN1PROD with RULES2
66982 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

In the CY 2013 OPPS/ASC final rule 

with comment period (77 FR 68499 

through 68500), in order to implement 

the requirement to reduce the annual 

update for ASCs that fail to meet the 

ASCQR Program requirements, we 

finalized our proposal that we would 

calculate two conversion factors: A full 

update conversion factor and an ASCQR 

Program reduced update conversion 

factor. We finalized our proposal to 

calculate the reduced national 

unadjusted payment rates using the 

ASCQR Program reduced update 

conversion factor that would apply to 

ASCs that fail to meet their quality 

reporting requirements for that calendar 

year payment determination. We 

finalized our proposal that application 

of the 2.0 percentage point reduction to 

the annual update may result in the 

update to the ASC payment system 

being less than zero prior to the 

application of the MFP adjustment. 

The ASC conversion factor is used to 

calculate the ASC payment rate for 

services with the following payment 

indicators (listed in Addenda AA and 

BB to this final rule with comment 

period, which are available via the 

Internet on the CMS Web site): ‘‘A2,’’ 

‘‘G2,’’ ‘‘P2,’’ ‘‘R2,’’ ‘‘Z2,’’ as well as the 

service portion of device-intensive 

procedures identified by ‘‘J8.’’ We 

finalized our proposal that payment for 

all services assigned the payment 

indicators listed above would be subject 

to the reduction of the national 

unadjusted payment rates for applicable 

ASCs using the ASCQR Program 

reduced update conversion factor. 

The conversion factor is not used to 

calculate the ASC payment rates for 

separately payable services that are 

assigned status indicators other than 

payment indicators ‘‘A2,’’ ‘‘G2,’’ ‘‘J8,’’ 

‘‘P2,’’ ‘‘R2,’’ and ‘‘Z2.’’ These services 

include separately payable drugs and 

biologicals, pass-through devices that 

are contractor-priced, brachytherapy 

sources that are paid based on the OPPS 

payment rates, and certain office-based 

procedures and radiology services 

where payment is based on the MPFS 

PE RVU amount and a few other specific 

services that receive cost-based 

payment. As a result, we also finalized 

our proposal that the ASC payment rates 

for these services would not be reduced 

for failure to meet the ASCQR Program 

requirements because the payment rates 

for these services are not calculated 

using the ASC conversion factor and, 

therefore, not affected by reductions to 

the annual update. 

Office-based surgical procedures 

(performed more than 50 percent of the 

time in physicians’ offices) and 

separately paid radiology services 

(excluding covered ancillary radiology 

services involving certain nuclear 

medicine procedures or involving the 

use of contrast agents, as discussed in 

section XII.C.1.b. of this final rule with 

comment period) are paid at the lesser 

of the MPFS nonfacility PE RVU-based 

amounts or the amount calculated under 

the standard ASC ratesetting 

methodology. Similarly, in section 

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

comment period, we are finalizing that 

payment for the new category of covered 

ancillary services (that is, certain 

diagnostic test codes within the medical 

range of CPT codes for which separate 

payment is allowed under the OPPS and 

when they are integral to an ASC 

covered surgical procedure) will be at 

the lesser of the MPFS nonfacility PE 

RVU-based amounts or the rate 

calculated according to the standard 

ASC ratesetting methodology. In the CY 

2013 OPPS/ASC final rule with 

comment period (77 FR 68500), we 

finalized our proposal that the standard 

ASC ratesetting methodology for this 

type of comparison would use the ASC 

conversion factor that has been 

calculated using the full ASC update 

adjusted for productivity. This is 

necessary so that the resulting ASC 

payment indicator, based on the 

comparison, assigned to these 

procedures or services is consistent for 

each HCPCS code regardless of whether 

payment is based on the full update 

conversion factor or the reduced update 

conversion factor. 

For ASCs that receive the reduced 

ASC payment for failure to meet the 

ASCQR Program requirements, we 

believe that it is both equitable and 

appropriate that a reduction in the 

payment for a service should result in 

proportionately reduced copayment 

liability for beneficiaries. Therefore, in 

the CY 2013 OPPS/ASC final rule with 

comment period (77 FR 68500), we 

finalized our proposal that the Medicare 

beneficiary’s national unadjusted 

copayment for a service to which a 

reduced national unadjusted payment 

rate applies would be based on the 

reduced national unadjusted payment 

rate. 

In that final rule with comment 

period, we finalized our proposal that 

all other applicable adjustments to the 

ASC national unadjusted payment rates 

would apply in those cases when the 

annual update is reduced for ASCs that 

fail to meet the requirements of the 

ASCQR Program (77 FR 68500). For 

example, the following standard 

adjustments would apply to the reduced 

national unadjusted payment rates: The 

wage index adjustment, the multiple 

procedure adjustment, the interrupted 

procedure adjustment, and the 

adjustment for devices furnished with 

full or partial credit or without cost. We 

believe that these adjustments continue 

to be equally applicable to payment for 

ASCs that do not meet the ASCQR 

Program requirements. 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75132), we 

did not make any changes to these 

policies. In the CY 2015 OPPS/ASC 

proposed rule (79 FR 41049 through 

41050), we did not propose any changes 

to these policies. 

D. Administrative Requirements 

We received a public comment on the 

ASCQR Program requirements in 

general. 

Comment: One commenter expressed 

appreciation that CMS did not propose 

any substantial changes to participatory 

requirements, stating that this will 

provide ASCs with valuable time to 

stabilize the processes for what is 

currently required without adding 

additional burden on resources. 

Response: We interpret the 

commenter as referring to program 

administrative requirements overall, 

and not to just participation status as 

the commenter makes reference to 

issues of burden. We thank the 

commenter for this support. We agree 

that program administrative process 

stability to the extent possible is 

important in developing the ASCQR 

Program. We continue to look for ways 

to minimize burden as we pursue the 

quality objectives of the ASCQR 

Program. 

1. Requirements Regarding QualityNet 

Account and Security Administrator 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75132 through 75133) for 

a detailed discussion of the QualityNet 

security administrator requirements, 

including setting up a QualityNet 

account, and the associated timelines, 

for the CY 2014 payment determination 

and subsequent years. In the CY 2015 

OPPS/ASC proposed rule (79 FR 41050), 

we did not propose any changes to these 

policies. 

2. Requirements Regarding Participation 

Status 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75133 through 78 FR 

75135) for a complete discussion of the 

participation status requirements for the 

CY 2014 payment determination and 

subsequent years. In the CY 2015 OPPS/ 

ASC proposed rule (79 FR 41050), we 

did not propose any changes to these 

policies. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66983 

E. Form, Manner, and Timing of Data 

Submitted for the ASCQR Program 

We received public comments on 

alternate methods for submitting data 

for the ASCQR Program. 

Comment: One commenter 

recommended that CMS allow ASCs to 

meet the requirements of the ASCQR 

Program using registry-based reporting, 

noting that using a registry is an option 

under the PQRS and that other registries 

are already in existence. This 

commenter recommended CMS issue 

proposals regarding this option in next 

year’s proposed rule. The commenter 

also recommended that ASCs should 

also have the option of submitting 

quality data to CMS through an EHRbased reporting mechanism, as there are 

ASCs that have implemented this 

technology and could benefit from this 

option. 

Response: We thank the commenter 

for these suggestions. We agree that it 

could reduce burden to have a registrybased mechanism for data submission. 

We have not proposed a registry-based 

reporting option because currently, 

there is not a registry in place that is 

collecting information on the quality 

measures that we have adopted for this 

program. Should registry-based 

reporting of the ASC quality measures 

adopted for the ASCQR Program become 

available in the future, we will explore 

further the viability of incorporating a 

registry-based reporting mechanism in 

the ASCQR Program. 

Regarding the use of EHR systems for 

reporting quality data, we agree that 

reporting by this method could reduce 

reporting burden. However, we are not 

aware of quality measures for ASCs that 

have been specified for electronic 

reporting. If such measures do exist, an 

understanding of the level of EHR 

adoption and capabilities of ASCs to 

utilize this method would be necessary 

before proposing their adoption by the 

ASCQR Program. As we discussed in 

the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75124 through 

75126), in a recent environmental scan, 

which included an assessment of the 

readiness of ASC to electronically report 

quality data, we found evidence of low 

levels of EHR use by ASCs. We believe 

that ASCs continue to be slow to adopt 

EHRs because many of these facilities 

are small and the cost of EHRs may pose 

a barrier to adoption. Further, there has 

been no incentive program to encourage 

such adoption by ASCs. 

Comment: One commenter requested 

a batch-processing data submission 

option for entities that own multiple 

ASCs. 

Response: We interpret this comment 

as referring to the ability to send quality 

measure data electronically in a format 

that allows for data submission for 

multiple ASCs, rather than requiring 

individual ASC data entry as is 

currently required for data submitted 

via a CMS online data submission tool 

measure data. We thank the commenter 

for their request and are considering 

how to implement this capability into 

our data submission processes. In the 

event this method can be available for 

data submission, we would issue 

proposals through rulemaking for 

ASCQR Program implementation. 

1. Requirements Regarding Data 

Processing and Collection Periods for 

Claims-Based Measures Using Quality 

Data Codes (QDCs) 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75135) for a complete 

summary of the data processing and 

collection periods for the claims-based 

measures using QDCs for the CY 2014 

payment determination and subsequent 

years. In the CY 2015 OPPS/ASC 

proposed rule (79 FR 41050), we did not 

propose any changes to these policies. 

We did not receive any public 

comments on data submission for 

claims-based measures using QDCs. 

2. Minimum Threshold, Minimum Case 

Volume, and Data Completeness for 

Claims-Based Measures Using QDCs 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75135 through 75137) for 

a complete discussion of the minimum 

thresholds, minimum case volume, and 

data completeness for successful 

reporting for the CY 2014 payment 

determination and subsequent years. In 

the CY 2015 OPPS/ASC proposed rule 

(79 FR 41050), we did not propose any 

changes to these policies. 

We received the following public 

comments on data collection using 

QDCs. 

Comment: One commenter 

recommended that CMS raise the 50 

percent threshold for claims meeting 

measure specifications containing 

QDCs, noting that many of the issues in 

the early years of the program that led 

to this standard have been resolved. 

Response: We thank the commenter 

for the recommendation and, while we 

did not propose any changes to our QDC 

use threshold in this rulemaking, we 

will consider this comment as we move 

forward with program planning as ASCs 

now have experience in submitting data 

in this manner. 

Comment: One commenter supported 

CMS’ decision not to propose any 

changes to minimum thresholds, 

minimum case volume, and data 

completeness for successful reporting, 

noting that program stability is 

important. Specifically, the commenter 

supports maintaining the sample size 

requirements for the endoscopy 

measures, ASC–9 and ASC–10. 

Response: We thank the commenter 

for its support of these data-related 

policies, including the maintenance of 

the sample size requirements for the 

endoscopy measures. 

3. Requirements for Data Submitted Via 

a CMS Online Data Submission Tool 

a. Data Collection for ASC–6 and ASC– 

7 

We refer readers to the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74509) and the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75137 through 75138) for 

a complete discussion of the 

requirements for data collection and 

submission for the ASC–6: Safe Surgery 

Checklist Use and ASC–7: ASC Facility 

Volume Data on Selected ASC Surgical 

Procedures measures for the CY 2015 

payment determination and subsequent 

years. In the CY 2015 OPPS/ASC 

proposed rule (79 FR 41050), we did not 

propose any changes to these policies. 

b. Delayed Data Collection for ASC–9 

and ASC–10 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75124 

through 75130), we adopted ASC–9: 

Endoscopy/Polyp Surveillance: 

Appropriate Follow-up Interval for 

Normal Colonoscopy in Average Risk 

Patients (NQF #0658) and ASC–10: 

Endoscopy/Polyp Surveillance: 

Colonoscopy Interval for Patients with a 

History of Adenomatous Polyps— 

Avoidance of Inappropriate Use (NQF 

#0659), two additional chart-abstracted 

measures, and we finalized a policy that 

aggregate data (numerators, 

denominators, and exclusions) on all 

ASC patients would be collected via an 

online Web-based tool that would be 

made available to ASCs via the 

QualityNet Web site. 

We finalized that the data collection 

time period would be the calendar year 

(January 1 to December 31) 2 years prior 

to the affected payment determination 

year, and the data collected would be 

submitted during the time period of 

January 1 to August 15 in the year prior 

to the affected payment determination 

year. Thus, for the CY 2016 payment 

determination, ASCs would be required 

to submit aggregate-level encounter data 

from January 1, 2014 to December 31, 

2014 using our Web-based tool during 


tkelley on DSK3SPTVN1PROD with RULES2
66984 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

the data submission window of January 

1, 2015 to August 15, 2015 (78 FR 75138 

through 75139). 

On December 31, 2013, we issued 

guidance stating that we would delay 

the implementation of ASC–9 and ASC– 

10 for 3 months for the CY 2016 

payment determination, with a resulting 

encounter period of April 1, 2014 to 

December 31, 2014 instead of January 1, 

2014 to December 31, 2014 (https://

www.qualitynet.org/dcs/ContentServer?

c=Page&pagename=QnetPublic%2F

Page%2FQnetTier3&cid=

1228772879036). The data submission 

timeframe and the encounter period for 

subsequent years remain as previously 

finalized (78 FR 75139). 

c. Delayed Data Collection and 

Exclusion for ASC–11 for the CY 2016 

Payment Determination and Voluntary 

Data Collection for ASC–11 for the CY 

2017 Payment Determination and 

Subsequent Years 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period, where we adopted ASC–11: 

Cataracts—Improvement in Patient’s 

Visual Function within 90 Days 

Following Cataract Surgery (NQF #1536) 

beginning with the CY 2016 payment 

determination (78 FR 75129), and 

finalized the data collection and data 

submission timelines (78 FR 75138 to 

75139). This measure assesses the rate 

of patients 18 years and older (with a 

diagnosis of uncomplicated cataract) in 

a sample who had improvement in 

visual function achieved within 90 days 

following cataract surgery based on 

completing both a pre-operative and 

post-operative visual function survey. 

Since our adoption of this measure, 

we have come to believe that it can be 

operationally difficult at this time for 

ASCs to collect and report this measure. 

Specifically, we are concerned that the 

results of the survey used to assess the 

pre-operative and post-operative visual 

function of the patient may not be 

shared across clinicians and facilities, 

making it difficult for ASCs to have 

knowledge of the visual function of the 

patient before and after surgery. We are 

also concerned about the surveys used 

to assess visual function; the measure 

allows for the use of any validated 

survey and results may be inconsistent 

should clinicians use different surveys. 

Therefore, on December 31, 2013, we 

issued guidance stating that we would 

delay data collection for ASC–11 for 3 

months (data collection would 

commence with April 1, 2014 

encounters) for the CY 2016 payment 

determination (https://www.qualitynet.

org/dcs/ContentServer?c=Page&page

name=QnetPublic%2FPage%2F

QnetTier3&cid=1228772879036). We 

issued additional guidance on April 2, 

2014, stating that we would further 

delay the implementation of ASC–11 for 

an additional 9 months, until January 1, 

2015 for the CY 2016 payment 

determination, due to continued 

concerns (https://www.qualitynet.org/

dcs/ContentServer?c=Page&pagename=

QnetPublic%2FPage%2FQnetTier3&

cid=1228773811586). 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41051), we proposed to 

exclude ASC–11 Cataracts: 

Improvement in Patient’s Visual 

Function within 90 Days Following 

Cataract Surgery (NQF #1536) from the 

CY 2016 payment determination 

measure set. We would not subject 

ASCs to a payment reduction with 

respect to this measure for the CY 2016 

payment determination. 

We continue to believe that this 

measure addresses an area of care that 

is not adequately addressed in our 

current measure set and the measure 

serves to drive coordination of care (78 

FR 75129). Further, we believe ASCs 

should be a partner in care with 

physicians and other clinicians using 

their facility and that this measure 

provides an opportunity to do so. 

Therefore, we are continuing to include 

this measure in the ASCQR Program 

measure set for the CY 2017 payment 

determination and subsequent years. 

However, we understand the concerns 

and, therefore, proposed that data 

collection and submission be voluntary 

for this measure for the CY 2017 

payment determination and subsequent 

years. ASCs would not be subject to a 

payment reduction for failing to report 

this measure during the period of 

voluntary reporting. For ASCs that 

choose to submit data, we continue to 

request that they submit such data using 

the means and timelines finalized in the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75138 to 

75139). Data submitted voluntarily will 

be publicly reported as discussed in the 

CY 2014 OPPS/ASC proposed rule (78 

FR 75138 to 75139). 

We invited public comment on this 

proposal. 

Comment: Some commenters stated 

that complications following cataract 

surgery are not acceptable and believed 

that ASC–11 tracks patient-centered 

clinical outcomes. The commenters 

stated that the measure would promote 

and improve care coordination among 

providers. Some commenters 

commended CMS’ recognition of the 

associated operational issues and taking 

the approach to delay implementation 

of this measure as well as allowing 

voluntary collection. 

Response: We appreciate the 

commenters that supported and agreed 

with our view and the approach we take 

for this measure. We agree that 

complications following cataract surgery 

are not acceptable. While ASC–11 does 

not address complications following 

cataract surgery, it does address 

improvement in visual function 

following cataract surgery and it tracks 

an important patient-centered clinical 

outcome. 

Comment: Some commenters did not 

support voluntary data reporting based 

on concerns regarding the extent to 

which ASCs would report data for ASC– 

11 if reporting was voluntary. Some 

commenters stated that incomplete 

display of data is not meaningful to 

consumers. Other commenters 

expressed concerns that the display of 

data from some ASCs but not others 

would lead some patients to conclude 

that some ASCs are more committed to 

improving cataract surgery. Several 

other commenters predicted that very 

few ASCs will report data for the ASC– 

11 measure, leading to an insufficient 

sample. 

Response: We thank the commenters 

for their views. We note that the 

proposal, which we are finalizing in this 

final rule with comment period, is for 

the measure to be voluntarily reported 

by ASCs. Therefore, ASCs would be able 

to choose whether to implement data 

collection and reporting processes for 

this measure. We continue to believe the 

ASC–11 measure has value in this care 

setting. We do not agree that an 

insufficient sample of facilities will 

report data for the ASC–11 measure 

because we also have self-reports from 

ASCs that some did put processes in 

place to collect data for this measure, 

and that these ASCs would like to report 

data for this measure because they view 

the measure as an important quality 

measure for facilities. 

We do not agree that ASC–11 data 

reported on a voluntary basis would not 

be meaningful for consumers. There are 

many situations where ASCs do not 

submit information to the ASCQR 

Program because they do not have such 

information due to lack of cases or low 

case volume. In the CY 2012 OPPS/ASC 

final rule with comment period (76 FR 

74514 through 74515), we finalized a 

policy to make data that an ASC 

submitted for the ASCQR Program 

publicly available on a CMS Web site 

after providing an ASC an opportunity 

to review the data to be made public. 

Therefore, when ASCs’ information is 

submitted, we will make this 

information publicly available. Where 

this information is not submitted, we 

will state that the information is not 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66985 

available. We also do not agree that 

reporting of measure data by some ASCs 

and not others under voluntary 

reporting would affect the validity of 

data reported for this Web-based 

measure because this situation is no 

different than any other measure where 

not all ASCs had cases. 

Comment: Many commenters 

requested that CMS remove the ASC–11 

measure from the program entirely, 

rather than delaying implementation 

and allowing voluntary reporting. These 

commenters reiterated similar concerns 

expressed in the CY 2014 OPPS/ASC 

final rule with comment period 

regarding associated burden, suitability 

for ASCQR Program versus PQRS, 

program alignment of this measure, 

nonstandardization of collected 

information, NQF endorsement, MAP 

recommendation, and coordination 

challenges faced by facilities. 

Response: We continue to believe this 

measure addresses the importance area 

of care coordination and responsibility 

for monitoring patient outcomes 

between performing physicians, 

practitioners that assess visual function, 

and facilities where procedures are 

performed; therefore, we are not 

removing ASC–11 from the ASCQR 

Program measure set for the CY 2017 

payment determination and subsequent 

years. 

With respect to the concerns raised by 

commenters about the measure, we refer 

commenters to the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

75124 through 75126, 75129, and 75138 

through 75139) where we previously 

have responded to these concerns. 

After consideration of the public 

comments we received, for the reasons 

discussed above, we are finalizing our 

proposal to allow voluntary data 

collection and reporting of this measure 

for the CY 2017 payment determination 

and subsequent years. We also are 

finalizing our proposal to exclude the 

measure entirely from the CY 2016 

payment determination measure set. 

ASCs will be able to begin reporting 

with January 1, 2015 services as 

described above in section XIV.E.3. of 

this final rule with comment period. For 

ASCs that choose to submit data, we 

request that they submit such data using 

the means and timelines finalized in the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75138 to 

75139). ASCs will not be subject to a 

payment reduction for failing to report 

this measure during the period of 

voluntary reporting. Data voluntarily 

submitted will be publicly reported. 

4. Claims-Based Measure Data 

Requirements for the New Measure for 

the CY 2018 Payment Determination 

and Subsequent Years 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41046–41048), we proposed 

to adopt the ASC–12: Facility SevenDay Risk-Standardized Hospital Visit 

Rate after Outpatient Colonoscopy 

measure, which is a claims-based 

measure that does not require any 

additional data submission apart from 

standard Medicare FFS claims. In the 

CY 2015 OPPS/ASC proposed rule (79 

FR 41051), we also proposed that, for 

this measure, which uses ASC Medicare 

claims data as specified in the ASCQR 

Specifications Manual and does not 

require any additional data submission 

such as QDCs, we would use paid 

Medicare FFS claims from a 12-month 

period from July 1 of the year 3 years 

before the payment determination year 

to June 30 of the following year. Thus, 

we stated, for the CY 2017 payment 

determination for this measure, claims 

from July 1, 2014 to June 30, 2015 

would be used. We noted that we 

proposed to adopt this measure under 

the ASCQR Program as well as the 

Hospital OQR Program, as described in 

section XIII.H.2.c. of the proposed rule. 

We stated that this ASCQR Program 

time period provides for the timeliest 

data possible while aligning the 

proposed data submission requirements 

with our Hospital OQR Program 

proposal, which would use the claimsbased measure data submission 

requirements for the CY 2015 payment 

determination and subsequent years that 

we adopted in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

75111 through 75112). 

We invited public comment on this 

proposal. 

Comment: Many commenters 

expressed concern that, if finalized, the 

ASC–12 measure’s data collection 

period would begin July 1, 2014, several 

months before adoption of the measure 

is finalized. Several commenters 

recommended that data collection begin 

July 1, 2015. 

Response: As we stated above in 

section XIV.B.5. of this final rule with 

comment period, we are finalizing the 

adoption of ASC–12 for the CY 2018 

payment determination and subsequent 

years instead of the CY 2017 payment 

determination and subsequent years as 

proposed. We are finalizing the data 

submission time period for ASC–12 to 

use paid Medicare FFS claims from the 

calendar year 2 years before the 

payment determination calendar year. 

For the CY 2018 payment 

determination, we will use paid 

Medicare FFS claims from January 1, 

2016 to December 31, 2016. We believe 

the reliability of the measure using 1 

year of data is sufficiently reliable. 

While we believe that measure 

reliability may be further improved by 

using a longer time period, we must 

balance the reliability of the measure 

with the timeliness of the measure. At 

this time, we believe that 1 year of data 

appropriately balances these competing 

interests, but we will continue to assess 

this belief during the dry run. 

After consideration of the public 

comments we received, we are not 

finalizing our proposal to use paid 

Medicare FFS claims from a 12-month 

period from July 1 of the year 3 years 

before the payment determination year 

to June 30 of the following year. Instead, 

we will use paid Medicare FFS claims 

from the calendar year 2 years before the 

payment determination calendar year. 

Specifically, with respect to the CY 

2018 payment determination, for 

calculating ASC–12, we will use paid 

Medicare FFS claims from January 1, 

2016 to December 31, 2016. 

5. Data Submission Requirements for 

ASC–8 (Influenza Vaccination Coverage 

Among Healthcare Personnel) Reported 

via the National Healthcare Safety 

Network (NHSN) for the CY 2016 

Payment Determination and Subsequent 

Years 

a. Previously Adopted Requirements for 

the CY 2016 Payment Determination 

We refer readers to the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74510) and the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75139 through 75140) for 

a complete discussion of the ASC–8 

measure (Influenza Vaccination 

Coverage among Healthcare Personnel) 

(NQF #0431), including the data 

collection timeframe and the data 

reporting standard procedures for the 

CY 2016 payment determination. 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75139 

through 75140), we finalized our 

proposal to use the data submission and 

reporting standard procedures that have 

been set forth by the CDC for NHSN 

participation in general and for 

submission of this measure to NHSN. 

We refer readers to the CDC’s NHSN 

Web site for detailed procedures for 

enrollment (http://www.cdc.gov/nhsn/

ambulatory-surgery/enroll.html), set-up 

(http://www.cdc.gov/nhsn/ambulatorysurgery/setup.html), and reporting 

(https://sams.cdc.gov) (user 

authorization through Secure Access 

Management Services (SAMS) is 

required for access to NHSN). We note 


tkelley on DSK3SPTVN1PROD with RULES2
66986 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

that the reporting link was updated in 

the CY 2015 OPPS/ASC proposed rule 

(79 FR 41051). 

b. Data Collection Timeframes for the 

CY 2017 Payment Determination and 

Subsequent Years and Submission 

Deadlines for the CY 2016 Payment 

Determination and Subsequent Years 

In the CY 2012 OPPS/ASC final rule 

with comment period (76 FR 74510), we 

finalized our policy that data collection 

for the CY 2016 payment determination 

would be from October 1, 2014 through 

March 31, 2015 (the 2014–2015 

influenza season data). In the CY 2015 

OPPS/ASC proposed rule (79 FR 41051 

through 41052, we proposed that for the 

CY 2017 payment determination and 

subsequent years, ASCs would collect 

data from October 1 of the year 2 years 

prior to the payment determination year 

to March 31 of the year prior to the 

payment determination year. For 

example, the CY 2017 payment 

determination would require data 

collection from October 1, 2015 to 

March 31, 2016. 

In the CY 2014 OPPS/ASC proposed 

rule, we proposed that ASCs would 

have until August 15, 2015 to submit 

their 2014–2015 influenza season data 

(October 1, 2014 through March 31, 

2015) to NHSN. We stated that this date 

is the latest date possible for data entry 

that would provide sufficient time for us 

to make the CY 2016 payment 

determinations and is aligned with the 

data entry deadline for the measures 

entered via the CMS online tool (78 FR 

43670). While some commenters 

supported this proposal, others 

expressed disagreement with this 

proposal because it differed from the 

May 15 deadline proposed for the 

Hospital IQR Program (78 FR 27700, 

50822) and the Hospital OQR Program 

(78 FR 43656, 75116 through 75117) and 

they believed this difference in 

deadlines could cause confusion, 

thereby disadvantaging ASCs (78 FR 

75140). Other commenters believed that 

providing ASCs with a later deadline 

would provide an unfair advantage 

because ASCs would have longer to 

submit their data. Due to these 

concerns, we did not finalize the August 

15, 2015 deadline. We stated that we 

intended to propose a submission 

deadline for this measure for the CY 

2016 payment determination in this 

proposed rule. 

In the proposed rule, we proposed 

that May 15 of the year in which the 

influenza season ends be the submission 

deadline for each payment 

determination year, similar to the 

Hospital IQR and OQR Programs. For 

example, for the CY 2016 payment 

determination, ASCs would be required 

to submit their 2014–2015 influenza 

season data (October 1, 2014 through 

March 31, 2015) by May 15, 2015. 

Similarly, for the CY 2017 payment 

determination, ASCs would be required 

to submit their 2015–2016 influenza 

season data (October 1, 2015 through 

March 31, 2016) by May 15, 2016. We 

believe a May 15 reporting deadline 

would enable ASCs to use data 

summarizing the results of their 

previous influenza vaccination 

campaign to set targets and make plans 

for their influenza vaccination 

campaigns prior to the next influenza 

season. This deadline also would enable 

us to post and the public to review the 

summary data before the start of the 

next influenza season. Finally, this date 

aligns to the May 15 deadline used in 

the Hospital IQR and OQR Programs for 

this measure. 

We invited public comment on this 

proposal. 

Comment: Many commenters 

supported the proposed submission 

deadline of May 15 for ASC–8. One 

commenter expressed concern that there 

is a time lag for reporting this data, and 

urged that the public should have access 

to the data at the time the data is most 

useful. 

Response: We thank the commenters 

for their support. We believe a May 15 

reporting deadline will enable ASCs to 

use data summarizing the results of 

their previous influenza vaccination 

campaign to set targets and make plans 

for their influenza vaccination 

campaigns prior to the next influenza 

season. This deadline also will enable 

us to post and the public to review the 

summary data before the start of the 

next influenza season. Finally, this date 

aligns with the May 15 deadline used in 

the Hospital IQR and OQR Programs for 

this measure. 

Comment: Several commenters 

opposed setting the submission 

deadline for ASC–8 to May 15, arguing 

that the August 15 deadline considered 

in the prior year rule was better aligned 

with the other measures in the ASCQR 

Program and would minimize confusion 

and reporting burden. One commenter 

suggested that the Hospital IQR and 

Hospital OQR Programs should move 

their deadlines to August 15 to support 

program alignment. 

Response: We thank the commenters 

for supporting last year’s proposal 

regarding a data submission deadline for 

the ASC–8 measure. We proposed an 

August 15 data submission deadline in 

the CY 2014 OPPS/ASC proposed rule 

(78 FR 43670), but did not finalize this 

proposal due to commenters’ concerns 

with nonalignment with other quality 

reporting programs (78 FR 75140). 

While we seek to align reporting 

deadlines whenever possible within the 

ASCQR Program (78 FR 75140), we 

believe alignment across programs with 

the May 15 reporting deadline will 

prevent confusion in reporting across 

different facilities. We also believe this 

earlier deadline will enable us to make 

the data publicly available in time for 

ASCs to use the data summarizing the 

results of their previous influenza 

vaccination campaign to set targets and 

make plans for their influenza 

vaccination campaigns prior to the next 

influenza season. This would be very 

difficult to achieve with an August 15 

reporting deadline. 

After consideration of the public 

comments we received, for the reasons 

set forth above, we are finalizing our 

proposal without modification to adopt 

May 15 of the year in which the 

influenza season ends as the data 

submission deadline for the ASC–8 

measure for each payment 

determination year, beginning with the 

CY 2016 payment determination. We 

also are finalizing our proposal without 

modification that, for the CY 2017 

payment determination and subsequent 

years, ASCs will collect data from 

October 1 of the year 2 years prior to the 

payment determination year to March 

31 of the year prior to the payment 

determination year. 

6. ASCQR Program Validation of 

Claims-Based and CMS Web-Based 

Measures 

We refer readers to the FY 2013 IPPS/ 

LTCH PPS final rule (77 FR 53641 

through 53642) for a complete 

discussion of our policy not to require 

validation of claims-based measures 

(beyond the usual claims validation 

activities conducted by our Medicare 

Administrative Contractors) or Webbased measures for the ASCQR Program, 

which is in alignment with our 

requirements for the Hospital IQR and 

OQR Programs. In the CY 2015 OPPS/ 

ASC proposed rule (79 FR 41052), we 

did not propose any changes to this 

policy. 

We received the following comment 

on data validation for the ASCQR 

Program. 

Comment: One commenter 

recommended that CMS develop an 

ASCQR data validation program to 

assure the accuracy and integrity of 

quality data that will be publicly 

reported under the ASCQR Program. 

Response: We thank the commenter 

for the comment, and note that we 

continue to evaluate the feasibility of 

data validation for the ASCQR Program. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66987 

We refer readers to the FY 2013 IPPS/ 

LTCH PPS final rule (77 FR 53641 

through 53642) for a complete 

discussion of our policy not to require 

validation of claims-based measures 

(beyond the usual claims validation 

activities conducted by our Medicare 

Administrative Contractors) or Webbased measures for the ASCQR Program. 

At this time, we believe that it would be 

overly burdensome to validate the 

reported data given the inexperience 

that ASCs have with reporting quality 

data to CMS coupled with the low 

incidence of cases for the claims-based 

measures. As we gain more experience 

with the ASCQR Program, we will 

reassess whether a data validation 

process for claims-based measures and 

measures where aggregate data are 

reported via an online tool is needed. 

7. Extraordinary Circumstances 

Extensions or Exemptions for the CY 

2017 Payment Determination and 

Subsequent Years 

We refer readers to the FY 2013 IPPS/ 

LTCH PPS final rule (77 FR 53642 

through 53643) and the CY 2014 OPPS/ 

ASC final rule with comment period (78 

FR 75140 through 75141) for a complete 

discussion of our extraordinary 

circumstances extension or waiver 

process under the ASCQR Program. In 

the CY 2015 OPPS/ASC proposed rule 

(79 FR 41052), we did not propose any 

substantive changes to these policies or 

the processes. However, in the future, 

we will refer to the process as the 

‘‘Extraordinary Circumstances 

Extensions or Exemptions’’ process 

rather than the ‘‘Extraordinary 

Circumstances Extensions or Waivers’’ 

process. 

We also are in the process of revising 

the Extraordinary Circumstances/

Disaster Extension or Waiver Request 

form (CMS–10432), approved under 

OMB control number 0938–1171. We 

are updating the instructions and the 

form so that a hospital or facility may 

apply for an extension for all applicable 

quality reporting programs at the same 

time. In addition, the instructions for 

the form will be updated. 

8. ASCQR Program Reconsideration 

Procedures for the CY 2017 Payment 

Determination and Subsequent Years 

We refer readers to the FY 2013 IPPS/ 

LTCH PPS final rule (77 FR 53643 

through 53644) and the CY 2014 OPPS/ 

ASC final rule with comment period (78 

FR 75141) for a complete discussion of 

our informal reconsideration process for 

the ASCQR Program for the CY 2014 

payment determination and subsequent 

years. In the CY 2015 OPPS/ASC 

proposed rule (79 FR 41052), we did not 

propose any changes to the informal 

reconsideration process. 

XV. Changes to the Rural Provider and 

Hospital Ownership Exceptions to the 

Physician Self-Referral Law: Expansion 

Exception Process 

A. Background 

1. Statutory Basis 

Unless the requirements of an 

applicable exception are satisfied, 

section 1877 of the Act, also known as 

the ‘‘physician self-referral law’’—(1) 

prohibits a physician from making 

referrals for certain designated health 

services payable by Medicare to an 

entity with which the physician (or an 

immediate family member) has a 

financial relationship (ownership or 

compensation); and (2) prohibits the 

entity from submitting claims to 

Medicare (or billing another individual, 

entity, or third party payer) for those 

designated health services furnished as 

a result of a prohibited referral. The Act 

establishes a number of specific 

exceptions to the physician self-referral 

law and grants the Secretary the 

authority to create regulatory exceptions 

for financial relationships that the 

Secretary determines pose no risk of 

program or patient abuse. Since the 

original enactment of the statute in 

1989, we have published a series of final 

rules interpreting the statute and 

promulgating numerous exceptions. 

Section 1877(d) of the Act sets forth 

exceptions related to ownership and 

investment interests held by a physician 

(or an immediate family member of a 

physician) in an entity that furnishes 

designated health services. Section 

1877(d)(2) of the Act provides an 

exception for ownership and investment 

interests in rural providers. Under the 

provision of section 1877(d)(2) of the 

Act, in order for an ownership or 

investment interest to qualify for the 

exception, the designated health 

services must be furnished in a rural 

area (as defined in section 1886(d)(2) of 

the Act), and substantially all of the 

designated health services furnished by 

the entity must be furnished to 

individuals residing in a rural area. 

Section 1877(d)(3) of the Act provides 

the hospital ownership exception, often 

referred to as the ‘‘whole hospital 

exception,’’ for ownership and 

investment interests in a hospital 

located outside of Puerto Rico, provided 

that the referring physician is 

authorized to perform services at the 

hospital and the ownership or 

investment interest is in the hospital 

itself (and not merely in a subdivision 

of the hospital). 

2. Affordable Care Act Amendments to 

the Rural Provider and Hospital 

Ownership Exceptions to the Physician 

Self-Referral Law 

Section 6001(a) of the Affordable Care 

Act amended the rural provider and 

whole hospital exceptions to the 

physician self-referral law to impose 

additional restrictions on physician 

ownership and investment in rural 

providers and hospitals. Section 6001(a) 

defines a ‘‘physician owner or investor’’ 

as a physician, or immediate family 

member of a physician, who has a direct 

or indirect ownership or investment 

interest in a hospital. We refer to 

hospitals with direct or indirect 

physician owners or investors as 

‘‘physician-owned hospitals.’’ 

Section 6001(a)(3) of the Affordable 

Care Act established new section 1877(i) 

of the Act, which imposes additional 

requirements for physician-owned 

hospitals to qualify for the rural 

provider or whole hospital exception. In 

addition to other requirements, section 

1877(i)(1) of the Act prohibits a 

physician-owned hospital from 

expanding its facility capacity beyond 

the number of operating rooms, 

procedure rooms, and beds for which 

the hospital was licensed as of March 

23, 2010, unless an exception is granted 

by the Secretary. 

Section 1877(i)(3) of the Act requires 

the Secretary to establish and 

implement an exception process to the 

prohibition on expansion of facility 

capacity. We refer to this process as the 

‘‘expansion exception process.’’ Section 

1877(i)(3)(A)(i) of the Act provides that 

a hospital qualifying as an ‘‘applicable 

hospital’’ or a ‘‘high Medicaid facility’’ 

may apply for an expansion exception. 

Section 1877(i)(3)(E) of the Act sets 

forth the eligibility criteria for 

applicable hospitals, which include 

criteria concerning inpatient Medicaid 

admissions, bed capacity, and bed 

occupancy. Section 1877(i)(3)(F) of the 

Act sets forth the eligibility criteria for 

high Medicaid facilities, which include 

a criterion concerning inpatient 

Medicaid admissions. 

In the CY 2011 OPPS/ASC final rule 

with comment period (75 FR 72240), we 

addressed many of the additional 

requirements that were established by 

section 6001(a) of the Affordable Care 

Act for the rural provider and whole 

hospital exceptions, including the 

prohibition on expansion of facility 

capacity. In that final rule with 

comment period, we finalized 

regulations at 42 CFR 411.362(b)(2) that 

prohibit a physician-owned hospital 

from increasing the number of operating 

rooms, procedure rooms, and beds 


tkelley on DSK3SPTVN1PROD with RULES2
66988 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

beyond that for which the hospital was 

licensed on March 23, 2010 (or, in the 

case of a physician-owned hospital that 

did not have a provider agreement in 

effect as of that date, but did have a 

provider agreement in effect on 

December 31, 2010, the effective date of 

such agreement), if the hospital seeks to 

avail itself of the rural provider or 

whole hospital exception. 

In the CY 2012 OPPS/ASC final rule 

with comment period (76 FR 74517), we 

promulgated regulations under 42 CFR 

411.362(c) that govern the expansion 

exception process. Section 411.362(c)(2) 

sets forth the criteria for a physicianowned hospital to qualify for an 

expansion exception as an applicable 

hospital. Specifically, § 411.362(c)(2) 

states that: (1) The hospital’s annual 

percent of total inpatient admissions 

under Medicaid must be equal to or 

greater than the average percent with 

respect to such admissions for all 

hospitals located in the county in which 

the hospital is located during the most 

recent fiscal year for which data are 

available as of the date that the hospital 

submits its exception request; (2) the 

hospital must be located in a State in 

which the average bed capacity in the 

State is less than the national average 

bed capacity during the most recent 

fiscal year for which data are available 

as of the date that the hospital submits 

its request; and (3) the hospital must 

have an average bed occupancy rate that 

is greater than the average bed 

occupancy rate in the State in which the 

hospital is located during the most 

recent fiscal year for which data are 

available as of the date that the hospital 

submits its request. 

Section 411.362(c)(3) specifies the 

criteria for a physician-owned hospital 

seeking an exception under the 

expansion exception process on the 

basis that it is a high Medicaid facility, 

including the requirement that, with 

respect to each of the three most recent 

fiscal years for which data are available 

as of the date that the hospital submits 

its exception request, the hospital must 

have an annual percent of total inpatient 

admissions under Medicaid that is 

estimated to be greater than such 

percent with respect to such admissions 

for any other hospital located in the 

county in which the hospital is located. 

In the CY 2012 OPPS/ASC proposed 

rule (76 FR 42350 through 42352), we 

proposed that filed Medicare hospital 

cost report data from the CMS 

Healthcare Cost Report Information 

System (HCRIS) be used to determine 

whether a hospital satisfies the inpatient 

Medicaid admissions, bed capacity, and 

bed occupancy criteria for applicable 

hospitals and the inpatient Medicaid 

admissions criterion for high Medicaid 

facilities. We requested public 

comments concerning alternative data 

sources that could result in more 

accurate determinations as to whether a 

hospital satisfies the relevant criteria (76 

FR 42350). The public comments that 

we received provided no persuasive 

support for a data source more accurate 

than the filed hospital cost report data 

reported to HCRIS. Therefore, we 

finalized the requirement to use filed 

hospital cost report data for purposes of 

facility capacity expansion exception 

requests in the CY 2012 OPPS/ASC final 

rule with comment period (76 FR 

74518). In this final rule with comment 

period, we refer to the filed hospital cost 

report data that are required under our 

existing regulations as ‘‘HCRIS data.’’ 

As required by section 1877(i)(3)(A) of 

the Act, the regulations addressing the 

expansion exception process in the CY 

2012 OPPS/ASC final rule with 

comment period were issued by January 

1, 2012, and the process was 

implemented on February 1, 2012. 

B. Limitations Identified by 

Stakeholders Regarding the Required 

Use of HCRIS Data 

Following the implementation of the 

expansion exception process on 

February 1, 2012, industry stakeholders 

informed us of what they believed to be 

certain limitations regarding the 

required use of HCRIS data under the 

regulations at 42 CFR 411.362. In the CY 

2015 OPPS/ASC proposed rule (79 FR 

41053), we discussed the existing 

required use of HCRIS data and certain 

limitations of the data that were 

identified by stakeholders and CMS. We 

do not repeat that information here; 

rather, we refer readers to the proposed 

rule for a complete discussion of the 

issues. To address the limitations 

regarding the required use of HCRIS 

data, we proposed to modify the 

expansion exception process to permit 

the use of certain non-HCRIS data 

sources for the inpatient Medicaid 

admissions, bed capacity, and bed 

occupancy criteria. 

As of the publication date of the CY 

2015 OPPS/ASC proposed rule, a 

correctly completed hospital cost report 

did not include Medicaid managed care 

admissions or discharges and, therefore, 

Medicaid managed care admissions and 

discharges were not available in HCRIS. 

As a result, the information collected to 

date through HCRIS cannot be used to 

estimate reliably Medicaid managed 

care admissions or discharges for 

purposes of estimating the percentages 

of inpatient Medicaid admissions under 

§§ 411.362(c)(2)(ii) and (c)(3)(ii). In 

addition, a hospital that has not 

participated as a provider in the 

Medicare program for each of the 3 most 

recent fiscal years for which data is 

available would be precluded from 

seeking a facility expansion exception 

as a high Medicaid facility. It would be 

similarly prohibitive if the requesting 

hospital is seeking an exception as 

either an applicable hospital or high 

Medicaid facility, and the hospitals in 

the county in which the requesting 

hospital is located were not Medicare 

participating providers or were not 

participating in the Medicare program 

during each of the years for which 

comparisons are required under the 

statute and our regulations. 

We believe that some physicianowned hospitals that serve a significant 

number of Medicaid managed care 

patients and are interested in the 

expansion exception process may fail to 

qualify for an exception due to the 

exclusion of Medicaid managed care 

data. Accordingly, as detailed in section 

XV.C. of the CY 2015 OPPS/ASC 

proposed rule (79 FR 41054), we 

proposed to revise the expansion 

exception process to permit physicianowned hospitals to use filed hospital 

cost report data, data from internal data 

sources, or data from external data 

sources to estimate the required 

percentages of inpatient admissions 

under Medicaid. (We referred in the 

proposal to the non-HCRIS internal data 

sources and external data sources that 

we proposed to permit for purposes of 

the expansion exception process as 

‘‘supplemental data sources.’’) Also, as 

explained in section XV.B. of the CY 

2015 OPPS/ASC proposed rule (79 FR 

41054), we proposed to revise the 

expansion exception process to permit 

the use of supplemental data sources for 

the bed capacity and bed occupancy 

criteria for applicable hospitals. 

C. Changes to the Physician-Owned 

Hospital Expansion Exception Process 

Below we discuss the provisions of 

the proposed rule and summarize and 

respond to the public comments we 

received in response to our proposals. 

For ease of reference, we have divided 

the comments and responses into the 

following categories: supplemental data 

sources; fiscal year standard; 

community input and timing of 

complete request; and additional 

considerations. 

1. Supplemental Data Sources 

Given the limitations regarding the 

required use of HCRIS data (which we 

described in sections XV.B.1. and 

XV.B.2. of the CY 2015 OPPS/ASC 

proposed rule (79 FR 41053 through 

41054)), we proposed to revise our 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66989 

regulations at §§ 411.362(c)(2)(ii), 

(c)(2)(iv), (c)(2)(v), and (c)(3)(ii) to 

permit physician-owned hospitals to 

use data from certain internal data 

sources or external data sources, in 

addition to HCRIS data, in order to 

estimate the percentages of inpatient 

Medicaid admissions, and to determine 

the bed capacities and the bed 

occupancy rates referenced in those 

sections. We stated in the proposed rule 

that we were not prescribing that 

hospitals use a specific individual data 

source or combination of data sources. 

We proposed that, for purposes of the 

expansion exception process, internal 

data sources would be sources 

generated, maintained, or under the 

control of the Department, and we gave 

as examples the Healthcare Cost and 

Utilization Project (HCUP), the 

Medicaid Statistical Information System 

(MSIS), and the Medicaid Analytic 

Extract (MAX). We sought public 

comments that recommended other 

possible internal data sources. We also 

proposed that, for purposes of the 

expansion exception process, ‘‘external 

data sources’’ would be data sources 

generated, maintained, or under the 

control of a State Medicaid agency, and 

we sought public comments that 

recommended other possible external 

data sources, including those of other 

State agencies or departments. Finally, 

we proposed to amend 42 CFR 411.351: 

(1) to define ‘‘internal data source’’ to 

include only non-HCRIS data sources 

that are reliable and transparent, and 

that maintain or generate data that are 

accurate, complete, and objectively 

verifiable for purposes of the expansion 

exception process, and to define 

‘‘external data source’’ to include only 

data sources that are reliable and 

transparent, and that maintain or 

generate data that are accurate, 

complete, and objectively verifiable for 

purposes of the expansion exception 

process; and (2) to state that internal 

data sources and external data sources 

must maintain data that are readily 

available and accessible to the 

requesting hospital, comparison 

hospitals, and to CMS for purposes of 

the expansion exception process. 

We noted in the proposed rule that 

the expansion exception process 

includes both the physician-owned 

hospital’s completion of its request and 

CMS’ consideration of the physicianowned hospital’s request. 

We stated in the proposed rule that 

we believe that the supplemental data 

sources should— 

• Be transparent regarding what 

comprises the data, where the data 

originated, and the manner and method 

by which the data source received the 

data; 

• Be maintained on a secure database 

that prevents distortion or corruption of 

data and that ensures the accuracy of 

the data; 

• Contain sufficient information to 

enable accurate estimates of the 

percentages of inpatient Medicaid 

admissions, and accurate 

determinations of bed capacities and 

bed occupancy rates; 

• Contain sufficient information to 

enable the comparisons required by 

§ 411.362(c)(2)(ii), (c)(2)(iv), (c)(2)(v), 

and (c)(3)(ii) for the fiscal year(s) at 

issue; and 

• Contain sufficiently clear and 

detailed data that will enable multiple 

users to produce consistent results and 

outcomes when using the same data set. 

In the proposed rule, we recognized 

that, if a physician-owned hospital uses 

data from a supplemental data source, 

the hospital may ultimately need to 

make estimates or determinations in 

addition to those referenced in our 

existing regulations. Accordingly, we 

proposed to revise our regulations to 

allow for the additional estimates or 

determinations that may be necessary 

under our revised process. Specifically, 

we proposed to permit a requesting 

hospital to use data from a 

supplemental data source to: 

• Estimate its own annual percentage 

of inpatient Medicaid admissions 

(§ 411.362(c)(2)(ii)). 

• Estimate the average percentage 

with respect to such admissions for all 

hospitals located in the county in which 

the hospital is located 

(§ 411.362(c)(2)(ii)). 

• Determine the average bed capacity 

in the State in which the hospital is 

located (§ 411.362(c)(2)(iv)). 

• Determine the national average bed 

capacity (§ 411.362(c)(2)(iv)). 

• Determine its own average bed 

occupancy rate (§ 411.362(c)(2)(v)). 

• Determine the average bed 

occupancy rate for the State in which 

the hospital is located 

(§ 411.362(c)(2)(v)). 

• Estimate its annual percentage of 

total inpatient admissions under 

Medicaid for each of the 3 most recent 

fiscal years for which data are available 

(§ 411.362(c)(3)(ii)). 

• Estimate the annual percentages of 

total inpatient admissions under 

Medicaid for every other hospital 

located in the county in which the 

hospital is located for each of the 3 most 

recent fiscal years for which data are 

available (§ 411.362(c)(3)(ii)). 

We respond below to the specific 

comments that we received in response 

to our proposal. 

a. Internal Data Sources 

Comment: All of the commenters 

supported CMS’ efforts to permit 

physician-owned hospitals to use 

supplemental data sources in the 

expansion exception process because of 

the limitations of the HCRIS data, 

especially with respect to the inpatient 

Medicaid admissions criteria. The 

commenters generally agreed that a 

more flexible approach would help 

ensure that the physician-owned 

hospitals that satisfy the statutory 

criteria are able to expand facility 

capacity under the CMS process. 

Response: We appreciate the 

commenters’ support. Accordingly, we 

are finalizing a number of our proposals 

to revise the expansion exception 

process to provide for the flexibility 

called for by the commenters and other 

industry stakeholders to effectuate the 

purpose of section 6001(a) of the 

Affordable Care Act. 

Comment: One commenter stated that 

it appreciated CMS’ efforts to permit 

physician-owned hospitals to use 

supplemental data sources but also 

expressed concern that an internal data 

source as defined in the proposed rule 

would have limited utility in the 

expansion exception process. With 

respect to the internal data sources 

provided as examples in the proposed 

rule, the commenter identified 

limitations concerning the data sources’ 

completeness for purposes of the 

expansion exception process. 

Specifically, the commenter stated that 

certain States do not provide 

information to the HCUP and that the 

MSIS does not provide sufficient detail 

at the State or county level for purposes 

of the expansion exception process. The 

commenter added that the Medicaid 

Analytic Extract (MAX) would not be 

appropriate for the expansion exception 

process because it may not be used for 

nonresearch purposes. 

Response: We share the concerns 

identified by the commenter. After 

publication of the proposed rule, we 

made additional inquiries into the 

utility of internal data sources with 

respect to the inpatient Medicaid 

admissions criteria. As a result of those 

inquiries and further review, we agree 

with the commenter that these data 

sources contain significant limitations, 

including incomplete data for purposes 

of the exception process, as well as 

issues related to timeliness, availability, 

and accessibility of the data. 

Accordingly, we do not believe that the 

three sources listed in the proposed rule 

satisfy all of the standards that we set 

forth in the proposed rule for 

supplemental data sources (79 FR 


tkelley on DSK3SPTVN1PROD with RULES2
66990 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

41055), which we continue to believe 

are critical for any supplemental data 

source that could be used in the 

expansion exception process. None of 

the commenters provided information 

regarding other potentially acceptable 

internal data sources, and we are 

unaware of any other internal data 

sources that could be used to estimate 

accurately and reliably the percentages 

of inpatient Medicaid admissions 

required. Therefore, we are not 

finalizing our proposal to permit the use 

of any non-HCRIS internal data source 

for the inpatient Medicaid admissions 

criteria required at §§ 411.362(c)(2)(ii) 

and (c)(3)(ii). 

We also believe that many of the 

limitations that the commenter and our 

review identified regarding the 

proposed internal data sources would 

also apply to the bed capacity and bed 

occupancy criteria at § 411.362(c)(2)(iv) 

and (c)(2)(v). Specifically, we do not 

believe that internal data sources other 

than HCRIS would include relevant and 

adequate information to determine 

accurately the average bed capacity for 

hospitals within a State or nationally; 

nor do we believe internal data sources 

other than HCRIS would include 

information to determine accurately bed 

occupancy rates in a State. Accordingly, 

we are not finalizing our proposed 

revisions to §§ 411.362(c)(2)(iv) and 

(c)(2)(v) that would permit the use of 

any non-HCRIS internal data source for 

those criteria. Because no internal data 

source, other than HCRIS, will be 

permitted in the expansion exception 

process under this final rule with 

comment period, we are not finalizing 

our proposal to add a definition of 

‘‘internal data source’’ to § 411.351. 

Comment: One commenter 

recommended that physician-owned 

hospitals be allowed to use as an 

internal data source the same Medicaid 

eligibility determination process that 

hospitals use for Medicare 

disproportionate share hospital (DSH) 

determinations. 

Response: Medicare DSH 

determinations are based on Medicaid 

days, not admissions (or discharges). 

Based on our review, we do not believe 

that Medicaid days, without additional 

detailed information for the requesting 

and each comparison hospital, could be 

used in calculations to estimate 

accurately or reliably the required 

percentages of inpatient Medicaid 

admissions. The commenter did not 

explain how Medicaid eligibility data 

could be used to estimate inpatient 

admissions under Medicaid for the 

requesting hospital and each 

comparison hospital, when required. 

Without further explanation, we cannot 

agree that the Medicaid eligibility 

determination process that hospitals use 

for Medicare DSH determinations 

should be considered a data source. 

b. External Data Sources 

Comment: Most commenters urged 

CMS to finalize its proposal to permit 

the use of data from external data 

sources for the inpatient Medicaid 

admissions criteria. One commenter 

stated that its State Medicaid agency’s 

data on inpatient Medicaid admissions 

includes fee-for-service and managed 

care data, and that the data on total 

patient admissions are readily available 

from the Medicaid agency. The 

commenter indicated that the State 

Medicaid agency data could be used to 

determine accurately the percentages of 

inpatient Medicaid admissions 

referenced in § 411.362(c)(2)(ii) and 

(c)(3)(ii). The commenter also stated that 

the State did not charge a fee for 

providing the necessary data. 

Response: We believe that States have 

a significant interest in ensuring that 

data generated, maintained, or under the 

control of the State Medicaid agency are 

accurate and reliable. In general, 

submission of data to a State Medicaid 

agency is not voluntary, and hospitals 

are incented to provide accurate data 

and other information to receive 

payment for the services that they 

provide to the State’s Medicaid 

enrollees. Accordingly, we are 

persuaded to finalize our proposal to 

permit the use of an external data source 

for the inpatient Medicaid admissions 

criteria at § 411.362(c)(2)(ii) and 

(c)(3)(ii) with the modification 

stemming from the recent revision to the 

Medicare hospital cost report described 

in this response. We also are adopting 

as final our proposed definition of 

‘‘external data source’’ with no 

modification. We are adding this 

definition at § 411.362(a), rather than at 

§ 411.351 as proposed, because the 

definition of ‘‘external data source’’ 

applies only to our regulations at 

§ 411.362. 

We note that CMS recently revised the 

hospital cost report to require the 

reporting of Medicaid managed care 

discharges in addition to Medicaid feefor-service discharges. As a result of this 

revision, a correctly completed hospital 

cost report will include Medicaid 

managed care discharges and, thus, 

Medicaid managed care discharges 

eventually will be available in HCRIS. 

At such time, the limitations that led to 

our proposal will be resolved, and 

HCRIS should be sufficiently complete 

to estimate the percentages of Medicaid 

inpatient admissions required in 

§ 411.362(c)(2)(ii) and (c)(3)(ii). 

However, we anticipate that it will take 

several years before physician-owned 

hospitals that are interested in 

requesting an expansion exception will 

be able to utilize the necessary Medicaid 

managed care data through HCRIS. 

Therefore, we are permitting physicianowned hospitals to use data from an 

external data source for the inpatient 

Medicaid admissions criteria until such 

time that the Secretary determines that 

HCRIS contains sufficiently complete 

inpatient Medicaid discharge data. At 

that time, going forward, physicianowned hospitals may use only filed 

Medicare hospital cost report data for 

the inpatient Medicaid admissions 

criteria. For additional information 

about the recent revisions to the 

hospital cost report, we refer readers to 

Transmittal 6 on the CMS Web site at: 

http://www.cms.gov/Regulations-andGuidance/Guidance/Transmittals/2014- 

Transmittals-Items/R6P240.html. 

We did not receive any public 

comments regarding whether an 

external data source would contain 

adequate information to determine the 

remaining four calculations required for 

the Secretary to grant an exception to 

the facility expansion prohibition for an 

applicable hospital (that is, the average 

bed capacity in the State where the 

requesting hospital is located, national 

average bed capacity, the requesting 

hospital’s average bed occupancy, and 

the average bed occupancy for all 

hospitals in the State where the 

requesting hospital is located). Based on 

our own review, we do not believe that 

an external data source would meet the 

standards set forth in the proposed rule 

when used for the criteria at 

§ 411.362(c)(2)(iv) and (c)(2)(v). 

Therefore, we are not finalizing our 

proposal to permit the use of external 

data sources for the four calculations 

specified in this paragraph and, thus, 

we are limiting the use of external data 

sources to the estimations of the 

percentages of inpatient Medicaid 

admissions at § 411.362(c)(2)(ii) and 

(c)(3)(ii). 

Comment: One commenter suggested 

that physician-owned hospitals seeking 

an expansion exception be permitted to 

use the most current external data 

available, regardless of source. 

Response: We interpret the comment 

as a suggestion that a requesting 

hospital should be able to use multiple 

external data sources to achieve the goal 

of using the ‘‘most current’’ data 

available when requesting an expansion 

exception, provided that each data 

source meets the criteria for an 

‘‘external data source.’’ We disagree 

with the commenter because we believe 

that the use of more than one data 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66991 

source would add unnecessary 

complexity to the Secretary’s review 

and lead to inconsistent results, 

including from year to year where 

multiple-year comparisons are required. 

In order to ensure accurate and 

consistent estimates and determinations 

and to facilitate the Secretary’s review 

of a physician-owned hospital’s request 

for a facility expansion exception, all of 

the data necessary for a physicianowned hospital to estimate or determine 

the percentages of inpatient Medicaid 

admissions referenced in 

§§ 411.362(c)(2)(ii) and (c)(3)(ii) must 

come from a single data source. 

Specifically, the same data source, 

whether HCRIS or an external data 

source, must be used in the numerator 

and denominator when determining or 

estimating the percentages of inpatient 

admissions under Medicaid for the 

requesting hospital and any other 

comparison hospital required under 

§ 411.362(c)(2)(ii) and (c)(3)(ii). We will 

continue to monitor the use of data 

sources in the expansion exception 

process and, if necessary, we will 

provide additional guidance on the CMS 

Web site regarding how an external data 

source should be used for the inpatient 

Medicaid admissions criteria. 

Comment: One commenter identified 

potential shortcomings in the data that 

its State Medicaid agency collects. 

Specifically, this commenter stated that 

its State collects Medicaid inpatient 

admissions data from general acute care 

hospitals but not psychiatric or 

specialty hospitals. (The commenter did 

not define ‘‘specialty hospital.’’) For this 

reason, the commenter claimed that its 

State Medicaid agency data would be 

incomplete if the requesting hospital is 

a psychiatric or specialty hospital or 

must compare itself to a psychiatric or 

specialty hospital. 

Response: Although we understand 

the potential implication of a State 

Medicaid agency not requiring a 

particular type of hospital to report 

admissions (or discharges) data to the 

agency, we note that HCRIS remains 

available under the policies set forth in 

this final rule with comment period. No 

Medicare participating hospital is 

exempt from reporting cost report data 

in HCRIS. Hospitals requesting an 

exception to the Affordable Care Act’s 

facility expansion prohibition may use 

HCRIS data to make the necessary 

estimates and determinations required 

under the statute and our regulations. 

Comment: One commenter 

recommended that physician-owned 

hospitals be permitted to use a Stateprovided listing of Medicaid DSHeligible hospitals as an external data 

source. The commenter suggested that, 

if a hospital has been determined by its 

State Medicaid agency to be eligible for 

Medicaid DSH payments, the 

supporting data that show the Medicaid 

inpatient utilization rate or low-income 

utilization rate status of the hospital 

would be an adequate external data 

source. 

Response: We do not believe that a 

listing of Medicaid DSH-eligible 

hospitals, even if developed by a State 

Medicaid agency, qualifies as an 

external data source under our proposed 

definition. Moreover, we are not 

persuaded to expand the definition of 

‘‘external data source’’ to include such 

a listing because we are unclear how a 

listing, by itself, could provide the data 

necessary to estimate the percentages of 

inpatient Medicaid admissions required 

under the statute and our regulations. 

Comment: One commenter suggested 

that admissions data, which it was able 

to obtain from the State health and 

human services commission, should be 

preferred over discharge data for 

purposes of the inpatient Medicaid 

admissions criteria. 

Response: In the CY 2012 OPPS/ASC 

final rule with comment period (76 FR 

74519), we determined that discharge 

data may be used to estimate the 

percentages of inpatient Medicaid 

admissions. We did not propose to 

revise this policy in the CY 2015 OPPS/ 

ASC proposed rule. However, we are 

clarifying in this CY 2015 OPPS/ASC 

final rule with comment period that 

either admissions data or discharge data 

may be used to either determine or 

estimate the percentages referenced in 

§ 411.362(c)(2)(ii) and (c)(3)(ii), 

provided that the data being used are 

from a permitted data source. We are 

not persuaded to rank or prioritize these 

types of data. The Secretary will 

determine whether an estimate is 

accurate or appropriate given the 

specific facts and circumstances 

underlying a physician-owned 

hospital’s expansion exception request. 

c. Completeness of Supplemental Data 

Sources 

Comment: One commenter expressed 

concern about the utility of an external 

data source, as defined in the proposed 

rule, for purposes of the expansion 

exception process. The commenter 

stated that, in some States, certain types 

of hospitals are not required to report 

any data to the States in which they are 

located. The commenter did not provide 

information regarding whether State 

Medicaid agencies can or do generate on 

their own (that is, without relying on 

reported information from hospitals) 

inpatient admissions data for those 

hospitals not required to report such 

data. The commenter requested that 

CMS clarify whether the State Medicaid 

sources would be considered 

‘‘complete’’ for purposes of the 

expansion exception process under such 

circumstances. 

Response: We recognize the 

possibility that a State Medicaid agency 

may not generate, maintain, or 

otherwise control a data source that 

would contain sufficient data for the 

inpatient Medicaid admissions criteria, 

the only eligibility criteria for which we 

are permitting the use of an external 

data source in this final rule with 

comment period. Thus, the utility of the 

external data sources that we are 

permitting likely will depend on the 

State in which the physician-owned 

hospital is located. 

Whether an external data source is 

considered complete depends on the 

facts and circumstances of the particular 

situation. For example, if a physicianowned hospital is seeking to qualify as 

a high Medicaid facility and the State’s 

data source does not include data on 

one of the comparison hospitals, the 

State’s data would not be considered 

complete for purposes of the process 

because a high Medicaid facility must 

compare itself against each other 

hospital in the county in which it is 

located. 

d. Other Issues Related to Supplemental 

Data Sources 

Comment: One commenter expressed 

concern that contradictory data sources 

could create confusion for requesting 

physician-owned hospitals, those who 

wish to comment on an expansion 

exception request, and the Secretary in 

her review of a request. The commenter 

provided an example where a 

physician-owned hospital chooses to 

utilize available HCRIS data for its 

expansion request, but the available 

data from the State Medicaid agency 

conflict with the HCRIS data, appearing 

to show that the physician-owned 

hospital was not the highest Medicaid 

facility in a more recent fiscal year(s). 

Two commenters recommended that 

CMS consider issuing guidance as to 

how external data sources will be 

characterized or measured in 

comparison to HCRIS data, how CMS 

and the Secretary will evaluate 

comments received from opposing 

hospitals, and what criteria the 

Secretary intends to rely upon to make 

the ultimate determinations. Another 

commenter recommended that CMS not 

prioritize or rank additional data 

sources, given that access to 

supplemental data sources will vary 

based upon the entity requesting an 

expansion exception. 


tkelley on DSK3SPTVN1PROD with RULES2
66992 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

Response: Determinations regarding 

expansion exception requests will be 

made on a case-by-case basis, with 

consideration given to all information 

available to CMS at the time of the 

review. We are not able to provide the 

specific guidance requested by the first 

commenter because the example 

provided is hypothetical in nature and 

not part of an actual request for the 

Secretary’s consideration. As we stated 

in the proposed rule, we believe that 

permissible data sources should, among 

other things, be transparent, be secure, 

enable accurate estimates of the 

percentages of inpatient Medicaid 

admissions, and provide for consistent 

results in order to enable the Secretary 

to make an informed decision regarding 

whether a requesting physician-owned 

hospital satisfies the statutory 

requirements for an exception to the 

facility expansion prohibition. We 

continue to believe in the importance of 

these attributes, and all data sources 

utilized by a requesting hospital and 

any community comments provided 

during the exception expansion process 

will be evaluated with them in mind. 

Because each request will be reviewed 

on a case-by-case basis, we decline to 

issue guidance regarding the relative 

priority of data sources. The Secretary 

will make determinations based on the 

criteria enumerated in the Affordable 

Care Act, as set forth in section 

1877(i)(3) of the Act and our 

regulations. 

Comment: One commenter 

recommended that, in addition to 

considering other data sources, CMS 

consider other factors when reviewing 

an expansion exception request. The 

commenter claimed that Medicaid 

patient days are a better metric than 

Medicaid admissions because Medicaid 

patient days reflect a hospital’s use of 

resources to care for a Medicaid patient. 

The commenter also suggested that CMS 

consider the specialty services, such as 

neonatal intensive care unit (NICU) 

services, that a hospital provides. 

Specifically, the commenter suggested 

that CMS consider the bed occupancy of 

a particular specialty service if that 

service treats a very large Medicaid 

population. 

Response: We do not have the 

authority to revise the expansion 

exception process to incorporate the 

factors that the commenter 

recommended. Section 6001(a) of the 

Affordable Care Act established criteria 

that physician-owned hospitals must 

satisfy in order to qualify for an 

expansion exception request, including 

criteria concerning inpatient Medicaid 

admissions. As we understand the 

comment, the commenter is 

recommending that we substitute (or 

additionally consider) a hospital’s 

inpatient Medicaid days as a criterion 

for granting an exception to the 

prohibition on facility expansion. The 

statute does not provide the Secretary 

discretion to consider inpatient 

Medicaid days in lieu of the inpatient 

Medicaid admissions criteria. Similarly, 

we lack the authority to consider the 

bed occupancy of specific specialty 

services, a factor which, even if 

permissible, would complicate our 

review of an exception request. 

e. Summary of Final Provisions 

Regarding Supplemental Data Sources 

After consideration of the public 

comments we received on the use of 

supplemental data sources, we are not 

finalizing the proposed revisions to 

§ 411.362(c)(2)(ii) and (c)(3)(ii) that 

would permit physician-owned 

hospitals to use data from an internal 

data source other than HCRIS to 

estimate the percentages of inpatient 

Medicaid admissions referenced in 

those sections. Accordingly, we are not 

finalizing our proposal to add a 

definition of the term ‘‘internal data 

source’’ under § 411.351. As finalized, 

§ 411.362(c)(2)(ii) and (c)(3)(ii) reflect 

modifications from our proposal that 

would have permitted physician-owned 

hospitals to use data from an external 

data source to estimate the percentages 

of inpatient Medicaid admissions 

referenced in those sections. 

Specifically, we are revising these 

sections to require the use of HCRIS 

data once they are complete and permit 

the use of data from an external data 

source only until then. We also are 

finalizing the definition of ‘‘external 

data source’’ without modification, 

although we are adding the definition at 

§ 411.362(a), rather than at § 411.351 as 

proposed. Finally, we are not finalizing 

the proposed revisions to those sections 

that would permit physician-owned 

hospitals to use data from a non-HCRIS 

data source to determine State average 

bed capacity, national averaged bed 

capacity, the requesting physicianowned hospital’s average bed 

occupancy rate, or the State average bed 

occupancy rate. We provide the 

following chart of the final provisions to 

assist the reader. 

Regulation Requirement Permissible data 

source(s) Limitations 

§ 411.362(c)(2)(ii) ........ Estimate the requesting hospital’s own annual percentage of inpatient Medicaid admission.HCRIS, external data 

source.

An external data source may be used only 

until such time as the Secretary determines 

that HCRIS contains sufficiently complete 

inpatient Medicaid discharge data. 

§ 411.362(c)(2)(ii) ........ Estimate the average percentage with respect to such admissions for all hospitals 

located in the county in which the requesting hospital is located.

HCRIS, external data 

source.

An external data source may be used only 

until such time as the Secretary determines 

that HCRIS contains sufficiently complete 

inpatient Medicaid discharge data. 

§ 411.362(c)(2)(iv) ....... Determine the average bed capacity in the 

State in which the requesting hospital is located.

HCRIS 

§ 411.362(c)(2)(iv) ....... Determine the national average bed capacity HCRIS 

§ 411.362(c)(2)(v) ........ Determine the requesting hospital’s own average bed occupancy rate.HCRIS 

§ 411.362(c)(2)(v) ........ Determine the average bed occupancy rate 

for the State in which the requesting hospital is located.

HCRIS 

§ 411.362(c)(3)(ii) ........ Estimate the requesting hospital’s annual percentage of total inpatient admissions under 

Medicaid for each of the three most recent 

fiscal years for which data are available.

HCRIS, external data 

source.

An external data source may be used only 

until such time as the Secretary determines 

that HCRIS contains sufficiently complete 

inpatient Medicaid discharge data. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66993 

Regulation Requirement Permissible data 

source(s) Limitations 

§ 411.362(c)(3)(ii) ........ Estimate the annual percentages of total inpatient admissions under Medicaid for 

every other hospital located in the county 

in which the requesting hospital is located 

for each of the three most recent fiscal 

years for which data are available.

HCRIS, external data 

source.

An external data source may be used only 

until such time as the Secretary determines 

that HCRIS contains sufficiently complete 

inpatient Medicaid discharge data. 

2. Fiscal Year Standard 

Section 1877(i)(3)(F) of the Act 

requires that a high Medicaid facility 

use data from each of the 3 most recent 

fiscal years for which data are available. 

In the CY 2012 OPPS/ASC final rule 

with comment period (76 FR 74518), we 

stated that we consider the most recent 

fiscal year for which data are available 

to be the most recent year for which 

HCRIS contains data from at least 6,100 

hospitals. We currently apply this 

standard to expansion exception 

requests for both applicable hospitals 

and high Medicaid facilities. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41055), we proposed to 

revise our standard so that the most 

recent fiscal year for which data are 

available would be the year for which 

the data source(s) used in an expansion 

exception request contain sufficient data 

to perform the comparisons required 

under § 411.362(c)(2)(ii), (c)(2)(iv), 

(c)(2)(v), and (c)(3)(ii). Specifically, we 

proposed that data sources, either alone 

or in combination with other data 

sources, would be considered to contain 

‘‘sufficient data’’ if they contain all data 

from the requesting hospital and each 

hospital to which the requesting 

hospital must compare itself that are 

necessary to perform the estimates 

required in the expansion exception 

process. In addition, with respect to a 

hospital seeking an expansion exception 

as an applicable hospital, we proposed 

that, in order to be considered to 

contain ‘‘sufficient data,’’ the data 

sources, either alone or in combination 

with other data sources, must contain 

the data necessary to determine the 

State and national average bed capacity 

and the average bed occupancy rate in 

the State in which the requesting 

hospital is located for purposes of the 

expansion exception process. 

We also proposed to require that data 

from the same fiscal year be used for the 

applicable hospital eligibility criteria at 

§ 411.362(c)(2)(ii), (c)(2)(iv) and 

(c)(2)(v), even if the hospital uses 

multiple data sources for those criteria. 

We stated our belief that requiring the 

use of data from the same fiscal year 

will ensure consistency and equitability 

in the expansion exception process. We 

sought public comments on our 

proposal to revise the standard that 

determines the most recent fiscal year(s) 

for which data are available, as well as 

other ways to define ‘‘sufficient data’’ 

for purposes of the expansion exception 

process. 

a. Summary of Public Comments and 

Our Responses Regarding the Fiscal 

Year Standard 

Comment: All of the commenters that 

addressed this issue supported CMS’ 

proposal to revise the interpretation of 

the standard ‘‘the most recent fiscal year 

for which data are available.’’ The 

commenters stated generally that 

external data sources often have more 

recent data than the fiscal year for 

which HCRIS contains data from at least 

6,100 hospitals. Two commenters 

recommended deeming a data source 

‘‘sufficient’’ and, thus, acceptable for 

use in an expansion exception request, 

if it contains all of the information 

necessary to complete the calculations 

required to determine eligibility for an 

exception as a high Medicaid facility or 

applicable hospital. Another commenter 

similarly supported the proposal and 

suggested that CMS consider the 

sufficiency of data on a case-by-case 

basis. 

Response: We agree with the 

commenters that recommended that we 

deem a data source ‘‘sufficient’’ and, 

thus, acceptable for use in an expansion 

exception request, if it contains all of 

the information necessary to complete 

the calculations required to determine 

eligibility for an exception as a high 

Medicaid facility or applicable hospital. 

Although determining the sufficiency of 

a data source on a case-by-case basis 

could significantly lengthen the period 

of time required for a thorough review 

of an expansion exception request, we 

believe that evaluating the sufficiency of 

data on a modified case-by-case basis is 

nonetheless appropriate, as explained 

more fully below. 

We are adopting separate standards to 

determine the sufficiency of data 

sources for the Medicaid inpatient 

admissions criteria and the bed capacity 

and occupancy criteria set forth in our 

regulations. For purposes of the 

Medicaid inpatient admissions 

estimates required in § 411.362(c)(2)(ii) 

and (c)(3)(ii), we are adopting a standard 

under which we will consider a data 

source sufficient when it contains data 

from the requesting hospital and every 

hospital located in the same county as 

the requesting hospital. This applies to 

both external data sources and HCRIS. 

The statutory criteria at sections 

1877(i)(3)(E)(ii) and (i)(3)(F)(ii) of the 

Act afford no flexibility to make these 

determinations based on data from 

fewer than all of the hospitals located in 

the same county as the requesting 

hospital. For purposes of the bed 

capacity and occupancy determinations 

required in § 411.362(c)(2)(iv) and 

(c)(2)(v), we will consider HCRIS 

sufficient for a particular fiscal year on 

a State-by-State basis, rather than the 

current ‘‘6,100 hospitals reporting’’ 

standard. Specifically, this final rule 

with comment period requires a 

requesting physician-owned hospital to 

satisfy the bed capacity criterion in 

§ 411.362(c)(2)(iv) during the most 

recent fiscal year for which HCRIS 

contains data from a sufficient number 

of hospitals in the requester’s State to 

determine the State’s average bed 

capacity and a sufficient number of 

hospitals nationally to determine the 

national average bed capacity. In 

addition, this final rule with comment 

period requires a requesting physicianowned hospital to satisfy the bed 

occupancy criterion in § 411.362(c)(2)(v) 

during the most recent fiscal year for 

which HCRIS contains data from a 

sufficient number of hospitals in the 

State to determine the requesting 

hospital’s average bed occupancy rate 

and the State’s average bed occupancy 

rate. ‘‘Sufficient number’’ means that 

enough hospitals have reported data 

such that the determinations in 

§ 411.362(c)(2)(iv) and (c)(2)(v) would 

not materially change after additional 

hospital data are reported. 

We will consult with the CMS Office 

of the Actuary to determine whether 

average bed capacity and bed occupancy 

rates would materially change upon 

additional hospital reporting. CMS 

intends to report on its Web site each 

State’s average bed capacity, the 

national average bed capacity, and each 

State’s average bed occupancy, per fiscal 

year, as they become available. A 


tkelley on DSK3SPTVN1PROD with RULES2
66994 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

requesting physician-owned hospital 

may use only the averages posted on the 

CMS Web site as of the date that the 

hospital submits its expansion 

exception request. 

We provide the following examples to 

illustrate the application of the standard 

applicable to the determinations 

required in § 411.362(c)(2)(iv) and 

(c)(2)(v). Assume that, for FY 2013, the 

requesting hospital is one of 200 

Medicare-participating hospitals located 

in State A. Assume also that, after 

consultation with the CMS Office of the 

Actuary, we determine that State A’s FY 

2013 average bed capacity and bed 

occupancy rates would not materially 

change once HCRIS contains data from 

at least 85 percent of State A hospitals 

(170 hospitals). Finally, assume that 

CMS is able to determine the FY 2013 

national average bed capacity rate once 

5,500 hospitals have reported bed 

capacity data in HCRIS, and that this 

rate would not materially change even 

if the remaining Medicare-participating 

hospitals reported data in HCRIS. Under 

the standard adopted in this final rule 

with comment period, the requesting 

hospital may use FY 2013 HCRIS data 

to make the State bed capacity and 

occupancy determinations required in 

§ 411.362(c)(2)(iv) and (c)(2)(v) once 

HCRIS contains data from at least 170 of 

the Medicare-participating hospitals in 

State A for that fiscal year. The 

requesting hospital may use FY 2013 

HCRIS data to determine the national 

average bed capacity required in 

§ 411.362(c)(2)(iv) once HCRIS contains 

data from at least 5,500 Medicareparticipating hospitals for that fiscal 

year. 

In contrast, assume that, for FY 2013, 

there are only 10 Medicare-participating 

hospitals in State B. Assume also that, 

after consultation with the CMS Office 

of the Actuary, we determine that State 

B’s FY 2013 average bed capacity and 

bed occupancy rates would materially 

change unless HCRIS contains data from 

all of State B’s hospitals. Thus, a 

physician-owned hospital located in 

State B could not use FY 2013 HCRIS 

data until all 10 Medicare-participating 

hospitals in State B reported their bed 

capacity and occupancy data in HCRIS 

for that fiscal year. 

With respect to external data sources, 

because we recognize that State 

Medicaid agencies likely will have 

varying collection time periods that may 

not line up with the Federal fiscal year 

end for which HCRIS data are available 

(for example, calendar year or State 

fiscal year), we are permitting the use of 

any 12-month period for the data, 

provided that all 3 years use the same 

12-month cycle. For example, a State 

Medicaid agency may collect Medicaid 

inpatient admissions data on a calendar 

year cycle. A physician-owned hospital 

requesting an expansion exception as a 

high Medicaid facility may use calendar 

years 2013, 2012 and 2011 if the 

external data source, for each of those 

years, contains all data from the 

requesting hospital and every hospital 

located in the same county as the 

requesting hospital. 

We note that, if the latest year for 

which HCRIS contained data sufficient 

to determine the average bed capacity in 

the State in which the requesting 

hospital is located and the national bed 

capacity was FY 2011, but HCRIS 

contained FY 2012 data sufficient to 

determine the requesting hospital’s own 

average bed occupancy and the average 

bed occupancy rate for the State in 

which the requesting hospital is located, 

the hospital could use FY 2011 data for 

the determinations required in 

§ 411.362(c)(2)(iv) and FY 2012 data for 

the determinations required in 

§ 411.362(c)(2)(v). We recognize that 

using different years from the same 

permissible data source to make the 

estimates or determinations set forth in 

the criteria for applicable hospitals may 

require additional review of an 

expansion exception request by the 

Secretary. However, in light of our 

interpretation that each criterion that a 

physician-owned hospital seeking a 

facility expansion exception must meet 

is analyzed separately, we believe that 

allowing a requesting hospital to use 

data from 12-month periods that may be 

different for each criterion will permit 

use of the most recent data, result in 

more accurate determinations, and best 

effectuate the plain meaning of the 

statutory and regulatory language 

regarding these criteria. 

b. Summary of Final Provisions 

Regarding the Fiscal Year Standard 

After consideration of the public 

comments we received on the standard 

regarding the most recent available data, 

we are finalizing our proposals with 

several modifications. For purposes of 

the estimates required in 

§ 411.362(c)(2)(ii) and (c)(3)(ii), the most 

recent 12-month period for which data 

are available is the most recent 12- 

month period for which the data source 

used contains all data from the 

requesting hospital and each hospital to 

which the requesting hospital must 

compare itself. For purposes of the 

determinations required in 

§ 411.362(c)(2)(iv), we require a 

requesting physician-owned hospital to 

satisfy the criterion during the most 

recent fiscal year for which HCRIS 

contains data from a sufficient number 

of hospitals to determine the relevant 

State’s average bed capacity and the 

national average bed capacity. For 

purposes of the determinations required 

in § 411.362 (c)(2)(v), we require a 

requesting physician-owned hospital to 

satisfy the criterion during the most 

recent fiscal year for which HCRIS 

contains data from a sufficient number 

of hospitals to determine the requesting 

hospital’s average bed occupancy rate 

and the relevant State’s average bed 

occupancy rate. Because we are 

continuing to require the use of HCRIS 

data for the determinations required in 

§ 411.362(c)(2)(iv) and (c)(2)(v), we 

believe that this bifurcated approach is 

necessary. 

Finally, we note that we analyze each 

estimate or determination required 

under § 411.362(c)(2) separately. We 

interpret the statute and our regulations 

to allow the use of different time 

periods for each estimate or 

determination, provided that the data 

source (or time period) used to perform 

the necessary calculation contains: (1) 

for purposes of § 411.362(c)(2)(ii) and 

(c)(3)(ii), all data from the requesting 

hospital and each hospital to which the 

requesting hospital must compare itself; 

(2) for purposes of § 411.362(c)(2)(iv), 

data from a sufficient number of 

hospitals to determine the relevant 

State’s average bed capacity and the 

national average bed capacity; and (3) 

for purposes of § 411.362(c)(2)(v), data 

from a sufficient number of hospitals to 

determine the requesting hospital’s 

average bed occupancy rate and the 

relevant State’s average bed occupancy 

rate, respectively. CMS will continue to 

determine and make available on its 

Web site State bed capacity and 

occupancy rates and the national 

average bed capacity rate. ‘‘Sufficient 

number’’ means that enough hospitals 

have reported data such that the 

determinations in § 411.362(c)(2)(iv) 

and (c)(2)(v) would not materially 

change even if data that may be missing 

from comparison hospitals were 

included. 

3. Community Input and Timing of a 

Complete Request 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41055 through 41056), we 

proposed to require that a physicianowned hospital requesting an expansion 

exception provide actual notification 

directly to hospitals whose data are part 

of the comparisons set forth under 

§ 411.362(c)(2)(ii) and (c)(3)(ii) of the 

regulations. Under proposed 

§ 411.362(c)(5), the notification must be 

in writing, in either electronic or hard 

copy form, and must be provided at the 

same time that the hospital discloses on 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66995 

any public Web site for the hospital that 

it is requesting an exception. We stated 

in the proposed rule that we believe that 

this additional safeguard would ensure 

that comparison hospitals are aware of 

the opportunity to confirm or dispute 

the accuracy or reliability of the data in 

the physician-owned hospital’s request. 

Our existing regulations at 

§ 411.362(c)(5) set forth the process for 

community input and the timing of a 

complete expansion exception request. 

These regulations provide for a 30-day 

comment period following publication 

in the Federal Register of notice of the 

physician-owned hospital’s expansion 

exception request and a 30-day rebuttal 

period for the requesting hospital to 

respond, if it chooses, to any written 

comments that CMS receives from the 

community. Currently, an expansion 

exception request is considered 

complete at the end of the 30-day 

comment period if CMS does not 

receive written comments from the 

community. If CMS receives written 

comments from the community, the 

request is considered complete at the 

end of the 30-day rebuttal period, 

regardless of whether the requesting 

hospital submits a rebuttal statement. 

In the proposed rule, we explained 

that permitting the use of non-HCRIS 

data in an expansion exception request 

would likely require additional time for 

our review of the request, including any 

comments submitted with respect to the 

request. Therefore, we proposed to 

revise our regulations at § 411.362(c)(5) 

to extend the date by which certain 

expansion exception requests will be 

deemed complete. Specifically, we 

proposed to revise § 411.362(c)(5) to 

provide that, where the request, any 

written comments, and any rebuttal 

statement include only HCRIS data, the 

current timeframes would apply. That 

is, such an expansion exception request 

would be deemed complete no later 

than: (1) The end of the 30-day 

comment period if no written comments 

from the community are received; and 

(2) the end of the 30-day rebuttal period 

if written comments from the 

community are received, regardless of 

whether the physician-owned hospital 

submitting the request submits a 

rebuttal statement. We also proposed 

that, where the request, any written 

comments, or a rebuttal statement 

includes data from a supplemental data 

source, an expansion exception request 

would be deemed complete no later 

than: (1) 180 days after the end of the 

30-day comment period if no written 

comments from the community are 

received; and (2) 180 days after the end 

of the 30-day rebuttal period if written 

comments from the community are 

received, regardless of whether the 

physician-owned hospital submitting 

the request submits a rebuttal statement. 

a. Summary of Public Comments and 

Our Responses Regarding Community 

Input and Timing of a Complete Request 

Comment: Some commenters 

encouraged CMS not to finalize the 

actual notification requirement, stating 

that it would impose a burden (both 

procedural and financial) on the 

requesting hospital or could lead to an 

increase in comments regarding each 

request and the complexity of those 

comments. One commenter stated that 

requiring actual notification to other 

hospitals located in the same county as 

the requesting hospital goes beyond the 

intent of the Congress in enacting this 

provision of the Affordable Care Act. 

Response: We believe that an actual 

notification requirement is important to 

ensure that comparison hospitals are 

aware of the opportunity to confirm or 

dispute the accuracy or reliability of the 

data in the physician-owned hospital’s 

request, and that any burden on the 

requesting hospital is outweighed by the 

facilitation of robust community input 

that can help inform the Secretary’s 

review of an expansion exception 

request. We believe that thorough 

vetting of all relevant information, both 

from the requesting hospital and the 

community in which the hospital is 

located, in fact, was the intent of the 

Congress. We disagree with the 

commenter that stated that this 

requirement goes beyond the 

congressional intent or our statutory 

authority. 

Comment: One commenter opposed 

CMS’ proposal to deem an expansion 

exception request that relies on a nonHCRIS data source complete no later 

than 180 days after the end of the 30- 

day comment period if no written 

comments from the community are 

received, and 180 days after the end of 

the 30-day rebuttal period if written 

comments from the community are 

received, regardless of whether the 

physician-owned hospital submitting 

the request submits a rebuttal statement. 

The commenter stated that the 

additional time beyond the 30-day 

period provided for in our existing 

regulations is particularly unnecessary 

if the requesting hospital uses inpatient 

admissions data from a State Medicaid 

agency that shows the percentage of 

Medicaid admissions for all of the 

hospitals operating in the same county 

as the requesting hospital. 

Response: The purpose of our 

proposed policy extending the 

timeframe for deeming complete an 

expansion exception request where the 

request itself, any community input, or 

any rebuttal statement includes nonHCRIS data is to provide CMS with 

sufficient time to address any potential 

conflicts between data presented by the 

requesting hospital and data or other 

information presented by a commenter 

or in the possession of CMS. As we 

noted in the CY 2012 OPPS/ASC final 

rule with comment period, the 

limitations on data sources that may be 

used in a physician-owned hospital’s 

expansion exception request do not 

apply to members of the community or 

to CMS (76 FR 74522). Therefore, it is 

possible (if not likely) that, when 

reviewing an expansion exception 

request, CMS would need to verify the 

data (and other information, if any) 

provided by the requesting hospital and 

any commenters, as well as consider the 

data in light of the information 

otherwise available to CMS. This review 

could involve the use of internal experts 

or contractors, which will require 

additional time. We note that the 

timeframe for deeming an expansion 

exception request complete will be ‘‘no 

later than’’ 180 days after the end of the 

30-day comment period (if no written 

comments from the community are 

received) and 180 days after the end of 

the 30-day rebuttal period (if written 

comments from the community are 

received) does not preclude an earlier 

timeframe where the information 

submitted by the requesting hospital 

does not conflict with any community 

input or information otherwise available 

to CMS. 

b. Final Provisions Regarding 

Community Input and Timing of a 

Complete Request 

After consideration of the public 

comments we received on community 

input and timing of a complete 

response, we are finalizing our proposal, 

without modification, recognizing that, 

under this final rule with comment 

period, the only permissible 

supplemental data sources are external 

data sources, as defined in this final rule 

with comment period at § 411.362. 

D. Additional Considerations 

We recognize the importance of an 

accurate and consistent expansion 

exception process. We stated in the CY 

2015 OPPS/ASC proposed rule (79 FR 

41056) that we are aware that data 

sources have unique characteristics due 

to their inputs, collection methods, 

compilation, and other factors, and that 

we would take this into consideration if 

we finalized our proposal to permit the 

use of supplemental data sources. In an 

effort to implement an accurate and 

consistent expansion exception process, 


tkelley on DSK3SPTVN1PROD with RULES2
66996 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

we solicited comments on the utility, 

appropriateness, and limitations of our 

proposal to permit the use of 

supplemental data sources. Specifically, 

we sought comments that: 

• Address whether permitting the use 

of supplemental internal or external 

data sources would significantly affect 

the outcomes for any of the estimates or 

determinations required in our 

regulations. 

• Address whether permitting the use 

of supplemental data sources would 

materially affect a physician-owned 

hospital’s ability to request an exception 

or CMS’ determination on an exception 

request. 

• Describe the length of time that 

would be necessary to obtain or generate 

the required data from a specific data 

source. 

• Address whether and when the data 

will be available and accessible per 

fiscal year. 

• Address whether the data will be 

available and accessible in a format that 

enables the requesting hospital to 

perform the necessary comparisons. 

• Describe how supplemental data 

sources could or should be prioritized, 

including, but not limited to, rankings 

related to accuracy or reliability. 

• Describe how data from a particular 

data source could be used in the 

expansion exception process. We 

encouraged commenters to specify 

whether a particular data source already 

maintains the percentages or rates 

required, or whether calculations will 

be necessary to generate the required 

percentages or rates. If calculations will 

be necessary, we requested that 

commenters describe the calculations. 

• Describe the cost to industry 

stakeholders, State governments, and 

the Federal government for obtaining or 

generating data from any potential data 

sources. We consider cost to include 

both resources (for example, human 

capital and information technology) and 

actual financial burden (for example, 

fees to use or purchase the data). 

We also solicited comments on 

whether any additional burdens would 

affect the quality of care for 

beneficiaries as a result of additional 

costs borne by a requesting hospital. 

We note that our inquiries were 

limited to solicitations of comments 

intended to inform our decision making 

regarding our actual proposals and, 

therefore, do not require a response in 

this final rule with comment period. 

However, we have chosen to summarize 

and respond to the comments that 

addressed ranking or prioritizing data 

sources and types of data because we 

believe discussion of these issues helps 

clarify how our revisions to the 

expansion exception process that we are 

finalizing will be implemented. 

Comment: A few commenters who 

addressed the additional considerations 

set forth in the proposed rule discussed 

ranking or prioritizing permitted data 

sources. One commenter recommended 

that CMS not prioritize or rank 

additional data sources, given that 

access to supplemental data sources will 

vary based on the hospital seeking the 

exception. Another commenter 

suggested that CMS give the highest 

priority to admissions data from State 

Medicaid agencies for the inpatient 

Medicaid admissions criteria. The 

commenter stated that the State in 

which the commenter is located 

provides an unbiased, reliable, single 

source of inpatient Medicaid admissions 

percentages that would eliminate the 

need for independent calculations by 

the requesting hospital and individuals 

and entities in the community in which 

the hospital is located. The commenter 

further suggested that if actual 

admissions data are unavailable through 

the State Medicaid agency, CMS permit 

the use of other data, including 

estimates of Medicaid admissions based 

on discharges using supplemental data. 

Response: We share the concerns of 

the commenters that noted that the 

external data sources available to 

requesting hospitals will vary from State 

to State. We also believe that the quality 

and completeness of the external data 

sources available to requesting hospitals 

will vary in the same manner. We 

further note the complexity involved in 

making a generally applicable policy as 

to how to rank or prioritize various data 

sources. Therefore, we decline to 

provide guidance regarding the rank or 

prioritization of potentially available 

data sources for use in the expansion 

exception process. Our goal remains to 

ensure a fair, accurate, and consistent 

process to implement section 6001 of 

the Affordable Care Act. As discussed 

elsewhere in this preamble, each 

expansion exception request will be 

considered on a case-by-case basis. The 

Secretary will consider only reliable, 

credible information to determine 

whether a requesting physician-owned 

hospital qualifies for an exception to the 

facility expansion prohibition. 

E. Summary of the Final Provisions 

Regarding the Expansion Exception 

Process Under the Rural Provider and 

Hospital Ownership Exceptions to the 

Physician Self-Referral Law 

In this final rule with comment 

period, we are finalizing the following 

policies related to the expansion 

exception process for physician-owned 

hospitals: 

• We are permitting the use of 

external data sources to estimate a 

physician-owned hospital’s annual 

percentage of inpatient admissions 

under Medicaid (§ 411.362(c)(2)(ii) and 

(c)(3)(ii)), the average percentage of 

inpatient admissions under Medicaid of 

all hospitals in the county in which a 

physician-owned hospital requesting an 

expansion exception as an ‘‘applicable 

hospital’’ is located (§ 411.362(c)(2)(ii)), 

and the annual percentage of inpatient 

admissions under Medicaid of any other 

hospital in the county in which a 

physician-owned hospital requesting an 

expansion exception as a ‘‘high 

Medicaid facility’’ is located 

(§ 411.362(c)(3)(ii)). However, on or after 

such date that the Secretary determines 

that HCRIS contains sufficiently 

complete inpatient Medicaid discharge 

data, a hospital may use only filed 

Medicare hospital cost report data to 

estimate the percentages of inpatient 

Medicaid admissions referenced in 

§ 411.362(c)(2)(ii) and (c)(3)(ii). 

• We are defining ‘‘external data 

source’’ at § 411.362 to mean a data 

source that (1) is generated, maintained, 

or under the control of a State Medicaid 

agency; (2) is reliable and transparent; 

(3) maintains data that, for purposes of 

the process described in § 411.362(c), 

are readily available and accessible to 

the requesting hospital, comparison 

hospitals, and CMS; and (4) maintains 

or generates data that, for purposes of 

the process described in § 411.362(c), 

are accurate, complete, and objectively 

verifiable. We are not finalizing our 

proposed definition of ‘‘internal data 

source.’’ 

• For purposes of § 411.362(c)(2)(ii) 

and (c)(3)(ii), we are interpreting the 

most recent 12-month period for which 

data are available as the most recent 12- 

month period for which the data source 

used contains all data from the 

requesting hospital and each hospital to 

which the requesting hospital must 

compare itself. 

• For purposes of the determinations 

required in § 411.362(c)(2)(iv), we 

require a requesting physician-owned 

hospital to satisfy the criterion during 

the most recent fiscal year for which 

HCRIS contains data from a sufficient 

number of hospitals to determine a 

State’s average bed capacity and the 

national average bed capacity. For 

purposes of the determinations required 

in § 411.362 (c)(2)(v), we require a 

requesting physician-owned hospital to 

satisfy the criterion during the most 

recent fiscal year for which HCRIS 

contains data from a sufficient number 

of hospitals to determine the requesting 

hospital’s average bed occupancy rate 

and the relevant State’s average bed 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66997 

occupancy rate. ‘‘Sufficient number of 

hospitals’’ means in this final rule with 

comment period that enough hospitals 

have reported data such that the 

determinations in § 411.362(c)(2)(iv) 

and (c)(2)(v) would not materially 

change even if data that may be missing 

from comparison hospitals were 

included. 

• Where the request, any written 

comments, and any rebuttal statement 

include only HCRIS data, we will 

consider a request for an expansion 

exception complete no later than: (1) 

The end of the 30-day comment period 

if no written comments from the 

community are received; and (2) the end 

of the 30-day rebuttal period if written 

comments from the community are 

received, regardless of whether the 

physician-owned hospital submitting 

the request submits a rebuttal statement 

(§ 411.362(c)(5)(i)). 

• Where the request, any written 

comments, or any rebuttal statement 

include data from an external data 

source (as defined in this final rule with 

comment period), we will consider a 

request for an expansion exception 

complete no later than: (1) 180 days 

after the end of the 30-day comment 

period if no written comments from the 

community are received; and (2) 180 

days after the end of the 30-day rebuttal 

period if written comments from the 

community are received, regardless of 

whether the physician-owned hospital 

submitting the request submits a 

rebuttal statement (§ 411.362(c)(5)(ii)). 

We are not finalizing our proposal to 

revise the bed capacity and bed 

occupancy criteria at § 411.362(c)(2)(iv) 

and (c)(2)(v) to permit the use of nonHCRIS data sources. However, we are 

revising §§ 411.362(c)(2)(iv) and (c)(2)(v) 

to clarify the fiscal year periods that 

requesting hospitals must use to make 

the determinations required in those 

sections. 

XVI. Revision of the Requirements for 

Physician Certification of Hospital 

Inpatient Services Other Than 

Psychiatric Inpatient Services 

In the FY 2014 IPPS/LTCH PPS 

proposed rule (78 FR 27644 through 

27650), we discussed the statutory 

requirement for certification of hospital 

inpatient services for payment under 

Medicare Part A. The certification 

requirement for inpatient services other 

than psychiatric inpatient services is 

found in section 1814(a)(3) of the Act, 

which provides that Medicare Part A 

payment will only be made for such 

services ‘‘which are furnished over a 

period of time, [if] a physician certifies 

that such services are required to be 

given on an inpatient basis.’’ 

As discussed in the CY 2015 OPPS/ 

ASC proposed rule (79 FR 41056 

through 41058), in commenting on our 

FY 2014 proposal mentioned above, 

some commenters argued that the 

statutory reference to services furnished 

‘‘over a period of time’’ and the thenexisting regulation’s lack of any specific 

deadline for physician certifications in 

nonoutlier cases indicated that no 

certification was required for short-stay 

cases. In support of their argument, the 

commenters cited the legislative history 

of section 1814(a)(3) of the Act, which 

these commenters interpreted as 

indicating that the certification 

requirements should apply only to 

certain long-term stays. 

As we indicated in our response to 

these public comments in the FY 2014 

IPPS/LTCH PPS final rule (78 FR 

50939), we do not agree with the 

assertion that the only possible 

interpretation of the statute is that the 

requirement for physician certification 

only applies to long-stay cases. The 

statute does not define ‘‘over a period of 

time,’’ and further provides that ‘‘such 

certification shall be furnished only in 

such cases, and with such frequency, 

and accompanied by such supporting 

material . . . as may be provided by 

regulations.’’ By this language, Congress 

explicitly delegated authority to the 

agency to elucidate this provision of the 

statute by regulation. 

In our previous regulations, we 

interpreted the statute’s requirement of 

a physician certification for inpatient 

hospital services furnished ‘‘over a 

period of time’’ to apply to all inpatient 

admissions. While this is not the only 

possible interpretation of the statute, we 

believe that it is a permissible 

interpretation. 

We continue to believe that an order 

from a physician or other qualified 

practitioner in order to trigger an 

inpatient hospital admission as 

specified in 42 CFR 412.3 is necessary 

for all inpatient admissions. As 

described more fully in the FY 2014 

IPPS/LTCH PPS final rule (78 FR 50938 

through 50954), the requirement for a 

physician order for a hospital inpatient 

admission has long been clear in the 

Medicare hospital conditions of 

participation (CoPs), and we 

promulgated § 412.3 to make more 

explicit that admission pursuant to this 

order is the means whereby a 

beneficiary becomes a hospital inpatient 

and, therefore, is required for payment 

of hospital inpatient services under 

Medicare Part A. A beneficiary becomes 

a hospital inpatient when admitted as 

such after a physician (or other qualified 

practitioner as provided in the 

regulations) orders inpatient admission 

in accordance with the CoPs, and 

Medicare pays under Part A for such an 

admission if the order is documented in 

the medical record. The order must be 

supported by objective medical 

information for purposes of the Part A 

payment determinations. Thus, the 

physician order must be present in the 

medical record and be supported by the 

physician admission and progress notes 

in order for the hospital to be paid for 

hospital inpatient services. 

As further noted in the FY 2014 IPPS/ 

LTCH PPS final rule (78 FR 50938 

through 50954), we believe the 

additional certification requirements 

now specified under § 424.13(a)(2), 

(a)(3), and (a)(4) (that is, the reason for 

hospitalization, the estimated time the 

patient will need to remain in the 

hospital, and the plan of posthospital 

care, if applicable) generally can be 

satisfied by elements routinely found in 

a patient’s medical record, such as 

progress notes. 

However, as we look to achieve our 

policy goals with the minimum 

administrative requirements necessary, 

and after considering previous public 

comments and our experience with our 

existing regulations, we believe that, in 

the majority of cases, the additional 

benefits (for example, as a program 

safeguard) of formally requiring a 

physician certification may not 

outweigh the associated administrative 

requirements placed on hospitals. 

Because we continue to believe that an 

inpatient admission order is necessary 

for all inpatient admissions, we 

proposed in the CY 2015 OPPS/ASC 

proposed rule (79 FR 41057) to require 

such orders as a condition of payment 

based upon our general rulemaking 

authority under section 1871 of the Act 

rather than as an element of the 

physician certification under section 

1814(a)(3) of the Act. Section 1871 of 

the Act authorizes the Secretary to 

‘‘prescribe such regulations as may be 

necessary to carry out the 

administration of the insurance 

programs under [Title XVIII].’’ A clear 

regulatory definition of when and how 

a beneficiary becomes an inpatient is 

necessary to carry out the 

administration of Medicare Part A. 

Section 1861(b) of the Act defines 

‘‘inpatient hospital services’’ as certain 

items and services furnished to ‘‘an 

inpatient of a hospital,’’ but does not 

define ‘‘an inpatient of a hospital.’’ 

Accordingly, § 412.3 provides the 

necessary definition for purposes of 

Medicare Part A payment by clarifying 

when ‘‘an individual is considered an 

inpatient of a hospital, including a 

critical access hospital.’’ We proposed 

to remove paragraph (c) from § 412.3. As 


tkelley on DSK3SPTVN1PROD with RULES2
66998 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

we proposed to rely on a different 

statutory authority for such regulation, 

we proposed that an admission order 

would no longer be a required 

component of physician certification of 

medical necessity. 

As to the physician certification 

requirement, we maintain that our prior 

longstanding policy was based upon a 

permissible interpretation of section 

1814(a)(3) of the Act pursuant to that 

provision’s express delegation of 

authority to the agency to determine the 

circumstances under which such 

certification should be required. 

Nonetheless, after consideration of 

public feedback, our experience under 

the then-existing regulations, and our 

policy goals, in the CY 2015 OPPS/ASC 

proposed rule (79 FR 41057), we 

proposed to change our interpretation of 

section 1814(a)(3) of the Act to require 

a physician certification only for longstay cases and outlier cases. 

As noted above, we believe that, in 

most cases, the admission order, 

medical record, and progress notes will 

contain sufficient information to 

support the medical necessity of an 

inpatient admission without a separate 

requirement of an additional, formal, 

physician certification. However, we 

believe that evidence of additional 

review and documentation by a treating 

physician beyond the admission order is 

necessary to substantiate the continued 

medical necessity of long or costly 

inpatient stays. While granting the 

Secretary broad discretion to determine 

the circumstances under which a 

physician certification should be 

required, the statute specifies that the 

certification by a physician with respect 

to inpatient hospital services (other than 

inpatient psychiatric hospital services) 

‘‘shall be furnished no later than the 

20th day’’ of the stay. Because the 

statute specifically requires that 

certification must occur no later than 

the 20th day, we believe that, at a 

minimum, Congress intended that 

physicians should conduct a more 

thorough review of such cases to help 

ensure that all requirements of medical 

necessity continue to be met. We also 

note the regulations at § 424.13(f)(2) 

specify our longstanding requirement 

that the physician certification for cost 

outlier cases occur no later than 20 days 

into the hospital stay, and we did not 

propose to change the requirements for 

these cases. Therefore, we believe that, 

for nonoutlier cases, 20 days is also an 

appropriate minimum threshold for the 

physician certification, and we 

proposed to define long-stay cases as 

cases with stays of 20 days or longer. 

Specifically, in the CY 2015 OPPS/

ASC proposed rule (79 FR 41057), we 

proposed to revise paragraph (a) of 

§ 424.13 to specify that Medicare Part A 

pays for inpatient hospital services 

(other than inpatient psychiatric facility 

services) for cases that are 20 inpatient 

days or more, or are outlier cases under 

subpart F of Part 412 of this chapter, 

only if a physician certifies or recertifies 

the following: 

(1) The reasons for either— 

(i) Continued hospitalization of the 

patient for medical treatment or 

medically required diagnostic study; or 

(We note that, in setting out the 

corresponding regulation text for this 

provision in the proposed rule (79 FR 

41083), we inadvertently omitted the 

word ‘‘Continued’’ at the beginning of 

this paragraph (a)(1)(i). We are making 

a conforming correction in this final 

rule with comment period. We do not 

believe that this conforming correction 

results in any substantive change in 

policy.) 

(ii) Special or unusual services for 

cost outlier cases (under the prospective 

payment system set forth in subpart F of 

Part 412 of this chapter). 

(2) The estimated time the patient will 

need to remain in the hospital. 

(3) The plans for posthospital care, if 

appropriate. 

We also proposed to revise paragraph 

(b) of § 424.13 to specify that 

certifications for long-stay cases must be 

furnished no later than 20 days into the 

hospital stay. 

Because the care furnished in 

inpatient psychiatric facilities is often 

purely custodial and therefore not 

covered under Medicare and because 

the primary purpose of the certification 

of these cases is to help ensure that 

Medicare pays only for services of the 

type appropriate for Medicare coverage, 

we did not propose changes to the 

certification requirements for inpatient 

psychiatric hospital services. 

As discussed more fully in the FY 

2014 IPPS/LTCH PPS final rule (78 FR 

50942 through 50943), there also are 

inherent differences in the operation of 

and beneficiary admission to IRFs. 

Therefore, we also did not propose any 

changes to the admission requirements 

for IRFs. 

We invited public comment on these 

proposals. Summaries of the public 

comments we received and our 

responses to those public comments are 

set forth below. 

Comment: Most commenters were 

supportive of the proposal to eliminate 

physician certification requirements for 

the majority of inpatient cases (other 

than long stay and cost outlier cases). 

Many commenters stated that the 

proposal would improve efficiency and 

would reduce the overall administrative 

burden on hospitals. Several 

commenters stated that the proposal 

would resolve ongoing issues within 

hospitals wherein certain practitioners 

routinely and appropriately admit 

patients, but are unable to complete the 

certification requirement because they 

do not meet the statutory definition of 

a physician. The commenters indicated 

that, because these cases rarely exceed 

20 days, and do not typically exceed 

outlier thresholds, these practitioners 

would not be required to seek approval 

from a physician to complete a 

physician certification statement. 

Response: We thank the commenters 

for their support of our proposal to 

apply certification requirements at 

§ 424.13 only to long-stay and outlier 

cases. We agree that our proposal would 

reduce administrative burden in 

general, and in particular would reduce 

the administrative burden associated 

with the majority of cases involving an 

admission order issued by a practitioner 

qualified to issue the order but who did 

not meet the statutory definition of a 

physician and therefore could not 

certify the case. 

Comment: Several commenters, while 

appreciative of the proposal to limit 

physician certification requirements, 

continued to disagree that CMS has the 

statutory authority to require signed 

admission orders for all inpatient cases. 

The commenters contended that CMS 

cannot use its general rulemaking 

authority under section 1871 of the Act 

to require a signed physician order for 

every inpatient admission. These 

commenters argued that that the 

continued requirement for admission 

orders is essentially the same as the 

certification requirement and stated that 

section 1814(a)(2) of the Act is explicit 

in requiring physician certification only 

for services ‘‘furnished over a period of 

time’’ and not for all services. 

Response: We disagree with these 

commenters. While the inpatient 

admission order was a required 

component of the physician certification 

under our previous policy, the order 

and the physician certification do not 

serve identical policy goals under our 

proposal, which we are now finalizing. 

For all cases, a properly authorized and 

documented admission order is 

necessary because the admission order 

is integral to a clear regulatory 

definition of when and how a 

beneficiary becomes an inpatient. Such 

a definition is necessary to carry out the 

administration of Medicare Part A 

because, as noted previously, section 

1861(b) of the Act defines ‘‘inpatient 

hospital services’’ as certain items and 

services furnished to ‘‘an inpatient of a 

hospital,’’ but does not define ‘‘an 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 66999 

inpatient of a hospital.’’ Accordingly, 

for all cases, our admission order 

requirements at § 412.3 provide the 

necessary definition for purposes of 

Medicare Part A payment by clarifying 

when ‘‘an individual is considered an 

inpatient of a hospital, including a 

critical access hospital.’’ The 

development of admission order 

requirements is a necessary and 

appropriate use of our general 

rulemaking authority under section 

1871 of the Act. 

In most cases, the admission order, 

along with the medical record and 

progress notes, may also provide 

sufficient information to support the 

medical necessity of an inpatient 

admission without the separate 

requirement of an additional, formal, 

physician certification. However, for 

long or very costly inpatient stays, we 

believe that additional review and 

documentation by a treating physician 

are necessary to help substantiate the 

continued medical necessity of such 

stays, and a physician certification 

provides evidence of such additional 

review. The fact that we have 

determined, in the majority of cases, 

that the additional benefits (for 

example, as a program safeguard) of 

formally requiring a physician 

certification do not outweigh the 

associated administrative requirements 

placed on hospitals in no way changes 

the necessity and appropriateness of 

requiring a signed admission order for 

all cases. 

Comment: Some commenters 

requested that CMS require the 

admission order to be signed by the time 

of billing, not before discharge, as is 

permitted for CAH certification 

requirements. The commenters cited the 

administrative burden and logistical 

challenges involved with CMS’ 

requirements. 

Response: We believe that, in most 

cases, matters relating to the 

determination of patient status should 

be resolved before discharge, due to the 

consequences that flow from such a 

determination. For example, whether 

services are billed under Medicare Part 

A or Part B can have a significant 

impact on a beneficiary’s financial 

liability. Therefore, we do not believe it 

is appropriate to change our existing 

policy which requires that inpatient 

orders be signed prior to discharge by a 

practitioner familiar with the case and 

authorized by the hospital to admit 

inpatients. 

In the FY 2015 IPPS/LTCH PPS final 

rule (79 FR 50163 through 50165), we 

did finalize a provision to allow CAHs 

to complete certification requirements 

(including completion of the admission 

order) no later than 1 day before the 

date on which the claim for payment is 

submitted as they had been allowed to 

do prior to FY 2014. However, this 

policy exists in part to provide CAHs 

with greater flexibility in meeting 

certification requirements unique to 

CAHs. For example, CAHs face a 

statutory requirement that a physician 

certify that a patient will be expected to 

be transferred or discharged within 96 

hours of admission. We do not believe 

it would be appropriate to apply this 

historical CAH policy more broadly to 

hospitals that do not face the same 

circumstances as CAHs. 

Comment: Several commenters 

requested that CMS provide additional 

guidance regarding the required content 

and format of the physician certification 

statement. Some commenters asked that 

CMS confirm that the policy requiring 

physician certification only for long-stay 

and outlier cases did not otherwise alter 

the inpatient hospital admission 

guidelines discussed in the FY 2014 

IPPS/LTCH PPS final rule (78 FR 50944 

through 50953). Others commenters 

requested general guidance and 

clarification regarding CMS policies in 

this area. 

Response: As discussed previously in 

the section, the physician certification 

requirements at § 424.13 generally may 

be satisfied by elements routinely found 

in a patient’s medical record, such as 

progress notes. CMS does not require 

that a physician certification comply 

with a specific standard or format—only 

that it ensures that the conditions at 

§ 424.13(a) were met. If the medical 

record adequately describes the reasons 

for continued hospitalization, the 

estimated time the patient is expected to 

require inpatient care, and discharge 

planning (where appropriate), and the 

medical record is signed by a physician 

involved with and responsible for the 

patient’s care, this would satisfy 

certification requirements. 

Our proposed policy change regarding 

the physician certification requirements 

does not change unrelated requirements 

implemented in the FY 2014 IPPS/

LTCH PPS final rule such as the 

requirements related to the 2-midnight 

policy. It also does not alter or remove 

any requirements for hospitals regarding 

admission orders. 

We are committed to continuing to 

work closely with and provide outreach 

to stakeholders regarding inpatient 

admission policies and certification 

requirements. 

Comment: Some commenters 

requested that CMS provide guidance 

on how MACs will review cases in the 

interim time period between publication 

of this final rule and the effective date 

of the regulation changes (January 1, 

2015). 

Response: Since the effective date of 

the FY 2014 IPPS/LTCH PPS final rule, 

we have worked closely with the MACs 

to ensure that the 2-midnight policy and 

related certification requirements are 

applied appropriately. As discussed 

previously, we believe that physician 

certification requirements for a high 

percentage of inpatient stays can be 

readily satisfied by elements routinely 

found in the medical record. Hospitals 

need to comply with all existing 

certification requirements until the 

finalized policy changes in this final 

rule with comment period go into effect 

on January 1, 2015. We are committed 

to continue to work with the MACs to 

prioritize medical review cases. 

In summary, after consideration of the 

public comments we received, we 

continue to believe our certification 

proposal satisfies our policy goals while 

reducing the administrative burden on 

hospitals. Therefore, we are finalizing 

the policy as proposed in the CY 2015 

OPPS/ASC proposed rule, which limits 

the requirement for physician 

certification to long-stay (20 days or 

longer) and outlier cases. We are 

finalizing our proposed revisions of 

paragraph (a) of § 424.13, with one 

minor modification. We are adding the 

word ‘‘Continued’’ at the beginning of 

paragraph (a)(1)(i), which we 

inadvertently omitted when we set out 

the regulation text in the proposed rule. 

We note that the preamble discussion in 

the proposed rule included this word 

(79 FR 41057), as discussed earlier. We 

also are finalizing our proposed revision 

of paragraph (b) of § 424.13, without 

modification, to specify that 

certifications for long-stay cases must be 

furnished no later than 20 days into the 

hospital stay. 

XVII. CMS-Identified Overpayments 

Associated With Payment Data 

Submitted by Medicare Advantage 

(MA) Organizations and Medicare Part 

D Sponsors (§§ 422.330 and 423.352) 

A. Background 

Medicare Part C and Part D payments 

to Medicare Advantage (MA) 

organizations and Part D sponsors are 

determined, in part, using data 

submitted to CMS by the MA 

organizations and Part D sponsors. 

These ‘‘payment data’’ include 

diagnosis data that are used by CMS to 

risk adjust Part C and Part D payments, 

Prescription Drug Event (PDE) data that 

are used by CMS to cost reconcile 

various Part D subsidies, as well as 

other types of data discussed below. MA 

organizations and Part D sponsors are 


tkelley on DSK3SPTVN1PROD with RULES2
67000 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

obliged to submit accurate, complete, 

and truthful payment-related data, as 

described in regulations at 42 CFR 

422.504(l) and 423.505(k). Through our 

review and oversight of payment data 

submitted by MA organizations and Part 

D sponsors, CMS identifies situations 

where MA organizations and/or Part D 

sponsors have submitted payment data 

to CMS that should not have been 

submitted either because the data 

submitted are inaccurate or because the 

data are inconsistent with Part C and 

Part D requirements. (Throughout this 

section, we refer to these data 

submissions as ‘‘erroneous payment 

data.’’) If an MA organization or Part D 

sponsor submits erroneous payment 

data to CMS, the MA organization or 

Part D sponsor can address errors by 

submitting corrected data to CMS 

payment systems. Our approach thus far 

to these types of situations has been to 

request that MA organizations and Part 

D sponsors make these data corrections 

voluntarily. 

However, in instances where the MA 

organization or Part D sponsor fails to 

make the requested data correction, the 

payment amount for the plan, calculated 

using that erroneous payment data, may 

also be incorrect. As a result, we have 

concluded that CMS needs to establish 

a formal process that allows us to 

recoup overpayments that result from 

the submission of erroneous payment 

data by an MA organization or Part D 

sponsor in the limited circumstances 

when the organization fails to correct 

those data. We emphasize that, in our 

experience, the circumstance where an 

MA organization or Part D sponsor fails 

to correct identified erroneous payment 

data arises very infrequently. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41058 through 41063), we 

proposed a new process that is not 

intended to replace established recovery 

and appeals processes such as the Risk 

Adjustment Data Validation (RADV) 

audit dispute and appeal process 

described at 42 CFR 422.311 or the Part 

D payment appeals process described at 

42 CFR 423.350. We stated that this 

proposed process would not constitute 

a change to the existing Part C or Part 

D payment methodologies. Rather, we 

merely proposed to adopt a procedural 

mechanism for recouping overpayments 

that CMS will use in those limited 

circumstances when an MA 

organization or Part D sponsor fails to 

correct erroneous payment data after 

notice and request from CMS to do so. 

The established recovery and appeals 

processes do not support this scenario. 

Section 1856(b) of the Act establishes 

authority for CMS to add standards for 

Part C and MA organizations. Section 

1853 of the Act for Part C and sections 

1860D–14 and 1860D–15 of the Act for 

Part D establish the methodology for 

computing payments to MA 

organizations and Part D sponsors, 

respectively. We believe that inherent in 

the methodology under which we 

calculate payments to MA organizations 

and Part D sponsors is the authority for 

CMS to establish a process for 

identifying and recouping overpayments 

in order to ensure that payments are 

made consistent with the payment 

framework established in the statute. 

Therefore, we proposed to implement 

such a process through changes to our 

regulations. 

1. Medicare Part C Payment Background 

For Medicare Part C, CMS makes 

prospective monthly payments to MA 

organizations for each enrollee in the 

plan. CMS’ monthly Part C payment for 

each MA plan enrollee consists of two 

components: the capitated payment for 

each enrollee (calculated as the planspecific county payment rate multiplied 

by the enrollee risk score), plus the plan 

rebate amount (if any). The plan-specific 

county rates and the plan rebate amount 

are based on the bid approved by CMS 

and are set in advance for a payment 

year. In addition, payment rates may be 

adjusted for enrollees with end-stage 

renal disease, enrollees in Medical 

Savings Account MA plans, and 

enrollees in religious fraternal benefit 

society MA plans under § 422.304. 

Prospective payments are made during 

the year, subject to a reconciliation after 

the end of the year. 

CMS adjusts the plan-specific county 

payment rate for each enrollee based on 

an enrollee risk score. Enrollee risk 

scores are determined using the CMSHierarchical Condition Category (CMS– 

HCC) risk adjustment model in effect for 

the payment year, plan-submitted 

diagnoses for the data collection year, 

and other data that CMS determines to 

be appropriate to perform risk 

adjustment. The CMS–HCC model is 

prospective in that it uses diagnosis 

information from a base year (data 

collection year) to adjust payments for 

the next year (payment year or coverage 

year). For example, the risk adjustment 

model uses diagnosis data from 2013 to 

adjust payments to MA organizations for 

coverage in 2014. 

To determine the appropriate risk 

score for each beneficiary, CMS uses 

demographic characteristics of 

beneficiaries and diagnostic information 

gathered in the administration of 

Original Medicare and submitted by MA 

organizations. MA organizations are 

currently required to submit an 

occurrence of an HCC model-relevant 

diagnosis only once during the data 

collection year, even though a 

beneficiary may have several service 

dates in a data collection year associated 

with a given diagnosis. The minimum 

data elements currently collected from 

MA organizations under § 422.310 are: 

Health Insurance Claim (HIC) Number; 

provider type (hospital inpatient, 

hospital outpatient, or physician); 

service from date; service through date; 

and ICD–9 codes at the level of 

specificity used by the HCC model. In 

addition, effective January 2012, CMS 

collects more detailed Part C utilization 

and cost data from MA organizations 

(often referred to as encounter data), 

that will be used in setting risk scores. 

CMS allows 13 months after the end 

of a data collection year for MA 

organizations to update the risk 

adjustment data submitted under 

§ 422.310; this period provides MA 

organizations an opportunity to identify 

and correct errors in data they have 

submitted for that data collection year 

(that is, by deleting diagnoses from 

CMS’ systems) and to identify and 

submit additional diagnoses not 

submitted during the data collection 

year. During this 13-month period, CMS 

uses the diagnosis data that MA 

organizations have submitted up to that 

point to calculate interim beneficiary 

risk scores for adjusting prospective 

payments made during the payment 

year. The end of this 13-month period 

is called the final risk adjustment data 

submission deadline 

(§ 422.310(g)(2)(ii)). 

For each payment year, we apply 

three sets of risk scores to adjust 

payments: initial and midyear risk 

scores during the payment year (both 

sets are based on incomplete diagnosis 

data from the data collection year) and 

final risk scores after the payment year 

using data MA organizations submitted 

as of the final deadline for risk 

adjustment data (which reflect complete 

data for the data collection year). During 

the year, CMS makes monthly 

prospective payments to MA 

organizations based on enrollment 

information and using interim risk 

scores calculated based on the data 

available before the final risk 

adjustment data submission deadline. 

CMS calculates the preliminary risk 

scores before the first payment is made 

(that is, for January of the payment year) 

and again in the middle of the payment 

year; an interim reconciliation is made 

so that the prospective payments to MA 

organizations are based on the most 

recent risk score available for each 

enrollee. 

After the final risk adjustment data 

submission deadline, CMS conducts a 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 67001 

reconciliation, in which the prospective 

Part C payments made during the 

coverage year based on interim risk 

scores are compared to Part C payments 

recalculated using final risk scores and 

the latest enrollment data. While 

changes in enrollment data are updated 

every month by CMS’ systems during 

the payment year (for example, 

disenrollments from MA organizations 

and dates of death from the Social 

Security Administration (SSA)), risk 

adjustment data are not finalized until 

the final risk adjustment data 

submission deadline. 

We note that after the deadline for 

submission of final risk adjustment data, 

MA organizations are allowed to submit 

corrected diagnosis data to correct 

overpayments they received from CMS. 

However, after this deadline, MA 

organizations are not allowed to submit 

diagnosis codes for additional payment, 

as specified in § 422.310(g)(2)(ii); this 

provision was recently adopted in the 

final rule entitled ‘‘Medicare Program; 

Contract Year 2015 Policy and 

Technical Changes to the Medicare 

Advantage and the Medicare 

Prescription Drug Benefit Programs’’ (79 

FR 29843). When such corrections are 

submitted, CMS conducts another 

reconciliation to correct the payments 

made to the MA organization using the 

established payment adjustment 

process. In addition, under § 422.311, 

CMS conducts Risk Adjustment Data 

Validation (RADV) audits of the risk 

adjustment data submitted by MA 

organizations pursuant to § 422.310. 

Such RADV audits are conducted at the 

MA organization contract level and are 

designed to calculate a contract–level 

error rate and payment adjustment 

amount for a specific payment year 

under audit. 

2. Medicare Part D Payment Background 

For Medicare Part D, the Medicare 

Prescription Drug Benefit, Improvement, 

and Modernization Act (MMA), which 

amended the Act by adding Part D 

under Title 18, provides four payment 

mechanisms: direct subsidy (codified at 

§ 423.329(a)); reinsurance subsidy 

(codified at § 423.329(c)); low-income 

subsidy (codified at §§ 423.780 and 

423.782); and risk sharing (codified at 

§ 423.336(b)). As a condition of 

payment, section 1860D–15(d)(2)(A) of 

the Act requires that Part D sponsors 

submit data and information necessary 

for CMS to carry out those payment 

provisions. Part D sponsors submit PDE 

data, direct and indirect remuneration 

(DIR) data and risk adjustment data to 

CMS for payment purposes. 

Throughout the coverage year, CMS 

makes prospective payments to Part D 

sponsors that cover three subsidies: the 

direct subsidy; the low-income costsharing subsidy; and the reinsurance 

subsidy. The payment amounts are 

based on information in the approved 

basic bid and on data received by CMS 

that are used to update payments 

throughout the year. Following the end 

of the coverage year, the prospective 

payments are reconciled against the 

actual costs of the Part D sponsor. 

Reconciliation of the low-income costsharing subsidy and reinsurance and the 

calculation of risk sharing are based on 

PDE and DIR data submitted by the Part 

D sponsor, as well as data captured from 

other CMS systems. CMS instructs Part 

D sponsors that they should continually 

monitor their submitted data throughout 

the year in order to ensure that the 

reconciliation and final payment 

determinations are accurate. 

The final Part D payment 

determination may be reopened and 

revised at CMS discretion under 

§ 423.346. In our final rule, ‘‘Medicare 

Program; Medicare Prescription Drug 

Benefit’’ published in the Federal 

Register on January 28, 2005 (70 FR 

4194), we stated that including the 

Medicare Part D reopening provision at 

§ 423.346 would ‘‘ensure that the 

discovery of any overpayment or 

underpayments could be rectified’’ (70 

FR 4316). However, this is only possible 

to the extent that the data submitted by 

Part D sponsors are accurate. 

Accordingly, prior to making a payment 

determination for a coverage year, either 

through a reconciliation described at 

§ 423.343 or a reopening described at 

§ 423.346, CMS periodically makes 

requests that Part D sponsors correct 

payment data that do not comply with 

program requirements (that is, what we 

have defined as ‘‘erroneous payment 

data’’). These may be general requests to 

all Part D sponsors to look for a type of 

payment issue (see for example, the 

Health Plan Management System 

(HPMS) memorandum, ‘‘Correcting 

Missing, Invalid, and Inactive Prescriber 

Identifiers on 2012 Prescription Drug 

Event (PDE) Records,’’ dated February 4, 

2013.) or targeted requests to specific 

Part D sponsors known to have 

particular payment issues (as was done 

in the ‘‘Prescriber NPI Project’’ 

announced in the HPMS memorandum, 

‘‘Announcement of Prescriber NPI 

Project and Web site Release,’’ dated 

December 4, 2012). If a Part D sponsor 

fails to correct its payment data, the 

erroneous payment data remain in the 

payment system, rendering the 

reopening provision ineffective for 

rectifying overpayments as it was 

intended. 

B. Provisions of the Proposed Rule and 

Final Policies 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41058 through 41063), we 

proposed to establish regulations at 42 

CFR 422.330, relating to MA 

organizations, and at 42 CFR 423.352, 

relating to Part D sponsors, that would 

specify the procedural mechanism for 

CMS to recoup overpayments associated 

with data errors identified by CMS in 

payment data submitted by MA 

organizations and Part D sponsors. We 

also proposed to create a process 

whereby an MA organization or Part D 

sponsor can appeal the finding that 

payment data are erroneous. 

We noted that our proposed policy is 

intended to establish a process to 

address data errors and payment 

adjustments that are not addressed by 

existing processes such as the RADV 

audit and appeal process or 

overpayments identified by the MA 

organization or Part D sponsor, which 

are subject to separate procedures. If an 

MA organization or a Part D sponsor 

self-identifies an overpayment, that 

overpayment must be reported and 

returned to CMS in accordance with 

section 1128J(d) of the Act, which was 

added by section 6402 of the Affordable 

Care Act. Regulations implementing 

section 1128J(d) have recently been 

adopted at §§ 422.326 and 423.360 in 

the final rule entitled ‘‘Medicare 

Program; Contract Year 2015 Policy and 

Technical Changes to the Medicare 

Advantage and the Medicare 

Prescription Drug Benefit Programs’’ (79 

FR 29843). 

Comment: Several commenters 

supported the establishment of a formal 

overpayment collection and appeals 

process. 

Response: We appreciate the 

commenters’ support. 

Comment: Several commenters 

expressed concern about including Part 

C and Part D proposed provisions in the 

OPPS/ASC proposed rule. The 

commenters stated that these proposed 

provisions are unrelated to the OPPS 

and ASC payment systems. 

Response: The Secretary generally has 

discretion to schedule and group topics 

for rulemaking, meaning any proposed 

and final rule published in the Federal 

Register, as long as proper public notice 

is given that includes an explanation of 

the proposed policies, the rationale and 

basis for the proposal, and the public is 

given an opportunity to comment. 

Comment: A few commenters 

requested that CMS make clear that the 

proposal regarding CMS-identified 

overpayments has no relationship to 

other CMS overpayment regulations, 


tkelley on DSK3SPTVN1PROD with RULES2
67002 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

specifically the overpayment regulations 

that were promulgated to implement the 

requirements of section 6402 of the 

Affordable Care Act, codified at section 

1128J(d) of the Act (79 FR 29847). 

Commenters expressed concern that, 

given the connection between planidentified overpayments and the False 

Claims Act, there is a potential for 

confusion and significant unintended 

consequences. 

Response: In the preamble to the CY 

2015 OPPS/ASC proposed rule, we 

expressly limited the scope of our 

proposal to establishing a process to 

address data errors and payment 

adjustments that are not addressed by 

existing processes. We stated that 

overpayments identified by an MA 

organization or a Part D sponsor are 

subject to separate procedures and that 

if an MA organization or a Part D 

sponsor self-identifies an overpayment, 

the overpayment must be reported and 

returned to CMS in accordance with 

§§ 422.326 and 423.360 of the 

regulations. We are further clarifying 

here that the CMS-identified 

overpayment process that is being 

finalized is separate and distinct from 

the overpayment rule that implemented 

the Affordable Care Act requirements 

regarding plan-identified overpayments 

codified at section 1128J(d) of the Act. 

Comment: A few commenters 

provided comments on and questioned 

the provisions of §§ 422.326 and 

423.360 which relate to reporting and 

returning of overpayments identified by 

MA organizations and Part D sponsors, 

respectively. 

Response: We consider these public 

comments to be out of the scope of the 

provisions of the proposed rule. The 

proposed rule was limited to the issue 

of CMS-identified overpayments arising 

from the submission of erroneous 

payment data. Therefore, we are not 

addressing these comments in this final 

rule. 

Comment: A few commenters stated 

that it is essential that CMS has overall 

control over the CMS-identified 

overpayment process to ensure proper 

identification and monitoring of 

overpayments. The commenters stated 

that this control is necessary to ensure 

that requests from separate CMS 

components or the Department’s Office 

of the Inspector General (OIG) for 

payment data changes are consistent 

with CMS-issued payment regulations 

and guidance. The commenters 

recommended that CMS provide 

adequate resources to the appropriate 

staff components in order to effectively 

coordinate and manage this process. 

Response: In the CY 2015 OPPS/ASC 

proposed rule, we stated that we may 

identify payment data that need to be 

corrected through a variety of different 

mechanisms, including, but not limited 

to, CMS analyses of payment data, 

audits, and/or communications with the 

MA organization or Medicare Part D 

sponsor. Regardless of how a potential 

overpayment is identified, CMS will 

conduct an independent evaluation of 

the erroneous data finding, before 

issuing a data correction notice to an 

MA organization or Part D sponsor. 

Although CMS may utilize OIG reports 

or other information to help to identify 

erroneous payment data, it is CMS, not 

the OIG, which will issue the request to 

correct payment data. Likewise, other 

separate CMS components may identify 

erroneous payment data, but it is the 

Medicare Part C and Part D payment 

components at CMS that will determine 

if that erroneous payment data could 

result in an overpayment and whether 

or not the CMS-identified overpayment 

process will be used to correct the 

overpayment. In addition, requests to 

correct payment data will only be issued 

after CMS has thoroughly reviewed the 

source or the mechanism that identified 

the payment data and has concurred 

with the findings that the payment data 

were erroneous. 

We appreciate and agree with the 

commenters’ suggestion that the CMS 

administration should provide adequate 

resources to the payment staff in order 

to effectively coordinate and manage 

this process. 

Comment: One commenter asked 

CMS to clarify whether this regulation 

would be used as a means to collect any 

alleged improper payments identified 

through the Recovery Audit Contractors 

(RAC) process. 

Response: As we indicated in the 

preamble of the proposed rule, this 

process is not intended to replace 

established recovery and appeals 

processes. We do not anticipate using 

this process to collect any overpayments 

identified through the RAC process at 

this time. 

Comment: Several commenters 

expressed concern that the proposed 

rule does not address underpayments 

identified by CMS or the health plan. A 

few commenters suggested that CMS 

add language to the regulation to 

explain how health plans recover 

underpayments that they or CMS have 

identified. One commenter suggested 

that CMS offset identified 

underpayments against overpayments 

before recouping any overpayments. 

Response: The purpose of the 

proposed provisions is to recover 

overpayments identified by CMS and 

return them to the Medicare Trust 

Funds. The offset calculation used to 

determine the overpayments will follow 

the Medicare Part C and Part D payment 

rules, and, as a result, the offset 

calculation may capture some 

underpayments. The extent to which 

underpayments will be recognized in 

the offset calculation to net out an 

overpayment will be limited and will 

vary depending on the circumstance 

surrounding the overpayment. The 

purpose of the provisions is not to 

provide the opportunity for MA 

organizations and Part D sponsors to 

secure additional payment by 

submitting additional data after the data 

submission deadlines. As noted in the 

preamble of the proposed rule, MA 

organizations and Part D sponsors have 

a period of time after the end of the data 

collection and coverage years, 

respectively, to update and supplement 

the payment data submitted throughout 

the year. In Part C, that period is 13 

months, and in the Part D context, it is 

approximately 6 months. We believe 

that these periods are adequate for MA 

organizations and Part D sponsors to 

ensure that they have submitted the data 

necessary to substantiate their 

payments. 

Comment: One commenter expressed 

concern that MA organizations’ or Part 

D sponsors’ benefit filings, current 

business dealings, and statutory rights 

and obligations may be affected if the 

plan’s financial information is rendered 

uncertain due to an overpayment 

recovery by CMS. 

Response: While we understand the 

commenter’s concern that the 

possibility of returning overpayments 

may introduce some financial 

uncertainty for MA organizations and 

Part D sponsors, CMS has an obligation 

to ensure that payments to MA 

organizations and Part D sponsors are 

made consistent with the applicable 

program requirements. Thus, we believe 

that CMS has the authority to recover, 

and MA organizations and Part D 

sponsors have an obligation to return, 

identified overpayments. 

Comment: A few commenters stated 

that overpayment recoupments from 

Part D sponsors may negatively impact 

beneficiaries. Commenters urged CMS 

to ensure that any adjustments made to 

recoup CMS overpayments from Part D 

sponsors continue to be appropriate to 

ensure that beneficiaries are not 

financially negatively impacted. 

Response: We understand the 

commenters’ concerns that overpayment 

recoupments not negatively affect 

beneficiaries. However, CMS has 

previously issued regulations that 

address this issue. Section 423.466(a) of 

the regulations states that whenever a 

Part D sponsor receives information that 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 67003 

necessitates a retroactive claims 

adjustment, the Part D sponsor must 

process the adjustment and issue 

refunds or recovery notices within 45 

days of the Part D sponsor’s receipt of 

complete information regarding the 

claims adjustment. In addition, 

§ 423.466(b) states that Medicare Part D 

sponsors must coordinate benefits with 

State Pharmaceutical Assistance 

Programs (SPAPs), other entities 

providing prescription drug coverage, 

beneficiaries, and other third party 

entities paying on the beneficiaries’ 

behalf for a period not to exceed 3 years 

from the date on which the prescription 

for a covered Part D drug was filled. 

Comment: A few commenters 

expressed concern about the burden 

imposed on providers. Commenters 

stated that the overpayment recovery 

process might cause financial 

consequences or penalties for 

physicians. Commenters expressed 

concern over the burden of related 

documentation requests. One 

commenter urged CMS to ensure that 

any associated provider record requests 

are limited to the specific instance of 

erroneous data under dispute. The 

commenter suggested that the plan 

requesting medical records be required 

to provide documentation on the scope 

of the erroneous data dispute identified 

by CMS and to limit the data request to 

the specific data issue identified. 

Response: These commenters appear 

to be focused on Part C and risk 

adjustment data. We recognize the 

commenters’ concerns that recoupment 

of overpayments may entail negative 

financial consequences for physicians. 

However, it is CMS’ responsibility to 

make payments to MA organizations 

and Part D sponsors that are consistent 

with the applicable statutes and 

regulations; this includes the authority 

to recover overpayments and return 

them to the Medicare Trust Funds. In 

addition, CMS is not allowed to 

interfere with the financial 

arrangements between MA 

organizations and their providers. 

Therefore, CMS is limited in how we 

can respond to the commenters’ 

concern. While we recognize there may 

be some burden relating to the request 

for documentation, it is important for 

the integrity of the payment process that 

overpayments are properly identified 

and documented. 

Comment: One commenter suggested 

that any Medical Loss Ratio (MLR) 

remittances paid by the plan to CMS 

should be considered when computing 

the overpayment recovery amount. For 

example, if a plan had an MLR below 

the statutory minimum and paid an 

MLR remittance to CMS, and then, at a 

later date, it was determined that the 

plan was overpaid for that year, the 

remittance would reduce the 

overpayment recovery amount. 

Response: From a conceptual 

perspective, we believe that the impact 

or relationship between an MLR 

remittance and the overpayment offset 

amount is an issue about the payment 

calculation methodology and MLR 

administration, rather than a procedural 

issue. This regulation narrowly specifies 

a procedural mechanism for, first, 

recovering overpayments from MA 

organizations and Part D sponsors and, 

second, providing an appeals process 

related to the accuracy and correctness 

of the payment data underlying the 

offset. Therefore, we believe that these 

comments relating to MLR remittances 

are out of the scope of the provisions of 

the proposed rule. 

Comment: One commenter expressed 

concern that there might be a large 

number of complications in situations 

where a contract has been terminated, or 

where there have been mergers or 

acquisitions involving the sponsor, or 

where other significant plan changes 

have occurred. The commenter 

requested guidance from CMS on the 

process in these situations. The 

commenter also asked that CMS be 

flexible in these scenarios. 

Response: We hold entities 

contracting with CMS responsible for 

returning overpayments, regardless of 

their merger and acquisition history. 

After consideration of the public 

comments we received, we are 

finalizing the proposal to establish a 

process for recovering CMS-identified 

overpayments associated with erroneous 

payment data submitted by MA 

organizations and Part D sponsors. 

1. Definitions of ‘‘Payment Data’’ and 

‘‘Applicable Reconciliation Date’’ 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41060), we proposed to 

define ‘‘payment data’’ to mean data 

controlled and submitted to CMS by an 

MA organization or a Part D sponsor 

that is used for payment purposes 

(proposed §§ 422.330(a) and 423.352(a)). 

The MA organization or Part D sponsor 

is responsible for the accuracy of such 

data. MA organizations and Part D 

sponsors are currently required to attest 

to the accuracy, completeness, and 

truthfulness of such data under 

§ 422.504(l) and § 423.505(k), 

respectively. For Medicare Part C, the 

data submitted by the MA organization 

to CMS include, for example, 

enrollment data and risk adjustment 

data specified at § 422.310. For 

Medicare Part D, data submitted by the 

Part D sponsor to CMS include 

enrollment data and data submitted 

under § 423.329(b)(3) (risk adjustment 

data), § 423.336(c)(1) (cost data), 

§ 423.343 (data for retroactive 

adjustments and reconciliations), and 

data provided for purposes of 

supporting allowable reinsurance costs 

and allowable risk corridor costs as 

defined in § 423.308, which include 

data submitted to CMS regarding direct 

or indirect remuneration (DIR). 

There are additional payment-related 

data that CMS uses to calculate Part C 

and Part D payments that are submitted 

directly to CMS by other entities, such 

as SSA. These entities are the 

authoritative source for data that they 

submit to CMS, and MA organizations 

and Part D sponsors are not the official 

source for data submitted by these other 

entities. For example, the SSA is the 

authoritative source for date of death of 

Medicare beneficiaries. An MA 

organization or a Part D sponsor 

generally does not submit a 

beneficiary’s date of death directly to 

CMS’ systems; such data come from the 

SSA data feed. When the SSA submits 

corrected data regarding a beneficiary’s 

date of death to CMS, CMS’ systems 

recalculate the payments made to the 

plan for that beneficiary and correct any 

incorrect payment through a routine 

retroactive payment adjustment process. 

Therefore, we proposed to define 

‘‘payment data’’ as only data that the 

MA organization or Part D sponsor 

controls and submits to CMS for 

payment purposes. 

For MA organizations under Part C, in 

the CY 2015 OPPS/ASC proposed rule 

(79 FR 41060), we proposed that the 

‘‘applicable reconciliation date’’ occurs 

on the date of the annual final risk 

adjustment data submission deadline set 

under § 422.310(g)(2)(ii). While changes 

in enrollment data are updated every 

month by CMS’ systems during the 

payment year (for example, 

disenrollments from MA organizations 

and dates of death from the SSA), risk 

adjustment data are not finalized until 

the final risk adjustment data 

submission deadline. Prior to that 

deadline, CMS allows the MA 

organization to continue submitting 

corrected and new diagnosis data. 

However, once the final risk adjustment 

data submission deadline has passed, 

CMS uses this final diagnosis data to 

calculate the final risk scores for the 

payment year. CMS then uses those 

final risk scores for payment 

reconciliation. By proposing that the 

applicable reconciliation date occurs on 

the risk adjustment data submission 

deadline, we intend to signal that the 

normal payment process for the year has 

been concluded. 


tkelley on DSK3SPTVN1PROD with RULES2
67004 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

For Part D sponsors, in the CY 2015 

OPPS/ASC proposed rule (79 FR 41060), 

we proposed that the ‘‘applicable 

reconciliation date’’ is the later of either: 

the annual deadline for submitting PDE 

data for the annual Part D payment 

reconciliations referenced in 

§ 423.343(c) and (d); or the annual 

deadline for submitting DIR data. The 

annual deadline for submitting PDE data 

is the last Federal business day prior to 

June 30 of the year following the 

coverage year being reconciled. The 

annual deadline for submitting DIR data 

is announced annually through 

subregulatory guidance and generally 

occurs around the last business day in 

June of the year following the coverage 

year being reconciled. We selected these 

events to define the Part D applicable 

reconciliation date because data must be 

submitted by these deadlines in order to 

be used for the purposes of the final Part 

D payment reconciliation. 

We noted in the proposed rule that 

the proposed definitions of ‘‘applicable 

reconciliation date’’ are nearly identical 

to the definitions of ‘‘applicable 

reconciliation’’ at existing §§ 422.326 

and 423.360. Similarly, the proposed 

definitions of ‘‘payment data’’ are nearly 

identical to the definitions of ‘‘funds’’ at 

existing §§ 422.326 and 423.360. 

Although proposed §§ 422.330 and 

423.352 addressed overpayments to MA 

organizations and Part D sponsors that 

have been identified by CMS, whereas 

§§ 422.326 and 423.360 address 

overpayments that are identified by the 

MA organization or Part D sponsor, we 

stated in the proposed rule that we do 

not believe that the issue of which 

entity (CMS or the plan) identified the 

overpayment is relevant to the question 

of when the overpayment occurred or 

what information is at issue. Both the 

regulations regarding overpayments 

identified by MA organizations and Part 

D sponsors finalized earlier this year in 

the final rule entitled ‘‘Medicare 

Program; Contract Year 2015 Policy and 

Technical Changes to the Medicare 

Advantage and the Medicare 

Prescription Drug Benefit Programs’’ 

and the regulations we proposed in the 

CY 2015 OPPS/ASC proposed rule to 

establish offset and appeal procedures 

for CMS-identified overpayments were 

intended to address circumstances in 

which an overpayment has been 

identified; therefore, we believe it 

would be appropriate and avoid 

unnecessary confusion to use similar 

definitions. 

Comment: A few commenters 

requested that CMS clarify the 

definition of ‘‘payment data.’’ 

Specifically, commenters stated that the 

definition of ‘‘payment data’’ in the 

proposed rule is supposed to 

correspond to the definition of ‘‘funds’’ 

at §§ 422.326 and 423.360. However, the 

commenters pointed out that, in the 

proposed rule, CMS defined ‘‘payment 

data’’ as ‘‘data controlled and submitted 

by’’ an MA organization or a Part D 

sponsor. Commenters noted that 

definition of ‘‘funds’’ omits the word 

‘‘controlled.’’ Commenters expressed 

concern over the inclusion of the word 

‘‘controlled’’ in the definition of 

‘‘payment data’’ because MA 

organizations and Part D sponsors do 

not control all relevant data. 

Commenters requested that CMS revise 

the definition of ‘‘payment data’’ to 

conform to the definition of ‘‘funds’’ at 

§§ 422.326 and 423.360. 

Response: We agree with the 

commenters. Our intent was to align the 

definitions of ‘‘payment data’’ with the 

definition of ‘‘funds’’ at §§ 422.326 and 

423.360 (79 FR 41060). Therefore, we 

are removing the word ‘‘controlled’’ 

from the regulatory definition of 

‘‘payment data’’ in this final rule. 

Comment: One commenter requested 

that CMS define ‘‘erroneous claims 

data’’ as used in the proposed rule. 

Response: We did not use the phrase 

‘‘erroneous claims data’’ in the preamble 

language or regulation text of the 

proposed rule. In the preamble of the 

proposed rule, we used the phrase 

‘‘erroneous payment data’’ to mean 

‘‘. . .payment data. . .that should not 

have been submitted—either because 

the data submitted are inaccurate or 

because the data are inconsistent with 

Part C and Part D requirements’’ (79 FR 

41058). We are adding the definition of 

‘‘erroneous payment data’’ to the final 

regulation text at §§ 422.330(a) and 

423.352(a). 

Comment: A few commenters noted 

that, in the preamble of the proposed 

rule, CMS referenced specific provisions 

of §§ 422.504 and 423.505 of the 

regulations and stated that MA 

organizations and Part D sponsors are 

required to certify the accuracy, 

completeness, and truthfulness of their 

payment data. Commenters were 

concerned that CMS did not include the 

phrase ‘‘based on best knowledge, 

information, and belief’’ that is included 

under §§ 422.504 and 423.505. 

Commenters requested that CMS revise 

the preamble language of the final rule 

to acknowledge the ‘‘best knowledge, 

information, and belief’’ standard 

articulated at §§ 422.504 and 423.505 

and to remove any incorrect references 

suggesting that MA organizations (or 

Part D sponsors) bear unqualified 

responsibility for data accuracy. 

Response: We did not intentionally 

exclude ‘‘based on best knowledge, 

information, and belief’’ from the 

preamble discussion. We acknowledge 

that MA organizations and Part D 

sponsors certify, based on best 

knowledge, information, and belief, the 

accuracy, completeness, and 

truthfulness of all data related to 

payment as stated at §§ 422.504 and 

423.505. After a review of the preamble 

language, we do not believe that 

additional edits are necessary as a result 

of the omission. 

After consideration of the public 

comments we received, we are 

finalizing the proposed regulatory 

definition of ‘‘payment data,’’ with a 

modification to remove the reference to 

‘‘controlled,’’ as described earlier. We 

also are adding a definition of 

‘‘erroneous payment data’’ in the final 

regulation text at §§ 422.330(a) and 

423.352(a). 

2. Request for Corrections of Payment 

Data 

Because MA organizations and Part D 

sponsors are required to submit accurate 

payment data, we have the authority to 

request that erroneous data be corrected 

when errors are discovered. In the CY 

2015 OPPS/ASC proposed rule (79 FR 

41060), we proposed a mechanism for 

recouping overpayments in situations 

where CMS has identified an error in 

payment data, the MA organization or 

Part D sponsor has not corrected that 

erroneous data upon request, and CMS 

determines that, as a result of the 

erroneous payment data, an 

overpayment was made. Under 

proposed §§ 422.330(b) and 423.352(b), 

we proposed that CMS would make the 

request through a data correction notice 

that would contain or make reference to 

the specific payment data identified by 

CMS as erroneous, the reason why CMS 

believes that the payment data are 

erroneous, and the timeframe in which 

the MA organization or Part D sponsor 

must make corrections to the data. This 

proposal was not intended to limit our 

authority to request correction of 

erroneous payment data to only those 

narrow circumstances in which an 

overpayment has already been 

identified. CMS may identify payment 

data that need to be corrected through 

a variety of different mechanisms, 

including, but not limited to, CMS 

analyses of payment data, CMS audits, 

or communications with the MA 

organization or Part D sponsor. 

We understand that, at some point, it 

would no longer be practical for MA 

organizations and Part D sponsors to 

correct payment data for coverage years 

that have long since been reconciled. 

Therefore, consistent with the look-back 

period for overpayments that are 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 67005 

identified by the MA organization or 

Part D sponsor found at existing 

§§ 422.326 and 423.360, in the CY 2015 

OPPS/ASC proposed rule (79 FR 41060), 

we proposed that CMS would request 

corrections to erroneous payment data 

only if the erroneous data affects 

payments for one or more of the 6 most 

recently completed payment years. That 

would mean, for example, that after the 

initial reconciliation takes place for Part 

D payments under § 423.343 (that is, the 

determination of the final amount of 

direct subsidy described in 

§ 423.329(a)(1), final reinsurance 

payments described in § 423.329(c), the 

final amount of the low-income subsidy 

described in § 423.329(d), or final risk 

corridor payments as described in 

§ 423.336) for contract year 2015 (which 

would take place in 2016), CMS may 

request corrections to erroneous 

payment data for contract years 2010 

through 2015. We proposed to use the 

same 6-year look-back period as applies 

to plan-identified overpayments under 

existing §§ 422.326 and 423.360 because 

both overpayment policies are intended 

to address circumstances in which an 

overpayment has been identified, and 

we do not believe that the issue of 

which entity (CMS or the plan) 

identified the overpayment is relevant 

to the length of the look-back period. 

We proposed that the timeframes for 

correcting payment data would be the 

same as under our current practice for 

correcting payment data described in 

existing procedural rules and 

subregulatory guidance and would be 

explained in additional procedural rules 

and subregulatory guidance, as 

necessary. For example, current Part D 

guidance states that corrections to PDE 

data must be completed within 90 days 

from discovery of the issue. We refer 

readers to the Health Plan Management 

System (HPMS) memorandum entitled 

‘‘Revision to Previous Guidance Titled 

‘Timely Submission of Prescription 

Drug Event (PDE) Records and 

Resolution of Rejected PDEs,’’’ dated 

October 6, 2011. 

Comment: A few commenters 

believed that the proposed rule on CMSidentified overpayments should only 

apply to actual overpayments, not 

merely the submission of incorrect 

payment data. These commenters were 

concerned that CMS incorrectly 

assumes that erroneous payment data 

equates to an overpayment. 

Response: We understand that 

correcting erroneous payment data 

submitted by an MA organization or a 

Part D sponsor and rerunning the 

payment process to determine the 

payment that should have been made 

may reflect an underpayment, 

overpayment, or no change when 

comparing the two results. Consistent 

with §§ 422.504(l) and 423.505(k), MA 

organizations and Part D sponsors must 

submit accurate payment data (based on 

best knowledge, information, and 

belief). We clarify that CMS may make 

the request to correct erroneous 

payment data, regardless of whether or 

not that data would result in an 

overpayment under our existing and 

inherent authority related to 

administration of the payment 

processes; this rule does not change or 

limit that authority. Rather, this rule 

provides authority to initiate an offset to 

recover overpayments when erroneous 

payment data have been submitted, the 

erroneous payment data resulted in an 

overpayment, and the erroneous 

payment data were not subsequently 

corrected upon request from CMS. The 

intent of the provisions at §§ 422.330 

and 423.352 is to provide a process 

whereby CMS-identified overpayments 

can be recovered; this process begins 

with CMS’ request for correction of the 

erroneous payment data that caused the 

overpayment to occur. We will establish 

the existence and extent of an 

overpayment by applying the Part C and 

Part D payment rules and formulas 

applicable to the payment year in 

question. 

Comment: Commenters requested that 

CMS clarify that the overpayment 

recoupment process would apply only 

to contract years for which CMS has 

completed final reconciliation. 

Commenters noted that CMS did not 

link the proposed regulatory definition 

of ‘‘applicable reconciliation date’’ to 

other subsections of the proposed 

regulations. The commenters stated that 

based on the proposed regulations, if 

CMS identifies an error in payment data 

and the payment error identified affects 

payments for any of the 6 most recently 

completed payment years, CMS may 

send a data correction notice to the MA 

organization or the Part D sponsor. 

However, CMS does not define 

‘‘recently completed’’ or correlate the 

definition with the phrase ‘‘applicable 

reconciliation date.’’ Commenters 

requested that CMS clarify its intention 

to recoup overpayments only following 

the ‘‘applicable reconciliation date.’’ 

Response: Our determination that an 

overpayment has occurred will be made 

after the applicable reconciliation date, 

as defined in this final rule, for the 

contract year in which the erroneous 

payment data were identified. In 

addition, the payment error must affect 

payment in one of the 6 most recently 

completed payment years. For example, 

after the initial reconciliation takes 

place for Part D payments under 

§ 423.343 (that is, the determination of 

the final amount of direct subsidy 

described in § 423.329(a)(1), final 

reinsurance payments described in 

§ 423.329(c), the final amount of the 

low-income subsidy described in 

§ 423.329(d), or final risk corridor 

payments as described in § 423.336) for 

contract year 2015 (which would take 

place in 2016), the 6 most recently 

completed payment years would be 

2010 through 2015. 

Consistent with our statements above 

regarding our existing and inherent 

authority related to administration of 

the payment processes to make the 

request to correct erroneous payment 

data, regardless of whether or not that 

data would result in an overpayment, 

we believe we have authority to request 

the correction of erroneous data at any 

time. Accordingly, we are moving the 

language that limits CMS to the 6-year 

look-back period at §§ 422.330(b) and 

423.352(b), ‘‘Request to correct payment 

data,’’ and associating it with 

§§ 422.330(c) and 423.352(c), ‘‘Payment 

offset,’’ in order to clarify that, while we 

may request the correction of erroneous 

payment data at any time, we will only 

use the payment offset procedures 

established in this rule to recover 

overpayments in the 6 most recently 

completed payment years. 

Therefore, we are modifying proposed 

§§ 422.330(c) and 423.352(c) to indicate 

that when the MA organization or Part 

D sponsor fails to correct payment data 

in response to a request under 

§§ 422.330(b) and 423.352(b), CMS will 

conduct a payment offset against 

payments made to the MA organization 

or Part D sponsor if: (1) the payment 

error affects payments for any of the 6 

most recently completed payment years; 

and (2) the payment error for a 

particular payment year is identified 

after the applicable reconciliation date 

for that payment year. 

Comment: One commenter requested 

that CMS institute a single, uniform 

timeframe to correct any payment data 

errors before CMS initiates paymentoffset procedures. The commenter 

believed that the different time periods 

associated with the resubmission or 

correction of various data points can 

lead to unnecessary confusion and the 

potential for missed deadlines. This 

commenter recommended that CMS 

create a uniform timeframe of at least 

120 days to submit data corrections. The 

commenter expressed concern that the 

process for collecting and verifying 

corrected data will involve numerous 

steps and that the process also likely 

will involve third parties, potentially 

including vendors no longer under 

contract, which would add additional 


tkelley on DSK3SPTVN1PROD with RULES2
67006 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

steps and time to the process of 

collecting and validating the data. The 

commenter stated that a turnaround 

time of less than 120 days creates a risk 

for not being able to collect the payment 

data and conduct a diligent and fulsome 

analysis before responding to CMS. 

Response: We understand that it 

makes sense to have a uniform 

timeframe for submitting corrected 

payment data in response to a CMS 

notification of CMS-identified erroneous 

payment data. We also understand that 

different timeframes for submitting 

corrected data could lead to confusion 

and missed deadlines. However, we 

disagree with the commenter that 120 

days is necessary to correct all types of 

payment data. As we cited in the 

preamble of the proposed rule, current 

Part D guidance in the HPMS 

memorandum dated October 6, 2011, 

states that corrections to PDE data must 

be completed within 90 days from 

discovery of the issue. We have no 

reason to believe that the 90-day 

timeframe for correcting Part D data 

under this provision is inadequate. 

Therefore, we will not be making 

changes to this policy at this time. 

Timeframes for correcting Part C 

payment data will be explained in 

additional procedural rules and 

subregulatory guidance. 

Comment: One commenter requested 

clarification regarding the submission of 

payment data corrections between the 

final risk adjustment submission 

deadline and when a payment 

reconciliation or payment rerun is 

conducted. 

Response: This commenter’s request 

appears to be directed at Part C and risk 

adjustment data. An overpayment may 

exist once applicable reconciliation has 

occurred, which is the final deadline for 

the submission of risk adjustment data 

for Part C. MA organizations should 

submit data corrections to correct an 

overpayment the MA organization has 

identified as soon as the MA 

organization recognizes the 

overpayment has occurred (§ 422.326). 

In the context of that rule and the 

process adopted under this rule, the 

operational action of conducting a risk 

adjustment payment rerun will be 

implemented according to our policy 

and schedules. The submission of data 

corrections should not be delayed 

relative to the timing of a risk 

adjustment rerun. If the data correction 

is not submitted, and we have identified 

the erroneous risk adjustment payment 

data, we may move forward with a 

payment offset. We agree that additional 

information on this issue would be 

helpful to MA organizations and will be 

providing further guidance as needed. 

Comment: A few commenters noted 

that, in the proposed rule, CMS stated 

that if the MA organization or Part D 

sponsor submits corrected payment data 

in response to CMS’ request, CMS will 

perform a reconciliation in the payment 

system using the established payment 

adjustment process. The commenters 

requested that CMS clarify that the 

referenced reconciliation is in reference 

to the established reopening of a 

payment adjustment reconciliation 

process. The commenter stated that the 

current reopening process is wellestablished and equitable, balancing the 

rights and obligations of Part D sponsors 

and CMS, and, therefore, there is an 

appropriate adjustment of both 

overpayments and underpayments to 

the Part D sponsor. The commenters 

urged CMS to invest additional 

operational resources to strengthen the 

existing reopening process. 

Response: If an MA organization or a 

Part D sponsor submits corrected 

payment data, as requested by CMS, we 

will recoup any overpayment amounts 

by performing a payment reconciliation 

according to our payment processing 

policies and schedules. We appreciate 

the commenter’s suggestion to invest 

additional operational resources to 

strengthen the existing reopening 

process, and will take this suggestion 

into consideration. 

Comment: Several commenters 

expressed concern regarding the length 

of the 6-year look-back period. Some of 

the commenters indicated the length of 

the look-back period would place undue 

burden on plans and providers. Another 

commenter stated that a 6-year 

timeframe is typically reserved for fraud 

and abuse processes and is not 

considered appropriate for routine 

operational processes. A few 

commenters recommended that the 

look-back period be 3 years. 

Response: We believe that a 6-year 

look-back period is an appropriate 

timeframe for identifying overpayments. 

As stated in the proposed rule, the 6- 

year look-back period is consistent with 

the look-back period established for 

overpayments that are identified by MA 

organizations or Part D sponsors 

(§§ 422.326 and 423.360). Also as stated 

in the proposed rule, we proposed to 

use the same 6-year look-back period as 

applies to plan-identified overpayments 

because both overpayment policies are 

intended to address circumstances in 

which an overpayment has occurred 

and has been identified. We do not 

believe that the issue of which entity 

(CMS or the plan) identified the 

overpayment is relevant to the length of 

the look-back period. 

Comment: A few commenters 

recommended that the look-back period 

be implemented prospectively. One 

commenter stated that a 6-year lookback period could affect many 

distributed risk arrangements between 

plans and providers that cross multiple 

years and have already been reconciled. 

Another commenter asked that CMS 

phase in the look-back period, 

beginning with a 1-year look-back 

period and each year adding an 

additional year to the look-back period, 

until 2020 when a 6-year look-back 

could be applied. 

Response: We disagree with the 

commenters’ recommendations to 

implement the look-back period 

prospectively. We proposed 6 years as 

the length of the look-back period 

because we believe that this timeframe 

best balances the government’s interest 

in having overpayments returned with 

entities’ interest in finality. We note that 

the statute of limitations related to the 

False Claims Act is 6 years from the date 

of the violation or 3 years from the date 

the relevant government official learns 

of the situation, but in no case more 

than 10 years from the date of the 

violation. Furthermore, under 

§ 422.504(d) and § 423.505(d), MA 

organizations and Part D sponsors are 

required to maintain, for 10 years books, 

records, documents, and other evidence 

of accounting procedures and practices 

related to costs, financial statements, 

cash flow, among others. 

After consideration of the public 

comments we received, we are 

finalizing proposed §§ 422.330(b) and 

423.352(b) and proposed §§ 422.330(c) 

and 423.352(c) with modifications. We 

are moving the language regarding the 6- 

year look-back period from proposed 

§§ 422.330(b) and 423.352(b) to 

§§ 422.330(c)(1) and 423.352(c)(1) in 

order to indicate that if the MA 

organization or Part D sponsor fails to 

correct payment data, CMS will conduct 

a payment offset if the payment error 

affects payments for any of the 6 most 

recently completed payment years and 

the payment error for a particular 

payment year is identified after the 

applicable reconciliation date for that 

payment year. 

3. Payment Offset 

If the MA organization or Part D 

sponsor submits corrected payment data 

in response to CMS’ request pursuant to 

proposed § 422.330(b) and § 423.352(b), 

CMS will perform a reconciliation in the 

payment system using the established 

payment adjustment process. CMS’ 

systems will conduct a payment 

reconciliation and determine the 

associated payment adjustment based 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 67007 

on the corrected data using established 

payment policies and procedures. 

However, if the MA organization or Part 

D sponsor fails to correct the erroneous 

payment data, in the CY 2015 OPPS/

ASC proposed rule (79 FR 41061), we 

proposed that CMS would conduct a 

payment offset from plan payments 

(proposed §§ 422.330(c) and 423.352(c)). 

a. Offset Amount 

Because the data would not have been 

corrected in the routine payment 

process, in the CY 2015 OPPS/ASC 

proposed rule (79 FR 41061 through 

41062), we proposed, to be codified at 

§§ 422.330(c) and 423.352(c), that CMS 

determine the overpayment offset 

amount by applying a payment 

calculation algorithm to simulate the 

payment calculations currently applied 

by CMS to produce the routine Part C 

and Part D payments. The payment 

calculation algorithm would apply the 

Part C or Part D payment rules for the 

applicable year to calculate what the 

correct payment should have been using 

corrected payment data. CMS currently 

simulates payment error amounts for a 

variety of different purposes, including 

for the annual Part C and Part D error 

rate reporting (required by the Improper 

Payment Elimination and Recovery Act 

(IPERA) and subject to the annual 

agency’s Chief Financial Officer’s (CFO) 

audit and reported in the annual Agency 

Financial Report (AFR)), RADV 

payment error estimation (subject to 

public comment), and the Part C and 

Part D monthly payment validation 

required by CFO auditors. These 

payment error calculations are all 

conducted outside of the suite of 

payment systems that CMS uses to make 

routine payments to MA organizations 

and Part D sponsors. In the proposed 

rule, we stated that we believe that these 

calculations are reliable and an accurate 

reflection of what the routine payment 

systems would calculate using the 

corrected data if the MA organization or 

Part D sponsor had submitted corrected 

payment data. 

The actual process for calculating the 

overpayment will be different for Part C 

and Part D because of the different 

payment rules for the two programs. 

The Part C and Part D programs are both 

subject to risk adjustment payment error 

resulting from invalid diagnoses and to 

payment error due to inaccurate 

enrollment data. The Part D program is 

further subject to payment 

reconciliation error resulting from errors 

in PDE data and/or DIR data. The two 

programs also are subject to different 

schedules with regard to the applicable 

reconciliation date and subsequent 

payment reconciliation processes. 

When new payment-related data are 

submitted to CMS payment systems, 

there is generally a change to the correct 

amount of payment once CMS conducts 

a payment reconciliation using the 

established payment adjustment 

process. However, it is not sufficient for 

the plan to just submit the new 

corrected risk adjustment, PDE, or DIR 

data to CMS systems because data 

submission does not automatically 

trigger a system reconciliation and 

payment adjustment. A change in 

payment will only occur if a payment 

reconciliation is conducted. If the 

applicable reconciliation has already 

been performed, CMS, at its discretion, 

may conduct risk adjustment reruns or 

Part D reopenings to ensure that 

payments also are corrected to reflect 

the newly corrected data. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41061), we proposed that, 

under the payment calculation 

algorithm, CMS would calculate the 

payment to the MA organization or Part 

D sponsor with and without the 

corrected data as of a specified date. The 

difference in the two amounts—that is, 

the amount by which the payments 

already made to the MA organization or 

Part D sponsor exceed the payments that 

should have been made as reflected in 

the calculation using the corrected 

data—would be the payment recovery or 

offset amount. We provided the 

following examples of how the offset 

amount would be calculated for Part C 

and Part D overpayments relative to two 

different types of payment data errors to 

illustrate our proposal: 

• Part C Offset Calculation. The 

example for Part C relates to incorrect 

diagnosis data identified by CMS in the 

process of calculating the national 

payment error estimate. A beneficiary’s 

final risk score and annual payment will 

be recalculated outside of the routine 

payment system without the invalid 

diagnoses but using all the other data 

used in the routine payment system. 

The year-appropriate CMS–HCC risk 

adjustment methodology will be used to 

produce the revised risk scores. The 

difference in payment for the 

beneficiary pre- and post-change in the 

invalid diagnosis will be the offset 

amount. This offset amount—generated 

using the same process for each 

beneficiary for whom erroneous 

payment data are identified by CMS— 

will be summed across all beneficiaries. 

• Part D Offset Calculation. The 

example for Part D relates to the 

situation in which a Part D plan sponsor 

has submitted PDE records for a 

beneficiary that include invalid 

National Drug Codes (NDCs). For 

payment purposes, PDEs are required to 

reference valid NDCs. In order to 

calculate the Part D payment offset 

amount, all of the beneficiary’s entire 

post-reconciliation PDE data will be 

pulled, and the incorrect PDEs will be 

deleted or adjusted. The programmed 

calculation logic will keep track of a 

variety of payment-related information; 

for example, a beneficiary’s benefit 

phase, gross covered drug cost, true outof-pocket (TrOOP) costs, low-income 

cost-sharing subsidies (if any), and plan 

payment as the beneficiary progresses 

through the Part D coverage benefit. The 

calculation algorithm will tap into a 

variety of different data sets, such as 

health plan benefit parameters, 

beneficiary low-income subsidy status, 

and standard low-income cost-sharing 

subsidy parameters. Reports will then 

be produced on Gross Covered Drug 

Cost (GCDC) and low-income costsharing subsidy payment differentials. 

These payment differential amounts 

will be incorporated into final 

reinsurance, low-income cost-sharing 

subsidy, and risk sharing summary 

totals for a contract. DIR adjustments 

will be factored into these calculations 

to arrive at the related payment offset 

amount to be applied at the contract 

level. The difference in reinsurance, 

low-income cost-sharing subsidy, and 

risk sharing dollars with and without 

the correction to the PDEs will 

constitute the payment offset related to 

the beneficiaries with the incorrect 

PDEs. 

If the erroneous payment data in 

question is subsequently corrected 

through the CMS payment system, the 

offset amount will be reversed, and the 

payment to the MA organization or Part 

D sponsor will be updated through the 

routine payment process. However, if 

the data in the CMS system are not 

corrected and CMS conducts a 

reconciliation or reopening for the 

applicable payment year after the offset 

has been determined, the data will not 

be properly synchronized, and it is 

possible that the resulting payment 

adjustments could be incorrect. In order 

to resolve this problem, CMS may 

reverse the original offset and 

recalculate the offset using the more 

recent data used in the most recent 

payment reconciliation or reopening. 

The new offset amount will replace the 

previous offset amount, and CMS would 

need to evaluate and act on the resulting 

overpayment or underpayment. 

Comment: A few commenters 

expressed concern about the payment 

calculation algorithm that will be used 

to determine the overpayment amount 

that should be recouped. Other 

commenters stated that they could not 

understand why CMS cannot simply 


tkelley on DSK3SPTVN1PROD with RULES2
67008 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

correct the data in the payment systems 

of record and ‘‘run a reopening.’’ 

Commenters requested that CMS clarify 

why the traditional reopening process 

cannot adequately address the types of 

payment issues outlined in the 

proposed rule. The commenters noted 

that CMS has used its existing authority 

in the past to remove PDEs it believed 

should not have been submitted. One 

commenter stated that this proposal 

creates an environment where the 

sponsor’s records of the PDEs and the 

TrOOP accumulators would be out of 

sync with CMS systems timing and 

would pose challenges during the 

reconciliations of PDEs and payment 

data, as well as readjudication of 

beneficiary claims, and as a result, 

recommended that CMS withdraw the 

proposal and assess whether there are 

other current less onerous mechanisms 

that can be adopted to better meet its 

goals. 

Response: For the Part C program and 

the Part D program, we believe that the 

traditional risk adjustment rerun and 

other reopening processes are the best 

mechanisms to recoup overpayments. 

We believe that these processes will be 

adequate to recoup overpayments in 

most cases because we assume that the 

majority of MA organizations and Part D 

sponsors will adjust their payment data 

upon request by CMS. However, as we 

stated in the preamble to our proposed 

rule, if an MA organization or Part D 

sponsor fails to correct erroneous 

payment data, the established risk 

adjustment rerun and reopening 

processes are inadequate. Because the 

data would not have been corrected in 

the CMS payment system, we will have 

to determine the overpayment amount 

by applying a payment calculation 

algorithm to simulate the payment 

calculations currently applied by CMS 

systems to produce routine Part C and 

Part D payments. It is true, as one 

commenter stated, that, in the Part D 

program, CMS has used existing 

authority to remove PDE data that 

should not have been submitted. We use 

that authority in very limited 

circumstances when the erroneous data 

is PDE data. Part D payment data also 

includes, however, direct and indirect 

remuneration (DIR) data, for which we 

do not have a means to ‘‘correct’’ 

erroneous data. Likewise, we do not 

have a process in place to ‘‘correct’’ 

erroneous data in the Part C program. In 

addition, because we only expect to 

conduct these types of data corrections 

in a limited set of circumstances, and it 

would require significant resources to 

make the payment system changes to 

support such corrections, CMS is 

prepared to use a more economical 

process based on running a payment 

calculation algorithm to recover the 

improper payments. 

As stated in the proposed rule, CMS 

already simulates Part C and Part D 

payments outside of the core payment 

systems to accurately calculate 

payments and payment errors for a 

variety of different purposes. Therefore, 

we believe that this procedural 

mechanism is the least onerous 

mechanism that can be adopted to 

recoup overpayments, return them to 

the Medicare Trust Funds, and ensure 

that payments are made consistent with 

the payment framework established in 

statute. Therefore, we are not 

withdrawing the proposal, as one 

commenter recommended. 

Comment: One commenter stated that 

CMS should not implement any type of 

extrapolation methodology when 

calculating the payment offset for MA 

organizations or Part D sponsors. The 

commenter believed that CMS may seek 

to extrapolate the results of erroneous 

payment data to all beneficiaries 

enrolled under a contract if the MA 

organization or Part D sponsor does not 

submit corrected data as requested by 

CMS. The commenter believed that the 

proposed provision could be interpreted 

to mean that CMS may apply the offset 

amount to all beneficiaries, even though 

not all beneficiaries may have been 

affected by the incorrect data. The 

commenter opined that it would not be 

appropriate to extrapolate paymentoffset calculations without providing 

MA organizations and Part D sponsors 

with notice or an explanation of the 

methodologies that CMS would employ. 

Commenters recommended that CMS 

expressly state that extrapolation will 

not be involved in payment recoupment 

under the CMS-identified overpayment 

regulations, and the payment offsets 

should be applied based on payment 

errors that have been determined for 

specific beneficiaries. 

Response: CMS may identify 

erroneous payment data submitted by 

MA organizations or Part D sponsors 

through a variety of different means. In 

the proposed rule, we discussed the 

procedures that CMS would undertake 

when erroneous payment data are 

identified, but did not address the 

means by which CMS would identify 

erroneous payment data. Therefore, this 

comment is outside the scope of the 

proposed rule. 

Comment: Several commenters raised 

the issue that, in cases where a CMSidentified overpayment is a result of 

errors in diagnosis data submitted by 

MA organizations, CMS’ determination 

of the overpayment amount should take 

into account the fact that the CMS–HCC 

risk adjustment model used to riskadjust payments to MA organizations is 

calibrated on diagnoses from Medicare 

fee-for-service claims not MA 

organizations’ claims. Commenters 

referred to this as the ‘‘data 

inconsistency issue.’’ Specifically, 

commenters noted that CMS has 

recognized, in the contract-level RADV 

context, that individual errors in risk 

adjustment data cannot be equated with 

overpayments without first accounting 

for the error rate in the fee-for-service 

(‘‘FFS’’) claims data. Commenters also 

stated that CMS has acknowledged 

when calculating overpayments based 

on medical record review for RADV 

audits that it must ‘‘account for the fact 

that the documentation standard used in 

RADV audits to determine a contract’s 

payment error (medical records) is 

different from the documentation 

standard used to develop the Part C riskadjustment model (FFS claims).’’ 

Further, commenters noted that, to 

address this problem, CMS 

implemented a ‘‘FFS Adjuster’’ that 

offsets the payment recovery amount to 

account for FFS and MA program 

differences in documentation standards. 

These commenters believed that CMS’ 

application of the ‘‘FFS Adjuster’’ in the 

RADV context does fulfill the actuarial 

equivalence requirement under the risk 

adjustment provisions in the Act, and 

failure to maintain logical consistency 

by applying this adjuster in the context 

of the CMS-identified overpayments 

addressed by this rule would be 

contrary to the actuarial standard in 

statute. 

Response: We understand from these 

comments that commenters are 

specifically recommending that any risk 

adjustment payment recovery amounts 

be adjusted to reflect medical record 

coding documentation differentials 

between FFS providers and MA 

organizations. We note that this type of 

adjustment would not apply to other 

types of data errors, such as those that 

might be found in PDE data. We further 

interpret the commenters to be saying 

that the overpayment amounts should 

be adjusted downward to take the 

medical record coding documentation 

differential into account. From a 

conceptual perspective, we believe that 

the application of a FFS adjuster is a 

payment calculation methodology issue, 

rather than a procedural issue. Our 

proposal was narrowly tailored to 

specify a procedure for correcting the 

inaccurate data that MA organizations 

and Part D sponsors have submitted for 

payment and providing an appeals 

process. Therefore, we believe that these 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 67009 

comments relating to data inconsistency 

and the application of a FFS adjuster to 

overpayments are outside the scope of 

the proposed provision. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, as proposed, 

without modification. 

b. Payment Offset Notification 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41062), we proposed that 

CMS would provide a payment offset 

notice to the MA organization or Part D 

sponsor (proposed §§ 422.330(d)(1) 

through (d)(3) and 423.352(d)(1) through 

(d)(3)). The notice would provide the 

dollar amount to be offset against a 

plan’s monthly prospective payments 

and an explanation of how the 

erroneous data were identified and of 

the calculation of the payment offset 

amount. Under our proposal, the 

payment offset notice would also 

explain that, in the event that the MA 

organization or Part D sponsor disagrees 

with the payment offset, it may request 

an appeal within 30 days of the issuance 

of the payment offset notice. 

Comment: A number of commenters 

requested that CMS provide for an 

appeals process prior to conducting the 

payment recovery or offset. 

Response: We are concerned that if 

we allow for appeals prior to the offset, 

we are at risk of having an extensive 

process that inordinately delays the 

offset and the recovery of the 

overpayment. However, we are willing 

to engage in a dialogue with plans prior 

to the offset. We anticipate that this 

dialogue will help to resolve data issues 

prior to implementing the payment 

offset and recovery. Therefore, we are 

not making the requested changes to the 

proposed process for payment offset 

notification. 

After consideration of the public 

comments we received, we are 

finalizing our proposal. However, we 

are making a minor modification to the 

accompanying regulation text at 

§ 422.330(d) and § 423.352(d) to clarify 

that the payment offset notice will 

include at least the information outlined 

in the regulation, but may include other 

information relevant to the payment 

offset. 

4. Appeals Process for MA 

Organizations and Part D Sponsors 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41062), we proposed an 

appeals process for MA organizations 

and Part D sponsors with three levels of 

review, including reconsideration 

(described at proposed §§ 422.330(e)(1) 

and 423.352(e)(1)), an informal hearing 

(described at proposed §§ 422.330(e)(2) 

and 423.352(e)(2)), and an 

Administrator review (described at 

proposed §§ 422.330(e)(3) and 

423.352(e)(3)). 

a. Reconsideration 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41062), we proposed that an 

MA organization or Part D sponsor must 

file its request for reconsideration 

within 30 days from the date that CMS 

issued the payment offset notice to the 

MA organization or the Part D sponsor 

(proposed §§ 422.330(e)(1)(i) and 

423.352(e)(1)(i)). At proposed 

§§ 422.330(e)(1)(ii) and 423.352(e)(1)(ii), 

we address the information that must be 

included in the MA organization’s or 

Part D sponsor’s request for 

reconsideration. The request would 

have to contain the findings or issues 

with which the MA organization or Part 

D sponsor disagrees, the reasons for its 

disagreement, and any additional 

documentary evidence that the MA 

organization or Part D sponsor wishes to 

submit in support of its position. This 

additional evidence would have to be 

submitted with the request for 

reconsideration. Under our proposal, 

any information submitted after this 

time would be rejected as untimely. 

Under our proposal, the CMS 

reconsideration official would review 

the underlying data that were used to 

determine the amount of the payment 

offset and any additional documentary 

evidence that the MA organization or 

Part D sponsor timely submitted with its 

reconsideration request 

(§§ 422.330(e)(1)(iii) and 

423.352(e)(1)(iii)). We note that, in some 

instances, the CMS reconsideration 

official’s review of the underlying data 

may include review of information 

identifying or explaining the error in the 

payment data, such as information from 

the source that identified the erroneous 

payment data. We proposed at 

§§ 422.330(e)(1)(iv) and 423.352(e)(1)(iv) 

that the CMS reconsideration official 

would inform the MA organization or 

Part D sponsor of the decision. We 

proposed at §§ 422.330(e)(1)(v) and 

423.352(e)(1)(v) that a reconsideration 

decision would be final and binding 

unless a timely request for an informal 

hearing is filed by the MA organization 

or Part D sponsor. 

Comment: Several commenters stated 

that a 30-day window to submit an 

appeal request is too short. A few 

commenters asked that CMS provide at 

least 60 days from the time a data 

correction notice is issued for Part D 

sponsors to appeal the data correction 

decision. One commenter suggested a 

timeframe of 30 days to appeal and an 

additional 60 days for researching the 

issue and gathering supporting 

documents necessary for consideration. 

Response: We have considered these 

concerns and suggestions, and we 

continue to believe that 30 days is 

sufficient time to file the appeal, 

particularly because the MA 

organization or Part D sponsor would 

have received an earlier notification and 

request to correct the erroneous data. 

After consideration of the public 

comments we received, we are 

finalizing our proposal without 

modification. 

b. Informal Hearing 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41062), we proposed that if 

the MA organization or Part D sponsor 

is dissatisfied with CMS’ 

reconsideration decision, it would be 

entitled to request an informal hearing 

(proposed §§ 422.330(e)(2) and 

423.352(e)(2)). As proposed at 

§§ 422.330(e)(2)(i) and 423.352(e)(2)(i), a 

request for an informal hearing must be 

made in writing and filed within 30 

days of the date of CMS’ reconsideration 

decision. The request must include a 

copy of CMS’ reconsideration decision 

and must specify the findings or issues 

in the decision with which the MA 

organization or Part D sponsor disagrees 

and the reasons for its disagreement 

(proposed §§ 422.330(e)(2)(ii) and 

423.352(e)(2)(ii)). 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41062), we set forth the 

proposed procedures for conducting the 

informal hearing at proposed 

§§ 422.330(e)(2)(iii) and 

423.352(e)(2)(iii). Under these 

procedures, CMS would provide written 

notice of the time and place of the 

informal hearing at least 10 days before 

the scheduled date of the hearing 

(proposed § 422.330(e)(2)(iii)(A) and 

§ 423.352(e)(2)(iii)(A)); the informal 

hearing would be conducted by a CMS 

hearing officer. The hearing officer 

would be limited to reviewing the 

record that was before CMS when CMS 

made its reconsideration determination 

(proposed § 422.330(e)(2)(iii)(B) and 

§ 423.352(e)(2)(iii)(B)). Under our 

proposal, no new or additional 

documentation or evidence may be 

submitted at this hearing. At proposed 

§ 422.330(e)(2)(iii)(C) and 

§ 423.352(e)(2)(iii)(C), we proposed that 

the CMS hearing officer would review 

the record of the proceeding before the 

CMS reconsideration official using the 

clearly erroneous standard of review. 

CMS’ reconsideration decision would 

not be reversed unless the MA 

organization or Part D sponsor 

establishes that the decision was clearly 

erroneous in light of the evidence in the 


tkelley on DSK3SPTVN1PROD with RULES2
67010 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

record before the CMS reconsideration 

official. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41062), at proposed 

§§ 422.330(e)(2)(iv) and 

423.352(e)(2)(iv), we proposed that the 

CMS hearing officer would send a 

written decision of the informal hearing 

to the MA organization or Part D 

sponsor explaining the basis for the 

decision. The CMS hearing officer’s 

decision would be final and binding, 

unless the decision is reversed or 

modified by the Administrator 

(proposed §§ 422.330(e)(2)(v) and 

423.352(e)(2)(v)). 

Comment: One commenter 

recommended that CMS allow plans the 

opportunity to present oral arguments 

during the informal hearing appeal stage 

and that written notice addressing the 

time and location of the hearing be 

provided at least 30 days prior, as 

opposed to the proposed 10 days. 

Response: As proposed and finalized, 

this rule will permit MA organizations 

and Part D sponsors, at the informal 

hearing stage, to present oral arguments 

regarding whether or not the CMS 

reconsideration official’s decision was 

clearly erroneous. At the informal 

hearing, the hearing officer will review, 

and the parties may discuss, the 

contents of the administrative record, 

which was before the reconsideration 

official. We understand that 10 days’ 

notice of the time and place of the 

hearing may be insufficient notice for 

some MA organizations and Part D 

sponsors to arrange for travel to the 

hearing location. Therefore, we are 

accepting the commenters’ suggestion to 

extend the timeframe for CMS to 

provide written notice of the time and 

place of the hearing, and are extending 

that timeframe to 30 days before the 

scheduled date for the informal hearing. 

Comment: A few commenters stated 

that with the ‘‘clearly erroneous’’ 

standard, CMS is unfairly placing the 

burden of proving CMS wrong 

completely on the MA organizations 

and Part D sponsors. Commenters 

pointed out that a sponsor may be 

unable—not unwilling—to collect the 

data required to refute CMS’ assertions. 

One commenter stated that while the 

burden of proof falls to the sponsors to 

disprove CMS’ claims, there is no 

explicit requirement that CMS must be 

able to substantiate its concerns 

regarding data before it triggers the 

proposed incorrect payment notification 

process. The commenter is concerned 

that without changes to these standards 

the possibility exists for abuse of the 

process, putting sponsors on a continual 

defensive cycle. The commenter 

suggested that CMS be obligated to 

provide reasonable substantiation of its 

overpayment claim and that the 

standard for review be that the MA 

organization or Part D sponsor provide 

reasonable evidence, in light of the 

available data, that the CMS claim is not 

supportable. 

Response: The issue of whether or not 

payment data submitted by an MA 

organization or Part D sponsor are 

erroneous is a factual issue that is 

determined by looking at the payment 

data in relation to the payment 

framework established in statute and 

regulation, which the MA organizations 

and Part D sponsors agree to be 

contractually bound by when they sign 

the agreement with CMS to operate a 

Medicare Advantage and/or a Voluntary 

Medicare Prescription Drug Plan. Under 

the clearly erroneous standard of 

review, the hearing officer will only 

overturn the reconsideration official’s 

decision if that decision, based on the 

record before the reconsideration 

official, contains plain errors of fact or 

law. Because the determination of 

whether or not payment data submitted 

by an MA organization or Part D 

sponsor are erroneous is a factual one, 

we believe that the clearly erroneous 

standard is appropriate. The CMS 

reconsideration official reviews the 

underlying data that were submitted by 

the MA organization or Part D sponsor 

and any additional documentary 

evidence timely submitted by the MA 

organization or Part D sponsor, and thus 

is in the best position to determine the 

facts underlying the determination that 

erroneous payment data have been 

submitted. Accordingly, the 

reconsideration official’s decision 

should only be disturbed in the case of 

a clear error. 

We believe commenters are concerned 

that there is no requirement that CMS 

substantiate its claims of an 

overpayment and that could lead to 

abuse of the process. To the contrary, 

paragraph (b) of both § 422.330 and 

§ 423.352 imposes a burden and a 

requirement on CMS. Under these 

provisions, we can request corrections 

to payment data through a notice in 

which we are obligated to include or 

make reference to the specific data that 

need to be corrected and the reason why 

we believe that the data are erroneous. 

‘‘Erroneous payment data,’’ as stated in 

the preamble of the proposed rule and 

the text of the regulations being adopted 

in this final rule, are data that should 

not have been submitted because the 

data are either inaccurate or 

inconsistent with Part C or Part D 

requirements. We will determine 

payment data to be erroneous based on 

the applicable statutes and regulations. 

Based on the payment framework 

established in statute and regulation, we 

will determine whether or not that 

erroneous data result in an overpayment 

prior to conducting the payment offset. 

Commenters are concerned that they 

will be unable—not unwilling—to refute 

CMS’ decision that the submission of 

erroneous payment data has resulted in 

an overpayment. As we stated in the 

preamble to our proposed rule, we 

proposed to establish a process for 

identifying and recouping overpayments 

to ensure that payments are made 

consistent with the payment framework 

established by statute. If we determine 

that an overpayment has occurred, the 

MA organization or Part D sponsor must 

be able to provide evidence to refute the 

finding that the underlying payment 

data are erroneous in order to succeed 

on appeal. As stated in the proposed 

rule at §§ 422.330(f) and 423.352(f), the 

MA organization or Part D sponsor must 

be able to prove by a preponderance of 

the evidence that our finding that the 

payment data are erroneous was 

incorrect or otherwise inconsistent with 

applicable program requirements. Thus, 

we believe that it is reasonable to expect 

that MA organizations and Part D 

sponsors provide evidence to support 

how their payment data are correct and 

consistent with program requirements 

in order for the CMS hearing officer to 

reverse both an initial determination by 

CMS and a reconsideration decision by 

the CMS reconsideration official that 

erroneous payment data have been 

submitted. 

After consideration of the public 

comments we received, we are 

finalizing our proposals with respect to 

the procedures that will apply to a 

request for an informal hearing, with a 

modification to provide that we will 

provide written notice of the time and 

place of the hearing 30 days before the 

scheduled date, as described above. 

c. Review by Administrator 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41062), we proposed that 

the MA organization or Part D sponsor 

may request review of the hearing 

officer’s decision by the Administrator 

within 30 days of issuance of the 

hearing officer’s decision (proposed 

§§ 422.330(e)(3)(i) and 423.352(e)(3)(i)). 

The MA organization or Part D sponsor 

may provide written arguments to the 

Administrator for review. Under 

proposed §§ 422.330(e)(3)(ii) and 

423.352(e)(3)(ii), after receiving the 

request for review, the Administrator 

would have the discretion to elect to 

review the hearing determination or 

decline to review it. As provided at 

proposed §§ 422.330(e)(3)(iii) and 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 67011 

423.352(e)(3)(iii), if the Administrator 

declines to review the hearing officer’s 

decision, the hearing officer’s decision 

would be final and binding. At 

proposed §§ 422.330(e)(3)(iv) and 

423.352(e)(3)(iv), we proposed that if 

the Administrator elects to review the 

hearing officer’s decision, the 

Administrator would review the hearing 

officer’s decision, as well as any other 

information included in the record of 

the hearing officer’s decision and any 

written arguments submitted by the MA 

organization or Part D sponsor. The 

Administrator would be able to uphold, 

reverse, or modify the hearing officer’s 

decision. The Administrator’s 

determination would be final and 

binding (proposed §§ 422.330(e)(3)(v) 

and 423.352(e)(3)(v)). 

We did not receive any public 

comments on the proposal for review by 

the Administrator and are finalizing this 

proposal without modification. 

5. Matters Subject To Appeal and 

Burden of Proof 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41063), at proposed 

§§ 422.330(f)(1) and (2) and 

423.352(f)(1) and (2), we proposed to 

limit the subject-matter that an MA 

organization or Part D sponsor may 

appeal under this provision and 

establish the burden of proof that the 

MA organization or Part D sponsor must 

meet in its appeal. Under this provision, 

an MA organization or a Part D sponsor 

would be able to appeal the notice of 

payment offset solely on the grounds 

that CMS’ finding that the MA 

organization’s or Part D sponsor’s 

payment data were either erroneous or 

otherwise inconsistent with applicable 

program requirements. The MA 

organization or Part D sponsor would 

bear the burden of proof by a 

preponderance of the evidence in 

demonstrating that CMS’ finding was 

incorrect or inconsistent with applicable 

program requirements. 

At proposed §§ 422.330(g) and 

423.352(g), we proposed that the 

appeals process under paragraph (e) of 

these sections would apply only to 

payment offsets described at proposed 

§§ 422.330(c) and 423.352(c). It would 

not apply to any other CMS payment 

offset process. 

Comment: One commenter noted that, 

in the proposed rule, CMS stated that 

the burden of proof is on the MA 

organization or Part D sponsor to prove 

that the CMS finding was ‘‘incorrect or 

otherwise inconsistent with applicable 

program requirements.’’ This 

commenter asked that CMS clarify that 

plans would not be expected to conform 

to FFS requirements or business models 

in coding practices. The commenter 

stated that in the past there have been 

occasions when CMS has relied on the 

use of FFS requirements or customary 

practices in the absence of specific MA 

or Part D guidelines. The commenter 

stated that this creates an unreasonable 

burden of regulations, rules, manuals, 

notices, and bulletins that must be 

considered in the process of identifying, 

reporting, and appealing matters of data 

accuracy and potential overpayment. In 

addition, the commenter believed that 

this practice does not address the fact 

that an error may have been solely 

caused by provider error, over which a 

plan has no control, and therefore 

places an unreasonable burden on the 

plan. 

Response: We are not clear about the 

commenter’s concern. In the preamble 

of the proposed rule, the phrase 

‘‘applicable program requirements’’ is 

referring to MA program requirements, 

not to FFS program requirements. If the 

commenter is asking about coding 

practices, CMS does not provide 

specific MA guidelines on how to code, 

but instead requires that MA 

organizations use the code sets and 

guidelines in whatever version of the 

International Classification of Diseases 

that is in effect for the classification and 

reporting of diseases for all U.S. health 

care settings (not just Medicare). 

Further, we are unsure as to what the 

commenter is referring in the statement 

‘‘in the past there have been occasions 

when CMS has relied on the use of FFS 

requirements or customary practices in 

the absence of specific MA or Part D 

guidelines.’’ The commenter did not 

provide any examples, so we are unable 

to respond to this concern. Regarding 

the statement that an MA organization 

has no control over provider errors in 

data submission, we refer readers to the 

contracting provisions in the MA 

regulation at § 422.504 regarding the 

MA organization’s responsibility for 

data submissions. 

After consideration of the public 

comments we received, we are 

finalizing our proposal without 

modification. 

6. Effective Date of Appeals Process 

Provisions 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41063), we proposed that 

this new procedural mechanism for a 

payment offset at proposed § 422.330 

and § 423.352 would apply after the 

effective date of any final rule 

implementing the new payment offset 

and appeals process, but that requests to 

correct payment data under proposed 

§§ 422.330(b) and 423.352(b) and the 

payment offsets under proposed 

§§ 422.330(c) and 423.352(c) may apply 

to any payment year, subject to the 6- 

year limitation under §§ 422.330(b) and 

423.352(b). 

We invited public comments on these 

proposals regarding the effective date 

and application of the rule. 

We did not receive any public 

comments on these proposals, and we 

are finalizing our proposals with the 

modification discussed above to codify 

the 6-year limitation in paragraph (c) of 

§§ 422.330 and 423.352. 

In summary, we are finalizing the 

provisions at §§ 422.330 and 423.352, 

with the following modifications. We 

are removing the phrase ‘‘controlled 

and’’ from the definition of ‘‘payment 

data’’ at §§ 422.330(a) and 423.352(a). 

We are adding the definition of 

‘‘erroneous payment data’’ to the final 

regulation text at §§ 422.330(a) and 

423.352(a). At §§ 422.330(b) and 

423.352(b), we are moving language 

regarding the 6-year look-back period to 

§§ 422.330(c)(1) and 423.352(c)(1) to 

indicate that if the MA organization or 

Part D sponsor fails to correct payment 

data, CMS will conduct a payment offset 

if the payment error identified affects 

payments for any of the 6 most recently 

completed payment years and the 

payment error for a particular payment 

year is identified after the applicable 

reconciliation date for that payment 

year. At §§ 422.330(c) and 423.352(c), 

we are adding paragraph (2) to clarify 

that CMS will calculate the payment 

offset amount using the correct payment 

data. In addition, we are making a minor 

modification to the regulation text at 

§ 422.330(d) and § 423.352(d) to clarify 

that the payment offset notice will 

include at least the information outlined 

in the regulation, but may include other 

information relevant to the payment 

offset. Finally, we are revising 

§§ 422.330(e)(2)(iii)(A) and 

423.352(e)(2)(iii)(A) to state that we will 

provide written notice of the time and 

place of the informal hearing at least 30 

days before the scheduled date. 

XVIII. Files Available to the Public via 

the Internet 

Addendum J to this final rule with 

comment period is a new addendum 

that we proposed for CY 2015, in 

response to requests by public 

commenters on the CY 2014 OPPS/ASC 

final rule with comment period for 

additional data regarding ratesetting for 

the new comprehensive APCs 

established in that final rule with 

comment period, which are discussed in 

section II.A.2.e. of this final rule with 

comment period. Addendum J lists the 

HCPCS code pairs for which we are 

finalizing complexity adjustments for 


tkelley on DSK3SPTVN1PROD with RULES2
67012 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

CY 2015, by clinical family; the HCPCS 

codes finalized for exclusion from the 

comprehensive APC payment bundle; 

and the relevant cost statistics. 

The public comments that we 

received related to the proposed 

Addendum J to the CY 2015 OPPS/ASC 

proposed rule are discussed in detail in 

section II.A.2.e. of this final rule with 

comment period. We are finalizing our 

proposal to create Addendum J without 

modification. 

The Addenda to the OPPS/ASC 

proposed rules and the final rules with 

comment period are published and 

available only via the Internet on the 

CMS Web site. To view the Addenda to 

this final rule comment period 

pertaining to CY 2015 payments under 

the OPPS, we refer readers to the CMS 

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

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

Hospital-Outpatient-Regulations-andNotices.html; select ‘‘1613–FC’’ from the 

list of regulations. All OPPS Addenda to 

this final rule with comment period are 

contained in the zipped folder entitled 

‘‘2015 OPPS 1613–F Addenda’’ at the 

bottom of the page. To view the 

Addenda to this final rule with 

comment period pertaining to the CY 

2015 payments under the ASC payment 

system, we refer readers to the CMS 

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

Medicare/Medicare-Fee-for-ServicePayment/ASCPayment/ASCRegulations-and-Notices.html; select 

‘‘1613–FC’’ from the list of regulations. 

All ASC Addenda to this final rule with 

comment period are contained in the 

zipped folders entitled ‘‘Addendum AA, 

BB, DD1 and DD2,’’ and ‘‘Addendum 

EE’’. 

XIX. Collection of Information 

Requirements 

A. Legislative Requirements for 

Solicitation of Comments 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 60- 

day notice in the Federal Register and 

to solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

3506(c)(2)(A) of the Paperwork 

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 741063 through 41067), we 

solicited public comments on each of 

the issues outlined above for the 

information collection requirements 

discussed below. 

B. Requirements in Regulation Text: 

Changes to the Rural Provider and 

Hospital Ownership Exceptions to the 

Physician Self-Referral Law: Expansion 

Exception Process (§ 411.362) 

As discussed in section XV.C. of the 

CY 2015 OPPS/ASC proposed rule (79 

FR 41054 through 41056) and in section 

XV.C. of this final rule with comment 

period, we proposed to modify the 

physician-owned hospital expansion 

exception process under the rural 

provider and hospital ownership 

exceptions to the physician self-referral 

law. Specifically, we proposed to permit 

physician-owned hospitals to use 

certain non-HCRIS data sources to 

demonstrate satisfaction of the 

expansion exception process eligibility 

criteria. 

In section XIX.B. of the CY 2015 

OPPS/ASC proposed rule (79 FR 41063), 

we stated that we believe the burden 

associated with our modifications to the 

physician-owned hospital expansion 

exception process is exempt from the 

PRA under 5 CFR 1320.3(c) because the 

information collection will not impact 

10 or more entities in a 12-month 

period. We did not receive any public 

comments on the proposed stated 

burden of our proposed modifications to 

the physician-owned hospital expansion 

exception process. 

As discussed in section XV.C. of this 

final rule with comment period, we are 

finalizing our proposal with certain 

modifications. The provisions are 

exempt from the PRA under 5 CFR 

1320.3(c) because the information 

collection will not impact 10 or more 

entities in a 12-month period. 

C. Associated Information Collections 

Not Specified in Regulatory Text 

In the CY 2015 OPPS/ASC proposed 

rule, we made reference to proposed 

associated information collection 

requirements that were not discussed in 

the regulation text contained in the 

proposed rule. The following is a 

discussion of those requirements, any 

public comments we received, and our 

responses to those public comments. 

1. Hospital OQR Program 

As we stated in section XIV. of the CY 

2012 OPPS/ASC final rule with 

comment period, the Hospital OQR 

Program has been generally modeled 

after the quality data reporting program 

for the Hospital IQR Program (76 FR 

74451). We refer readers to the CY 2011 

OPPS/ASC final rule with comment 

period (75 FR 72111 through 72114), the 

CY 2012 OPPS/ASC final rule with 

comment period (76 FR 74549 through 

74554), the CY 2013 OPPS/ASC final 

rule with comment period (77 FR 68527 

through 68532), and the CY 2014 OPPS/ 

ASC final rule with comment period (78 

FR 75170 through 75172) for detailed 

discussions of Hospital OQR Program 

information collection requirements we 

have previously finalized. 

a. Revisions to the CY 2016 Payment 

Determination Estimates 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75103), we 

finalized the adoption of four new 

measures for the CY 2016 payment 

determination and subsequent years: (1) 

OP–27: Influenza Vaccination Coverage 

among Healthcare Personnel (NQF # 

0431); (2) OP 29: Endoscopy/Polyp 

Surveillance: Appropriate Follow-up 

Interval for Normal Colonoscopy in 

Average Risk Patients (NQF # 0658); (3) 

OP 30: Endoscopy/Polyp Surveillance: 

Colonoscopy Interval for Patients with a 

History of Adenomatous Polyps— 

Avoidance of Inappropriate Use (NQF # 

0659); and (4) OP–31: Cataracts— 

Improvement in Patient’s Visual 

Function within 90 Days Following 

Cataract Surgery (NQF # 1536). In the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75171), we 

estimated measures OP–29, OP–30, and 

OP–31 would require 40 hours of 

reporting per quarter (96 cases × 0.417 

hours). We also estimated that reporting 

these measures via our Web-based tool 

would take 10 minutes (or 0.167 hours) 

per measure per year (or 2.5 minutes for 

each quarter’s data, which are submitted 

on an annual basis) (78 FR 75171 

through 75172). 

We noted in section XIII.D.2. of the 

CY 2015 OPPS/ASC proposed rule and 

this final rule with comment period that 

we have delayed reporting for OP–29 

and OP–30 for the CY 2016 payment 

determination by one quarter. Therefore, 

we estimate a reduction in burden of 40 

hours for each of these measures (40 

hours per quarter for reporting + 2.5 

minutes of reporting via the Web-based 

tool) per hospital for the CY 2016 

payment determination. In addition, in 

section XIII.D.3. of the CY 2015 OPPS/ 

ASC proposed rule and this final rule 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 67013 

with comment period, we are finalizing 

our proposal to exclude OP–31 from the 

CY 2016 payment determination 

measure set. Therefore, we estimate that 

there will be no burden for reporting 

OP–31 for the CY 2016 payment 

determination, and an overall reduction 

in burden of 160 hours ((40 hours per 

quarter for reporting × 4 quarters) 

+ 0.167 hours per year for reporting via 

the Web-based tool) per hospital for the 

CY 2016 payment determination. 

Combining the estimated reductions 

in burden for all three of these 

measures, we estimate a total reduction 

in burden of 240 hours (40 hours + 40 

hours + 160 hours) per hospital for the 

CY 2016 payment determination due to 

delayed data collection for OP–29 and 

OP–30 and the exclusion of OP–31. We 

estimate that approximately 3,300 

hospitals will participate in the Hospital 

OQR Program for the CY 2016 payment 

determination. Therefore, we estimate a 

total reduction in burden of 792,000 

hours (240 hours × 3,300 hospitals) for 

the CY 2016 payment determination 

from our original estimate of 1.6 million 

hours (160 hours/measure × 3 measures 

× 3,300 hospitals) as discussed in the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75171 through 

75172) for all hospitals participating in 

the Hospital OQR Program based on the 

data collection delays for OP–29 and 

OP–30 and the exclusion of OP–31. In 

the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75171), we 

estimated that these measures would 

result in a financial burden of $30 per 

hour. Therefore, we estimate that the 

changes to these three measures will 

result in a reduction in financial burden 

of $23.8 million ($30/hour × 792,000 

hours) for the CY 2016 payment 

determination from our original 

estimate of $76.8 million ($1.6 million 

× $30) as discussed in the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75171 through 75172). 

b. Hospital OQR Program Requirements 

for the CY 2017 Payment Determination 

and Subsequent Years 

As we stated in the CY 2014 OPPS/ 

ASC final rule with comment period (78 

FR 75171), we believe there is a burden 

associated with successful participation 

in the Hospital OQR Program, where 

successful participation results in a full 

annual payment update (APU) for the 

particular payment determination. For 

the reasons stated in that rule, we 

believe that the burden associated with 

these requirements is 42 hours per 

hospital or 138,600 hours for all 

hospitals for the CY 2017 payment 

determination and subsequent years. We 

estimate a financial burden for these 

requirements of $4.2 million ($30/hour 

× 138,600) for all hospitals. 

(1) Claims-Based Measures for the CY 

2017 and CY 2018 Payment 

Determinations and Subsequent Years 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68530) for detailed 

discussions of the information 

collection requirements for the 

previously finalized claims-based 

measures (OP–8, OP–9, OP–10, OP–11, 

OP–13, OP–14, and OP–15). In section 

XIII.E. of this final rule with comment 

period, we are finalizing our proposal to 

adopt one additional claims-based 

measure, OP–32: Facility Seven-Day 

Risk-Standardized Hospital Visit Rate 

after Outpatient Colonoscopy, but are 

finalizing its inclusion in the measure 

set for the CY 2018 payment 

determination and subsequent years 

instead of for the CY 2017 payment 

determination and subsequent years as 

proposed. Before publicly reporting this 

measure, however, we will conduct a 

dry run (a preliminary analysis) for 

facilities to review their performance 

and provide feedback. For more detailed 

information about the dry run, we refer 

readers to our discussion in section 

XIII.E. of this final rule with comment 

period. 

As we noted in the CY 2013 OPPS/

ASC final rule with comment period (77 

FR 68530) and consistent with the 

modifications we are finalizing in this 

final rule with comment period, we 

calculate claims-based measures using 

Medicare FFS claims data that do not 

require additional hospital data 

submissions. 

(2) Chart-Abstracted Measures for the 

CY 2017 Payment Determination and 

Subsequent Years 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68530 through 68531) and 

the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75171) for 

detailed discussions of the information 

collection requirements for the 

previously finalized chart-abstracted 

measures (OP–1, OP–2, OP–3, OP–4, 

OP–5, OP–6, OP–7, OP–18, OP–20, OP– 

21, OP–22, OP–23, OP–29, OP–30, and 

OP–31). 

In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41034), we proposed to 

remove three chart-abstracted measures 

from the Hospital OQR Program 

beginning with the CY 2017 payment 

determination, OP–4: Aspirin at Arrival 

(NQF # 0286); OP–6: Timing of 

Prophylactic Antibiotics; and OP–7: 

Perioperative Care: Prophylactic 

Antibiotic Selection for Surgical 

Patients (NQF # 0528). In section 

XIII.C.3. of this final rule with comment 

period, we are finalizing our proposal to 

remove two of these measures (OP–6 

and OP–7) from the Hospital OQR 

Program for the CY 2017 payment 

determination and subsequent years. We 

are not finalizing our proposal to 

remove OP–4 and refer readers to 

section XIII.C.3. of this final rule with 

comment period for a detailed 

discussion. We previously estimated 

that each participating hospital will 

spend 35 minutes (or 0.583 hours) per 

case to collect and submit the data 

required for the chart-abstracted 

measures finalized for the CY 2015 

payment determination and subsequent 

years (OP–1, OP–2, OP–3, OP–4, OP–5, 

OP–6, OP 7, OP–18, OP–20, OP–21, OP– 

22, and OP–23) (78 FR 75171). Because 

we are finalizing our proposals to 

remove two of these measures, we 

believe that the time to chart-abstract 

measures will be reduced by 16.7 

percent (2 of 12 measures) per case. 

Therefore, we estimate that hospitals 

will spend approximately 29 minutes 

(0.483 hours) per case to collect and 

submit these data. 

Data submitted for the CY 2014 

payment determination indicate that the 

average hospital will submit 

approximately 1,266 cases per year for 

these measures. Therefore, as a result of 

our removal of 2 chart-abstracted 

measures, we estimate that the time it 

will take for the average hospital to 

abstract data for all of the chartabstracted measures will be 612 hours 

per year (1,266 cases × 0.483 hours). We 

estimate that there will be 

approximately 3,300 hospitals that 

participate in the Hospital OQR Program 

for the CY 2017 payment determination 

and subsequent years. Therefore, we 

estimate that the chart-abstracted 

measures for the CY 2017 payment 

determination and subsequent years 

will result in a burden of 2.02 million 

hours (612 hours × 3,300 hospitals) for 

all participating hospitals, for a total 

financial burden of approximately $61 

million (2.02 million hours × $30/hour). 

In addition, in the CY 2014 OPPS/

ASC final rule with comment period (78 

FR 75171), we estimated that OP–29 and 

OP–30 would require 25 minutes (0.417 

hours) per case per measure to chartabstract. We also estimated that 

hospitals would abstract 384 cases per 

year for each of these measures. Our 

estimate for the CY 2017 payment 

determination and subsequent years has 

not changed from last year’s estimate 

(although, as noted above, we have 

changed our estimate for the CY 2016 

payment determination based on the 

delay of reporting OP–29 and OP–30). 


tkelley on DSK3SPTVN1PROD with RULES2
67014 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

Therefore, for the CY 2017 payment 

determination and subsequent years, we 

estimate a burden of 1.1 million hours 

(3,300 hospitals × 0.417 hours/case × 

384 case/measure × 2 measures) for all 

participating hospitals for OP–29 and 

OP–30 for a total financial burden of 

approximately $33 million ($30/hour × 

1.1 million hours). 

In section XIII.D.3. of this final rule 

with comment period, we are finalizing 

our proposal to exclude OP–31 from the 

CY 2016 payment determination 

measure set and, for the CY 2017 

payment determination and subsequent 

years, to change this measure from 

required to voluntary. Hospitals will not 

be subject to a payment reduction with 

respect to this measure for the CY 2016 

payment determination or during the 

period of voluntary reporting. We 

continue to believe this measure 

addresses an important area of care, and 

anticipate that many facilities will 

report this measure on a voluntary basis. 

In the CY 2014 ASC/OPPS final rule 

with comment period (78 FR 75171), we 

estimated that OP–31 would require 25 

minutes (0.417 hours) per case to chartabstract. We also estimated that 

hospitals would abstract 384 cases per 

year for this measure. We estimate that 

approximately 20 percent of hospitals 

(660 hospitals (3,300 hospitals × 0.2)) 

will elect to report this measure on a 

voluntary basis. Therefore, we are 

revising the estimated burden for this 

measure to 105,685 hours (660 hospitals 

× 0.417 hours/case × 384 cases) for 

participating hospitals for the CY 2017 

payment determination and subsequent 

years, for a total financial burden of 

approximately $3.2 million ($30/hour × 

105,685 hours). 

Therefore, for the chart-abstracted 

measures, we estimate a total burden for 

all participating hospitals of 3.23 

million hours (2.02 million hours + 

105,685 hours + 1.1 million hours) and 

$96.9 million (3.23 million hours × $30/ 

hour) for the CY 2017 payment 

determination and subsequent years. 

(3) Web-Based Measures Submitted 

Directly to CMS for the CY 2017 

Payment Determination and Subsequent 

Years 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75171) for detailed 

discussions of the information 

collection requirements for the 

previously finalized measures submitted 

via the Web-based tool. For the reasons 

stated in that final rule with comment 

period, we estimate that each 

participating hospital would spend 10 

minutes per measure per year to collect 

and submit the data for the six measures 

(OP–12, OP–17, OP–25, OP–26, OP–29, 

and OP–30) submitted via the Webbased tool. Therefore, the estimated 

annual burden associated with these 

measures for all participating hospitals 

is 3,307 hours (3,300 hospitals × 0.167 

hours/measure × 6 measures/hospital) 

for the CY 2017 payment determination 

and subsequent years. 

As stated above, in section XIII.D.3. of 

this final rule with comment period, we 

are finalizing our proposal that hospitals 

have the option to voluntarily collect 

and submit OP–31 data beginning with 

the CY 2015 encounter period for the 

CY 2017 payment determination and 

subsequent years; failing to report this 

measure will not affect hospitals’ 

payment determinations for CY 2017 

and subsequent years. We continue to 

believe this measure addresses an 

important area of care and estimate that 

approximately 20 percent of hospitals or 

660 hospitals (3,300 hospitals × 0.2) will 

elect to report this measure on a 

voluntary basis. Therefore, we are 

revising the estimated burden for this 

measure for all participating hospitals to 

111 hours (660 hospitals × 0.167 hours) 

for the CY 2017 payment determination 

and subsequent years. 

Moreover, we estimate that the 

financial burden incurred for the Webbased submission of these measures for 

all participating hospitals will be 

$119,070 ($30/hour × (3,858 hours + 111 

hours)) for the CY 2017 payment 

determination and subsequent years. 

(4) NHSN HAI Measure for the CY 2017 

Payment Determination and Subsequent 

Years 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75172) for detailed 

discussions of the information 

collection requirements for OP–27: 

Influenza Vaccination Coverage among 

Healthcare Personnel. In section 

XIII.D.1. of this final rule with comment 

period, we are clarifying the submission 

deadline for this measure. We do not 

believe there will be a change in burden 

due to this clarification because it was 

a typographical error and our previous 

estimates were based on the correct 

submission timeframe. We also noted 

that facilities should collect and submit 

a single vaccination count for each 

health care facility enrolled in NHSN by 

the facility OrgID. Although we believe 

an overall reduction in burden will 

occur because hospitals will only be 

required to submit this information once 

for both the Hospital IQR Program and 

the Hospital OQR Program, we do not 

believe there is a reduction in burden 

that is directly attributable to the 

Hospital OQR Program. That is, this 

requirement is independent of the 

Hospital IQR Program requirements. 

Therefore, our burden analysis remains 

the same. For the reasons discussed in 

the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75172), we 

estimate a total burden for all 

participating hospitals of 106,940 hours 

and a total financial burden of 

$3,208,203 associated with this 

measure. 

c. Review and Corrections Period 

Requirements for the CY 2017 Payment 

Determination and Subsequent Years 

In section XIII.H.2.f. of this final rule 

with comment period, we are finalizing 

our proposal to formalize that the time 

during which hospitals submit chartabstracted data is the review and 

corrections period for those data. 

Because this proposal does not require 

hospitals to submit additional data, we 

do not believe it will increase burden 

for these hospitals. 

d. Hospital OQR Program Validation 

Requirements for the CY 2017 Payment 

Determination and Subsequent Years 

In sections XIII.H.3.b. and XIII.H.3.e. 

of this final rule with comment period, 

we are finalizing three changes to our 

validation procedures: (1) A hospital 

will be eligible for random selection for 

validation if it submits at least 12 cases 

to the Hospital OQR Program Clinical 

Data Warehouse during the quarter 

containing the most recently available 

data (we note that this is a modification 

of our proposal that a hospital would be 

eligible for random selection for 

validation if it submitted 1 case); (2) 

hospitals will have the option to either 

submit paper copies of patient charts or 

securely transmit electronic versions of 

medical information for validation; and 

(3) hospitals must identify the medical 

records staff responsible for submission 

of records under the Hospital OQR 

Program to the designated CMS 

contractor. We do not believe that these 

changes to the eligibility requirements 

will result in additional burden because 

we will continue to select 500 hospitals 

for validation consistent with our 

previous burden estimates indicate (78 

FR 75172). In addition, we do not 

believe requiring hospitals to identify 

the medical records staff responsible for 

submission of records will result in 

additional burden since hospitals must 

already submit this information to our 

designated contractors (the State QIO), 

and only the contractor to whom the 

data is submitted may change. However, 

we do believe that the second 

requirement regarding the method of 

submission may result in a change in 

burden. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 67015 

We are finalizing our proposal that 

the requirement to submit patient charts 

for validation of Hospital OQR Program 

data may be met by employing either of 

the following options: (1) A hospital 

may submit paper medical records, the 

form in which we have historically 

requested them; or (2) a hospital may 

securely transmit electronic versions of 

medical information beginning in the 

CY 2017 payment determination and for 

subsequent years. We are finalizing our 

proposal that hospitals that choose to 

securely transmit electronic versions of 

medical information should either: (1) 

download or copy the digital image (that 

is., a PDF) of the patient chart onto an 

encrypted CD, DVD, or flash drive and 

ship the encrypted electronic media 

following instructions specified on the 

QualityNet Web site; or (2) securely 

submit PDFs of patient charts using a 

Secure File Transfer Portal on the 

QualityNet Web site. In the FY 2014 

IPPS/LTCH PPS final rule (78 FR 50834 

through 50835), the Hospital IQR 

Program previously finalized a similar 

policy that also allows hospitals to 

submit electronic versions of records for 

validation using the first method. In the 

FY 2015 IPPS/LTCH PPS final rule, the 

Hospital IQR Program finalized secure 

submission of digital images via a 

Secure File Transfer Portal (79 FR 

50269). For the same reasons outlined in 

the Hospital IQR Program (78 FR 

50956), we are finalizing our proposal to 

set a reimbursement rate of $3.00 per 

patient chart submitted electronically 

(using either of the finalized methods 

for electronic submission) for validation 

for the CY 2017 payment determination 

and subsequent years. We will continue 

to reimburse hospitals at a rate of 12 

cents per page, plus shipping, for 

records provided on paper (76 FR 

74577). 

The burden associated with validation 

is the time and effort necessary to 

submit validation data to the CMS 

contractor. For some hospitals, we 

believe that submitting these data 

electronically may result in a reduction 

in burden; for others we believe that 

submitting paper copies will be the least 

burdensome option. As we have 

previously stated in the CY 2014 OPPS/ 

ASC final rule with comment period, we 

sample 500 hospitals for validation, and 

we estimate that it will take each 

hospital 12 hours to comply with the 

data submission requirements (78 FR 

75172). Therefore, because the number 

of hospitals we sample for validation 

will remain the same, we estimate a 

total burden of approximately 6,000 

hours (500 hospitals x 12 hours/

hospital) and a total financial impact of 

$180,000 ($30/hour x 6,000 hours) for 

the CY 2017 payment determination and 

subsequent years. 

e. Extraordinary Circumstances 

Extensions or Exemptions Process 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68489), the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75119 through 75120), 

and 42 CFR 419.46(d) for a complete 

discussion of our extraordinary 

circumstances extension or waiver 

process under the Hospital OQR 

Program. In this final rule with 

comment period, we are finalizing our 

proposal to change the phrase 

‘‘extension or waiver’’ to ‘‘extension or 

exemption’’ throughout the regulation. 

In section XIII.J. of this final rule with 

comment period, we note that we intend 

to make certain changes to the form to 

ensure that the form is consistent across 

CMS quality reporting programs. We do 

not anticipate that these minor changes 

will affect the collection of information 

burden estimates for this process. 

f. Reconsideration and Appeals 

While there is burden associated with 

filing a reconsideration request, the 

regulations at 5 CFR 1320.4 for the PRA 

(44 U.S.C. 3518(c)(1)(B)) exclude 

collection activities during the conduct 

of administrative actions such as 

reconsiderations or appeals. 

We invited public comment on the 

burden associated with these 

information collection requirements. We 

did not receive any public comments on 

this burden. 

2. ASCQR Program Requirements 

a. Background 

We refer readers to the CY 2012 

OPPS/ASC final rule with comment 

period (76 FR 74554), the FY 2013 IPPS/ 

LTCH PPS final rule (77 FR 53672), the 

CY 2013 OPPS/ASC final rule with 

comment period (77 FR 68532 through 

68533), and the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

75172 through 75174) for detailed 

discussions of the ASCQR Program 

information collection requirements we 

have previously finalized. 

b. Revisions to the CY 2016 Payment 

Determination Estimates 

In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75124 

through 75130), we finalized the 

adoption of three new measures for the 

CY 2016 payment determination and 

subsequent years: ASC–9: Endoscopy/

Polyp Surveillance: Appropriate 

Follow-up Interval for Normal 

Colonoscopy in Average Risk Patients 

(NQF # 0658); ASC–10: Endoscopy/

Polyp Surveillance: Colonoscopy 

Interval for Patients with a History of 

Adenomatous Polyps—Avoidance of 

Inappropriate Use (NQF # 0659); and 

ASC–11: Cataracts—Improvement in 

Patient’s Visual Function within 90 

Days Following Cataract Surgery (NQF # 

1536). In that final rule with comment 

period, we estimated that each 

participating ASC would spend 35 

minutes per case to collect and submit 

the data for these measures, resulting in 

a total estimated burden for ASCs with 

a single case per ASC of 3,067 hours 

(5,260 ASCs × 0.583 hours per case per 

ASC). We also stated that we expected 

ASCs would vary greatly as to the 

number of cases per ASC due to ASC 

specialization (78 FR 75173). 

As we stated in section XIV.E.3. of the 

CY 2015 OPPS/ASC proposed rule and 

this final rule with comment period, we 

have delayed reporting for ASC–9 and 

ASC–10 for the CY 2016 payment 

determination by one quarter. Therefore, 

we estimate a 25-percent reduction in 

cases and burden for these measures for 

the CY 2016 payment determination. As 

we stated in section XIV.E.3.c. of the CY 

2015 OPPS/ASC proposed rule and this 

final rule with comment period, we 

delayed reporting of ASC–11 by 1 year. 

We also are finalizing our proposal to 

exclude ASC–11 from the CY 2016 

payment determination measure set. As 

a result, we do not believe there would 

be any burden associated with this 

measure for the CY 2016 payment 

determination. 

c. Claims-Based Measures for the CY 

2017 Payment Determination and 

Subsequent Years 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68532) and CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75172 through 75174) for 

detailed discussions of the information 

collection requirements for the five 

previously-adopted claims-based 

ASCQR Program measures (four 

outcome measures and one process 

measure). The five previously adopted 

measures are: ASC–1: Patient Burn 

(NQF # 0263); ASC–2: Patient Fall (NQF 

# 0266); ASC–3: Wrong Site, Wrong 

Side, Wrong Patient, Wrong Procedure, 

Wrong Implant (NQF # 0267); ASC–4: 

Hospital Transfer/Admission (NQF # 

0265); and ASC–5: Prophylactic 

Intravenous (IV) Antibiotic Timing 

(NQF # 0264). For the reasons we 

discussed in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 

75172 through 75173), we estimate that 

the reporting burden to report Quality 

Data Codes (QDCs) for these five claimsVerDate Sep<11>2014 17:52 Nov 07, 2014 Jkt 235001 PO 00000 Frm 00247 Fmt 4701 Sfmt 4700 E:\FR\FM\10NOR2.SGM 10NOR2

tkelley on DSK3SPTVN1PROD with RULES2
67016 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

based outcome measures would be 

nominal for the CY 2017 payment 

determination and for subsequent years. 

In section XIV.B.5. of this final rule 

with comment period, we are finalizing 

our proposal to add one additional 

claims-based measure to the ASCQR 

Program, but are finalizing its inclusion 

in the measure sets for the CY 2018 

payment determination and subsequent 

years, instead of the measure set we 

proposed for the CY 2017 payment 

determination and subsequent years. 

Before publicly reporting this measure, 

we plan to perform a dry run (a 

preliminary analysis) of the measure in 

2015. We refer readers to section 

XIV.B.5 of this final rule with comment 

period for a detailed discussion of the 

dry run. 

Because this measure, ASC–12: 

Facility Seven-Day Risk-Standardized 

Hospital Visit Rate after Outpatient 

Colonoscopy, will be computed by CMS 

based on paid Medicare FFS claims, and 

will not require ASCs to submit QDCs, 

we do not anticipate that this measure 

would create additional burden to ASCs 

during the dry run or for the CY 2018 

payment determination and subsequent 

years. 

d. Web-Based Measures for the CY 2017 

Payment Determination and Subsequent 

Years 

We refer readers to the CY 2013 

OPPS/ASC final rule with comment 

period (77 FR 68532) and CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 75172 through 75174) for 

detailed discussions of the information 

collection requirements for the five 

previously-adopted Web-based 

measures, excluding ASC–11, which we 

proposed for voluntary inclusion in the 

ASCQR Program for the CY 2017 

payment determination and subsequent 

years. The five previously adopted 

measures are: ASC–6: Safe Surgery 

Checklist Use; ASC–7: ASC Facility 

Volume Data on Selected ASC Surgical 

Procedures; ASC–8: Influenza 

Vaccination Coverage Among 

Healthcare Personnel (NQF # 0431); 

ASC–9: Endoscopy/Polyp Surveillance: 

Appropriate Follow-Up Interval for 

Normal Colonoscopy in Average Risk 

Patients (NQF # 0658); and ASC–10: 

Endoscopy/Polyp Surveillance: 

Colonoscopy Interval for Patients with a 

History of Adenomatous PolypsAvoidance of Inappropriate Use (NQF # 

0659). 

For the reasons we discussed in the 

CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75173 through 

75174), we estimate that the reporting 

burden for the ASC–6: Safe Surgery 

Checklist Use and the ASC–7: ASC 

Facility Volume measures would be 

1,756 hours (5,260 ASCs × 2 measures 

× 0.167 hours per ASC) and $52,680 

(1,756 hours × $30.00 per hour) 

annually for the CY 2017 payment 

determination and for subsequent years. 

For the reasons discussed in the CY 

2014 OPPS/ASC final rule with 

comment period (78 FR 75173 through 

75174), we estimate that the reporting 

burden for the ASC–8: Influenza 

Vaccination Coverage Among 

Healthcare Personnel (NQF #0431) 

measure would be 18,005 hours and 

$540,150 (18,005 hours × $30.00 per 

hour) annually for the CY 2017 payment 

determination and for subsequent years. 

For the reasons discussed in the CY 

2014 OPPS/ASC final rule with 

comment period (78 FR 75173 through 

75174), we estimate that the reporting 

burden for ASCs with a single case per 

ASC for the chart-abstracted ASC–9: 

Endoscopy/Polyp Surveillance: 

Appropriate Follow-Up Interval for 

Normal Colonoscopy in Average Risk 

Patients (NQF # 0658) and ASC–10: 

Endoscopy/Polyp Surveillance: 

Colonoscopy Interval for Patients with a 

History of Adenomatous PolypsAvoidance of Inappropriate Use (NQF # 

0659) measures would be 3,067 hours 

and $92,010 (3,067 hours × $30.00 per 

hour) annually for the CY 2017 payment 

determination and for subsequent years. 

In section XIV.E.3.c. of this final rule 

with comment period, we are finalizing 

our proposal that data collection and 

submission be voluntary for the CY 

2017 payment determination and 

subsequent years for ASC–11: Cataracts: 

Improvement in Patient’s Visual 

Function within 90 Days Following 

Cataract Surgery (NQF # 1536), meaning 

we would not subject ASCs to a 

payment reduction with respect to this 

measure during the period of voluntary 

reporting. We continue to believe this 

measure addresses an important area of 

care, and anticipate that many facilities 

will report this measure on a voluntary 

basis. In the CY 2014 ASC/OPPS final 

rule with comment period (78 FR 

75173), we estimated that each 

participating ASC would spend 35 

minutes per case to collect and submit 

the data for this measure, making the 

total estimated burden for ASCs with a 

single case per ASC 3,067 hours (5,260 

ASCs × 0.583 hours per case per ASC) 

annually. We expect that ASCs would 

vary greatly as to the number of cases 

per ASC due to ASC specialization. We 

estimate that approximately 20 percent 

of ASCs would elect to report this 

measure on a voluntary basis; therefore, 

we estimate the total estimated burden 

for ASCs with a single case per ASC to 

be 613 hours (1,052 ASCs × 0.583 hours 

per case per ASC) and $18,390 (613 

hours × $30.00 per hour) annually for 

the CY 2017 payment determination and 

subsequent years. 

e. Extraordinary Circumstances 

Extension or Exemptions Process 

We refer readers to the FY 2013 IPPS/ 

LTCH PPS final rule (77 FR 53642 

through 53643) and the CY 2014 OPPS/ 

ASC final rule with comment period (78 

FR 75140) for a complete discussion of 

our extraordinary circumstances 

extension or waiver process under the 

ASCQR Program. In the CY 2015 OPPS/ 

ASC proposed rule, we did not propose 

to make any substantive changes to this 

process. However, in the future, we will 

refer to the process as the extraordinary 

circumstances extensions or exemptions 

process. In section XIV.E.7. of this final 

rule with comment period, we note that 

we intend to make certain changes to 

the form to ensure that the form is 

consistent across CMS quality reporting 

programs. We do not anticipate that 

these minor changes would affect the 

burden estimates for this process. 

f. Reconsideration 

While there is burden associated with 

filing a reconsideration request, the 

regulations at 5 CFR 1320.4 for the PRA 

(44 U.S.C. 3518(c)(1)(B)) exclude 

collection activities during the conduct 

of administrative actions such as 

reconsiderations. 

We invited public comment on the 

burden associated with these 

information collection requirements. We 

did not receive any public comments on 

this burden. 

XX. Waiver of Proposed Rulemaking 

and Response to Comments 

A. Waiver of Proposed Rulemaking 

We ordinarily publish a notice of 

proposed rulemaking in the Federal 

Register and invite public comment on 

a proposed rule. The notice of proposed 

rulemaking includes a reference to the 

legal authority under which the rule is 

proposed, and the terms and substance 

of the proposed rule or a description of 

the subjects and issues involved. This 

procedure can be waived, however, if an 

agency finds good cause that a noticeand-comment procedure is 

impracticable, unnecessary, or contrary 

to the public interest and incorporates a 

statement of the finding and its reasons 

in the rule issued. 

We utilize HCPCS codes for Medicare 

payment purposes. The HCPCS is a 

national coding system comprised of 

Level I codes (CPT codes) and Level II 

codes that are intended to provide 

uniformity to coding procedures, 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 67017 

services, and supplies across all types of 

medical providers and suppliers. CPT 

codes are copyrighted by the AMA and 

consist of several categories, including 

Category I codes which are 5-digit 

numeric codes, and Category III codes 

which are temporary codes to track 

emerging technology, services, and 

procedures. The AMA issues an annual 

update of the CPT code set each Fall, 

with January 1 as the effective date for 

implementing the updated CPT codes. 

The HCPCS, including both CPT codes 

and Level II codes, is similarly updated 

annually on a calendar year basis. 

Annual coding changes are not available 

to the public until the Fall immediately 

preceding the annual January update of 

the OPPS and the ASC payment system. 

Because of the timing of the release of 

these new codes, it is impracticable for 

us to provide prior notice and solicit 

comment on these codes and the 

payments assigned to them in advance 

of publication of the final rule that 

implements the OPPS and the ASC 

payment system. However, it is 

imperative that these coding changes be 

accounted for and recognized timely 

under the OPPS and the ASC payment 

system for payment because services 

represented by these codes will be 

provided to Medicare beneficiaries in 

hospital outpatient departments and 

ASCs during the calendar year in which 

they become effective. Moreover, 

regulations implementing the HIPAA 

(42 CFR Parts 160 and 162) require that 

the HCPCS be used to report health care 

services, including services paid under 

the OPPS and the ASC payment system. 

We assign interim payment amounts 

and status indicators to any new codes 

according to our assessment of the most 

appropriate APC based on clinical and 

resource homogeneity with other 

procedures and services in the APC. If 

we did not assign payment amounts to 

new codes on an interim basis, the 

alternative would be to not pay for these 

services during the initial calendar year 

in which the codes become effective. 

We believe it would be contrary to the 

public interest to delay establishment of 

payment amounts for these codes. 

Therefore, we find good cause to 

waive the notice of proposed 

rulemaking for the establishment of 

payment amounts for selected HCPCS 

codes identified with comment 

indicator ‘‘NI’’ in Addendum B and 

Addendum BB to this final rule with 

comment period. We are providing a 60- 

day public comment period. 

B. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this final rule with comment period, 

and, when we proceed with a 

subsequent document(s), we will 

respond to those comments in the 

preamble to that document. 

XXI. Economic Analyses 

A. Regulatory Impact Analysis 

1. Introduction 

We have examined the impacts of this 

final rule with comment period, as 

required by Executive Order 12866 on 

Regulatory Planning and Review 

(September 30, 1993), Executive Order 

13563 on Improving Regulation and 

Regulatory Review (January 18, 2011), 

the Regulatory Flexibility Act (RFA) 

(September 19, 1980, Pub. L. 96–354), 

section 1102(b) of the Social Security 

Act, section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

(March 22, 1995, Pub. L. 104–4), 

Executive Order 13132 on Federalism 

(August 4, 1999), and the Contract with 

America Advancement Act of 1996 

(Pub. L. 104–121) (5 U.S.C. 804(2)). This 

section of the final rule with comment 

period contains the impact and other 

economic analyses for the provisions 

that we are finalizing. 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This final 

rule with comment period has been 

designated as an economically 

significant rule under section 3(f)(1) of 

Executive Order 12866 and a major rule 

under the Contract with America 

Advancement Act of 1996 (Pub. L. 104– 

121). Accordingly, this final rule with 

comment period has been reviewed by 

the Office of Management and Budget. 

We have prepared a regulatory impact 

analysis that, to the best of our ability, 

presents the costs and benefits of this 

final rule with comment period. We 

solicited comments on the regulatory 

impact analysis in the proposed rule, 

and we address the public comments we 

received in this section below and in 

other sections of this final rule with 

comment period as appropriate. 

2. Statement of Need 

This final rule with comment period 

is necessary to update the Medicare 

hospital OPPS rates. It is necessary to 

make changes to the payment policies 

and rates for outpatient services 

furnished by hospitals and CMHCs in 

CY 2015. We are required under section 

1833(t)(3)(C)(ii) of the Act to update 

annually the OPPS conversion factor 

used to determine the payment rates for 

APCs. We also are required under 

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

review, not less often than annually, 

and revise the groups, the relative 

payment weights, and the wage and 

other adjustments described in section 

1833(t)(2) of the Act. We must review 

the clinical integrity of payment groups 

and relative payment weights at least 

annually. We are revising the APC 

relative payment weights using claims 

data for services furnished on and after 

January 1, 2013, through and including 

December 31, 2013 and processed 

through June 30, 2014, and updated cost 

report information. 

This final rule with comment period 

also is necessary to update the ASC 

payment rates for CY 2015, enabling 

CMS to make changes to payment 

policies and payment rates for covered 

surgical procedures and covered 

ancillary services that are performed in 

an ASC in CY 2015. Because ASC 

payment rates are based on the OPPS 

relative payment weights for the 

majority of the procedures performed in 

ASCs, the ASC payment rates are 

updated annually to reflect annual 

changes to the OPPS relative payment 

weights. In addition, we are required 

under section 1833(i)(1) of the Act to 

review and update the list of surgical 

procedures that can be performed in an 

ASC not less frequently than every 2 

years. 

3. Overall Impacts for the OPPS and 

ASC Payment Provisions 

We estimate that the total increase in 

Federal government expenditures under 

the OPPS for CY 2015 compared to CY 

2014 due to the changes in this final 

rule with comment period, will be 

approximately $900 million. Taking into 

account our estimated changes in 

enrollment, utilization, and case-mix, 

we estimate that the OPPS expenditures 

for CY 2015 will be approximately 

$5.135 billion higher relative to 

expenditures in CY 2014. Because this 

final rule with comment period is 

economically significant as measured by 

the threshold of an additional $100 

million in expenditures in one year, we 

have prepared this regulatory impact 

analysis that, to the best of our ability, 


tkelley on DSK3SPTVN1PROD with RULES2
67018 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

presents its costs and benefits. Table 49 

displays the redistributional impact of 

the CY 2015 changes in OPPS payment 

to various groups of hospitals and for 

CMHCs. 

We estimate that the update to the 

conversion factor and other adjustments 

(not including the effects of outlier 

payments, the pass-through estimates, 

and the application of the frontier State 

wage adjustment for CY 2015) will 

increase total OPPS payments by 2.2 

percent in CY 2015. The changes to the 

APC weights, the changes to the wage 

indexes, the continuation of a payment 

adjustment for rural SCHs, including 

EACHs, and the payment adjustment for 

cancer hospitals will not increase OPPS 

payments because these changes to the 

OPPS are budget neutral. However, 

these updates will change the 

distribution of payments within the 

budget neutral system. We estimate that 

the total change in payments between 

CY 2014 and CY 2015, considering all 

payments, including changes in 

estimated total outlier payments, passthrough payments, and the application 

of the frontier State wage adjustment 

outside of budget neutrality, in addition 

to the application of the OPD fee 

schedule increase factor after all 

adjustments required by sections 

1833(t)(3)(F), 1833(t)(3)(G), and 

1833(t)(17) of the Act, will increase total 

estimated OPPS payments by 2.3 

percent. 

We estimate the total increase (from 

changes to the ASC provisions in this 

final rule with comment period as well 

as from enrollment, utilization, and 

case-mix changes) in Medicare 

expenditures under the ASC payment 

system for CY 2015 compared to CY 

2014 to be approximately $236 million. 

Because the provisions for the ASC 

payment system are part of a final rule 

that is economically significant as 

measured by the $100 million threshold, 

we have prepared a regulatory impact 

analysis of the changes to the ASC 

payment system that, to the best of our 

ability, presents the costs and benefits of 

this portion of the final rule with 

comment period. Table 50 and Table 51 

of this final rule with comment period 

display the redistributional impact of 

the CY 2015 changes on ASC payment, 

grouped by specialty area and then 

grouped by procedures with the greatest 

ASC expenditures, respectively. 

4. Detailed Economic Analyses 

a. Estimated Effects of OPPS Changes in 

This Final Rule With Comment Period 

(1) Limitations of Our Analysis 

The distributional impacts presented 

here are the projected effects of the CY 

2015 policy changes on various hospital 

groups. As we did for the proposed rule, 

we post on the CMS Web site our 

hospital-specific estimated payments for 

CY 2015 with the other supporting 

documentation for this final rule with 

comment period. To view the hospitalspecific estimates, we refer readers to 

the CMS Web site at: http://

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

HospitalOutpatientPPS/index.html. At 

the Web site, select ‘‘regulations and 

notices’’ from the left side of the page 

and then select ‘‘CMS–1613–FC’’ from 

the list of regulations and notices. The 

hospital-specific file layout and the 

hospital-specific file are listed with the 

other supporting documentation for this 

final rule with comment period. We 

show hospital-specific data only for 

hospitals whose claims were used for 

modeling the impacts shown in Table 

49 below. We do not show hospitalspecific impacts for hospitals whose 

claims we were unable to use. We refer 

readers to section II.A. of this final rule 

with comment period for a discussion of 

the hospitals whose claims we do not 

use for ratesetting and impact purposes. 

We estimate the effects of the 

individual policy changes by estimating 

payments per service, while holding all 

other payment policies constant. We use 

the best data available, but do not 

attempt to predict behavioral responses 

to our policy changes. In addition, we 

do not make adjustments for future 

changes in variables such as service 

volume, service-mix, or number of 

encounters. In the CY 2015 OPPS/ASC 

proposed rule (79 FR 41068), we 

solicited public comment and 

information about the anticipated effects 

of our proposed changes on providers 

and our methodology for estimating 

them. Any public comments that we 

received are addressed in the applicable 

sections of the final rule with comment 

period that discuss the specific policies. 

(2) Estimated Effects of OPPS Changes 

on Hospitals 

Table 49 below shows the estimated 

impact of this final rule with comment 

period on hospitals. Historically, the 

first line of the impact table, which 

estimates the change in payments to all 

facilities, has always included cancer 

and children’s hospitals, which are held 

harmless to their pre-BBA amount. We 

also include CMHCs in the first line that 

includes all providers. We now include 

a second line for all hospitals, excluding 

permanently held harmless hospitals 

and CMHCs. 

We present separate impacts for 

CMHCs in Table 49, and we discuss 

them separately below, because CMHCs 

are paid only for partial hospitalization 

services under the OPPS and are a 

different provider type from hospitals. 

In CY 2015, we are continuing to pay 

CMHCs under APC 0172 (Level I Partial 

Hospitalization (3 services) for CMHCs) 

and APC 0173 (Level II Partial 

Hospitalization (4 or more services) for 

CMHCs), and we are paying hospitals 

for partial hospitalization services under 

APC 0175 (Level I Partial 

Hospitalization (3 services) for hospitalbased PHPs) and APC 0176 (Level II 

Partial Hospitalization (4 or more 

services) for hospital-based PHPs). 

The estimated increase in the total 

payments made under the OPPS is 

determined largely by the increase to 

the conversion factor under the 

statutory methodology. The 

distributional impacts presented do not 

include assumptions about changes in 

volume and service-mix. The 

conversion factor is updated annually 

by the OPD fee schedule increase factor 

as discussed in detail in section II.B. of 

this final rule with comment period. 

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

provides that the OPD fee schedule 

increase factor is equal to the market 

basket percentage increase applicable 

under section 1886(b)(3)(B)(iii) of the 

Act, which we refer to as the IPPS 

market basket percentage increase. The 

IPPS market basket percentage increase 

for FY 2015 is 2.9 percent (79 FR 

49994). Section 1833(t)(3)(F)(i) of the 

Act reduces that 2.9 percent by the 

multifactor productivity adjustment 

described in section 1886(b)(3)(B)(xi)(II) 

of the Act, which is 0.5 percentage point 

for FY 2015 (which is also the MFP 

adjustment for FY 2015 in the FY 2015 

IPPS/LTCH PPS final rule (79 FR 

49994)); and sections 1833(t)(3)(F)(ii) 

and 1833(t)(3)(G)(iv) of the Act further 

reduce the market basket percentage 

increase by 0.2 percentage point, 

resulting in the OPD fee schedule 

increase factor of 2.2 percent. We are 

using the OPD fee schedule increase 

factor of 2.2 percent in the calculation 

of the CY 2015 OPPS conversion factor. 

Section 10324 of the Affordable Care 

Act, as amended by HCERA, further 

authorized additional expenditures 

outside budget neutrality for hospitals 

in certain frontier States that have a 

wage index less than 1.00. The amounts 

attributable to this frontier State wage 

index adjustment are incorporated in 

the CY 2015 estimates in Table 49. 

To illustrate the impact of the CY 

2015 changes, our analysis begins with 

a baseline simulation model that uses 

the CY 2014 relative payment weights, 

the FY 2014 final IPPS wage indexes 

that include reclassifications, and the 

final CY 2014 conversion factor. Table 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 67019 

49 shows the estimated redistribution of 

the increase in payments for CY 2015 

over CY 2014 payments to hospitals and 

CMHCs as a result of the following 

factors: The impact of the APC 

reconfiguration and recalibration 

changes between CY 2014 and CY 2015 

(Column 2); the wage indexes and the 

provider adjustments (Column 3); the 

combined impact of all the changes 

described in the preceding columns 

plus the 2.2 percent OPD fee schedule 

increase factor update to the conversion 

factor (Column 4); the combined impact 

shown in Column 4 plus the CY 2015 

frontier State wage index adjustment 

(Column 5); and the estimated impact 

taking into account all payments for CY 

2015 relative to all payments for CY 

2014, including the impact of changes 

in estimated outlier payments and 

changes to the pass-through payment 

estimate (Column 6). 

We did not model an explicit budget 

neutrality adjustment for the rural 

adjustment for SCHs because we are 

finalizing our proposal to maintain the 

current adjustment percentage for CY 

2015. Because the updates to the 

conversion factor (including the update 

of the OPD fee schedule increase factor), 

the estimated cost of the rural 

adjustment, and the estimated cost of 

projected pass-through payment for CY 

2015 are applied uniformly across 

services, observed redistributions of 

payments in the impact table for 

hospitals largely depend on the mix of 

services furnished by a hospital (for 

example, how the APCs for the 

hospital’s most frequently furnished 

services will change), and the impact of 

the wage index changes on the hospital. 

However, total payments made under 

this system and the extent to which this 

final rule with comment period will 

redistribute money during 

implementation also will depend on 

changes in volume, practice patterns, 

and the mix of services billed between 

CY 2014 and CY 2015 by various groups 

of hospitals, which CMS cannot 

forecast. 

Overall, we estimate that the rates for 

CY 2015 will increase Medicare OPPS 

payments by an estimated 2.3 percent. 

Removing payments to cancer and 

children’s hospitals because their 

payments are held harmless to the preOPPS ratio between payment and cost 

and removing payments to CMHCs 

results in an estimated 2.3 percent 

increase in Medicare payments to all 

other hospitals. These estimated 

payments will not significantly impact 

other providers. 

Column 1: Total Number of Hospitals 

The first line in Column 1 in Table 49 

shows the total number of facilities 

(4,006), including designated cancer and 

children’s hospitals and CMHCs, for 

which we were able to use CY 2013 

hospital outpatient and CMHC claims 

data to model CY 2014 and CY 2015 

payments, by classes of hospitals, for 

CMHCs and for dedicated cancer 

hospitals. We excluded all hospitals and 

CMHCs for which we could not 

plausibly estimate CY 2014 or CY 2015 

payment and entities that are not paid 

under the OPPS. The latter entities 

include CAHs, all-inclusive hospitals, 

and hospitals located in Guam, the U.S. 

Virgin Islands, Northern Mariana 

Islands, American Samoa, and the State 

of Maryland. This process is discussed 

in greater detail in section II.A. of this 

final rule with comment period. At this 

time, we are unable to calculate a 

disproportionate share hospital (DSH) 

variable for hospitals not participating 

in the IPPS. Hospitals for which we do 

not have a DSH variable are grouped 

separately and generally include 

freestanding psychiatric hospitals, 

rehabilitation hospitals, and long-term 

care hospitals. We show the total 

number of OPPS hospitals (3,871), 

excluding the hold-harmless cancer and 

children’s hospitals and CMHCs, on the 

second line of the table. We excluded 

cancer and children’s hospitals because 

section 1833(t)(7)(D) of the Act 

permanently holds harmless cancer 

hospitals and children’s hospitals to 

their ‘‘pre-BBA amount’’ as specified 

under the terms of the statute, and 

therefore, we removed them from our 

impact analyses. We show the isolated 

impact on 72 CMHCs at the bottom of 

the impact table and discuss that impact 

separately below. 

Column 2: APC Recalibration—All 

Changes 

Column 2 shows the estimated effect 

of APC recalibration. Column 2 also 

reflects any changes in multiple 

procedure discount patterns or 

conditional packaging that occur as a 

result of the changes in the relative 

magnitude of payment weights. As a 

result of APC recalibration, we estimate 

that urban hospitals will experience no 

change, with the impact ranging from an 

increase of 0.3 percent to a decrease of 

¥0.1 percent, depending on the number 

of beds. Rural hospitals will experience 

no change, with the impact ranging from 

an increase of 0.3 percent to a decrease 

of ¥0.4 percent, depending on the 

number of beds. Major teaching 

hospitals will experience an increase of 

0.7 percent overall. 

Column 3: New Wage Indexes and the 

Effect of the Provider Adjustments 

Column 3 demonstrates the combined 

budget neutral impact of the APC 

recalibration; the updates for the wage 

indexes with the fiscal year (FY) 2015 

IPPS post-reclassification wage indexes; 

and the rural adjustment. We modeled 

the independent effect of the budget 

neutrality adjustments and the OPD fee 

schedule increase factor by using the 

relative payment weights and wage 

indexes for each year, and using a CY 

2014 conversion factor that included the 

OPD fee schedule increase and a budget 

neutrality adjustment for differences in 

wage indexes. 

Column 3 reflects the independent 

effects of the updated wage indexes, 

including the application of budget 

neutrality for the rural floor policy on a 

nationwide basis. This column excludes 

the effects of the frontier State wage 

index adjustment, which is not budget 

neutral and is included in Column 5. 

We did not model a budget neutrality 

adjustment for the rural adjustment for 

SCHs because we are finalizing our 

proposal to continue the rural payment 

adjustment of 7.1 percent to rural SCHs 

for CY 2015, as described in section II.E. 

of this final rule with comment period. 

We modeled the independent effect of 

updating the wage indexes by varying 

only the wage indexes, holding APC 

relative payment weights, service-mix, 

and the rural adjustment constant and 

using the CY 2015 scaled weights and 

a CY 2014 conversion factor that 

included a budget neutrality adjustment 

for the effect of changing the wage 

indexes between CY 2014 and CY 2015. 

The FY 2015 wage policy results in 

modest redistributions. 

There is no difference in impact 

between the CY 2014 cancer hospital 

payment adjustment and the CY 2015 

cancer hospital payment adjustment 

because we are finalizing our proposal 

to use the same payment-to-cost ratio 

target in CY 2015 as in CY 2014. 

Column 4: All Budget Neutrality 

Changes Combined With the Market 

Basket Update 

Column 4 demonstrates the combined 

impact of all the changes previously 

described and the update to the 

conversion factor of 2.2 percent. 

Overall, these changes will increase 

payments to urban hospitals by 2.3 

percent and to rural hospitals by 1.9 

percent. Most classes of hospitals will 

receive an increase in line with the 2.2 

percent overall increase after the update 

is applied to the budget neutrality 

adjustments. 


tkelley on DSK3SPTVN1PROD with RULES2
67020 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

Column 5: All Adjustments With the 

Frontier State Wage Index Adjustment 

This column shows the impact of all 

budget neutrality adjustments, 

application of the 2.2 percent OPD fee 

schedule increase factor, and the 

nonbudget-neutral impact of applying 

the CY 2015 frontier State wage 

adjustment. Rural hospitals in West 

North Central and Mountain States will 

experience estimated increases in 

payment of 3.4 and 4.2 percent, 

respectively, as a result of the frontier 

State wage index adjustment, while 

urban hospitals in those States will 

experience estimated increases of 3.2 

and 2.5 percent, respectively. 

Column 6: All Changes for CY 2015 

Column 6 depicts the full impact of 

the CY 2015 policies on each hospital 

group by including the effect of all of 

the changes for CY 2015 and comparing 

them to all estimated payments in CY 

2014. Column 6 shows the combined 

budget neutral effects of Column 2 and 

3; the OPD fee schedule increase; the 

impact of the frontier State wage index 

adjustment; the impact of estimated 

OPPS outlier payments as discussed in 

section II.G. of this final rule with 

comment period; the change in the 

Hospital OQR Program payment 

reduction for the small number of 

hospitals in our impact model that 

failed to meet the reporting 

requirements (discussed in section XIII. 

of this final rule with comment period); 

and the difference in total OPPS 

payments dedicated to transitional passthrough payments. 

Of those hospitals that failed to meet 

the Hospital OQR Program reporting 

requirements for the full CY 2014 

update (and assumed, for modeling 

purposes, to be the same number for CY 

2015), we included 37 hospitals in our 

model because they had both CY 2013 

claims data and recent cost report data. 

We estimate that the cumulative effect 

of all changes for CY 2015 will increase 

payments to all facilities by 2.3 percent 

for CY 2015. We modeled the 

independent effect of all changes in 

Column 6 using the final relative 

payment weights for CY 2014 and the 

relative payment weights for CY 2015. 

We used the final conversion factor for 

CY 2014 of $72.672 and the CY 2015 

conversion factor of $74.144 discussed 

in section II.B. of this final rule with 

comment period. 

Column 6 contains simulated outlier 

payments for each year. We used the 1- 

year charge inflation factor used in the 

FY 2015 IPPS/LTCH PPS final rule (79 

FR 50379) of 5.09 percent (1.0509) to 

increase individual costs on the CY 

2013 claims, and we used the most 

recent overall CCR in the July 2014 

Outpatient Provider-Specific File 

(OPSF) to estimate outlier payments for 

CY 2014. Using the CY 2013 claims and 

a 5.09 percent charge inflation factor, 

we currently estimate that outlier 

payments for CY 2014, using a multiple 

threshold of 1.75 and a fixed-dollar 

threshold of $2,900 will be 

approximately 0.8 percent of total 

payments. The estimated current outlier 

payments of 0.8 percent are 

incorporated in the comparison in 

Column 6. We used the same set of 

claims and a charge inflation factor of 

10.44 percent (1.1044) and the CCRs in 

the July 2014 OPSF, with an adjustment 

of 0.9821, to reflect relative changes in 

cost and charge inflation between CY 

2013 and CY 2015, to model the CY 

2015 outliers at 1.0 percent of estimated 

total payments using a multiple 

threshold of 1.75 and a fixed-dollar 

threshold of $2,775. The charge 

inflation and CCR inflation factors are 

discussed in detail in the FY 2015 IPPS/ 

LTCH PPS final rule (79 FR 50379 

through 50380). 

We estimate that the anticipated 

change in payment between CY 2014 

and CY 2015 for the hospitals failing to 

meet the Hospital OQR Program 

requirements will be negligible. Overall, 

we estimate that facilities will 

experience an increase of 2.3 percent 

under this final rule with comment 

period in CY 2015 relative to total 

spending in CY 2014. This projected 

increase (shown in Column 6) of Table 

49 reflects the 2.2 percent OPD fee 

schedule increase factor, less 0.13 

percent for the change in the passthrough estimate between CY 2014 and 

CY 2015, plus 0.18 percent for the 

difference in estimated outlier payments 

between CY 2014 (0.82 percent) and CY 

2015 (1.0 percent), less 0.1 percent due 

to the frontier State wage index 

adjustment in CY 2014, plus 0.1 percent 

due to the frontier State wage index 

adjustment in CY 2015. We estimate 

that the combined effect of all changes 

for CY 2015 will increase payments to 

urban hospitals by 2.3 percent. 

Overall, we estimate that rural 

hospitals will experience a 1.9 percent 

increase as a result of the combined 

effects of all changes for CY 2015. We 

estimate that rural hospitals that bill 

less than 5,000 lines of OPPS services 

will experience a decrease of ¥2.0 

percent and rural hospitals that bill 

11,000 or more lines of OPPS services 

will experience adjustments ranging 

from 0.9 to 2.1 percent. 

Among hospitals by teaching status, 

we estimate that the impacts resulting 

from the combined effects of all changes 

will include an increase of 3.1 percent 

for major teaching hospitals and 2.0 

percent for nonteaching hospitals. 

Minor teaching hospitals will 

experience an estimated increase of 2.0 

percent. 

In our analysis, we also have 

categorized hospitals by type of 

ownership. Based on this analysis, we 

estimate that voluntary hospitals will 

experience an increase of 2.4 percent, 

proprietary hospitals will experience an 

increase of 1.7 percent, and 

governmental hospitals will experience 

an increase of 2.1 percent. 

TABLE 49—ESTIMATED IMPACT OF THE CY 2015 CHANGES FOR THE HOSPITAL OUTPATIENT PROSPECTIVE PAYMENT

SYSTEM

Number of 

hospitals 

APC 

Recalibration 

(all changes) 

New wage 

index and 

provider 

adjustments 

All budget neutral 

changes 

(combined cols 2, 

3) with market 

basket update 

All budget neutral 

changes and 

update (column 4) 

with frontier wage 

index adjustment 

All changes 

(1) (2) (3) (4) (5) (6) 

ALL FACILITIES * ............................ 4,006 0.0 0.0 2.2 2.3 2.3 

ALL HOSPITALS ............................. 3,871 0.0 0.0 2.2 2.3 2.3 

(excludes hospitals permanently 

held harmless and CMHCs) 

URBAN HOSPITALS ....................... 3,008 0.0 0.0 2.3 2.4 2.3 

LARGE URBAN (GT 1 MILL.) .. 1,646 0.1 0.2 2.5 2.5 2.5 

OTHER URBAN (LE 1 MILL.) .. 1,362 0.0 ¥0.1 2.1 2.3 2.1 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 67021 

TABLE 49—ESTIMATED IMPACT OF THE CY 2015 CHANGES FOR THE HOSPITAL OUTPATIENT PROSPECTIVE PAYMENT

SYSTEM—Continued 

Number of 

hospitals 

APC 

Recalibration 

(all changes) 

New wage 

index and 

provider 

adjustments 

All budget neutral 

changes 

(combined cols 2, 

3) with market 

basket update 

All budget neutral 

changes and 

update (column 4) 

with frontier wage 

index adjustment 

All changes 

(1) (2) (3) (4) (5) (6) 

RURAL HOSPITALS ........................ 863 0.0 ¥0.3 1.9 2.2 1.9 

SOLE COMMUNITY ................. 376 0.1 ¥0.2 2.2 2.6 2.2 

OTHER RURAL ........................ 487 ¥0.2 ¥0.3 1.6 1.7 1.6 

BEDS (URBAN): 

0–99 BEDS ............................... 1,067 0.0 0.0 2.3 2.4 2.3 

100–199 BEDS ......................... 856 0.0 0.0 2.2 2.3 2.2 

200–299 BEDS ......................... 458 ¥0.1 0.1 2.2 2.4 2.2 

300–499 BEDS ......................... 410 ¥0.1 0.1 2.2 2.4 2.3 

500 + BEDS .............................. 217 0.3 ¥0.1 2.4 2.4 2.5 

BEDS (RURAL): 

0–49 BEDS ............................... 345 0.1 ¥0.2 2.2 2.4 2.2 

50–100 BEDS ........................... 315 0.3 ¥0.3 2.2 2.5 2.2 

101–149 BEDS ......................... 116 ¥0.3 ¥0.1 1.8 2.1 1.8 

150–199 BEDS ......................... 46 ¥0.4 ¥0.4 1.4 2.1 1.4 

200 + BEDS .............................. 41 ¥0.3 ¥0.4 1.5 1.5 1.5 

VOLUME (URBAN): 

LT 5,000 Lines .......................... 544 ¥1.7 ¥0.3 0.2 0.4 0.4 

5,000–10,999 Lines .................. 135 ¥0.8 ¥0.2 1.3 1.3 1.4 

11,000–20,999 Lines ................ 117 ¥1.5 0.0 0.6 1.2 0.9 

21,000–42,999 Lines ................ 228 ¥0.7 0.0 1.5 1.5 1.6 

42,999–89,999 Lines ................ 526 ¥0.3 0.0 1.9 1.9 1.9 

GT 89,999 Lines ....................... 1,458 0.1 0.0 2.3 2.4 2.4 

VOLUME (RURAL): 

LT 5,000 Lines .......................... 34 ¥3.8 ¥0.3 ¥1.9 1.1 ¥2.0 

5,000–10,999 Lines .................. 27 ¥1.8 ¥0.5 ¥0.1 1.1 0.0 

11,000–20,999 Lines ................ 42 ¥1.1 ¥0.3 0.8 0.8 0.9 

21,000–42,999 Lines ................ 161 0.2 ¥0.3 2.1 2.7 2.1 

GT 42,999 Lines ....................... 599 0.0 ¥0.3 1.9 2.1 1.9 

REGION (URBAN): 

NEW ENGLAND ....................... 152 1.1 0.2 3.5 3.5 3.4 

MIDDLE ATLANTIC .................. 361 0.5 0.5 3.2 3.2 3.2 

SOUTH ATLANTIC ................... 482 ¥0.2 ¥0.3 1.7 1.7 1.7 

EAST NORTH CENT. ............... 473 0.1 ¥0.1 2.2 2.1 2.2 

EAST SOUTH CENT. ............... 179 ¥0.9 ¥0.5 0.9 0.9 0.9 

WEST NORTH CENT. .............. 194 0.0 ¥0.2 2.0 3.2 2.0 

WEST SOUTH CENT. .............. 527 ¥0.7 ¥0.5 1.0 1.0 1.1 

MOUNTAIN ............................... 203 0.0 ¥0.1 2.1 2.5 2.2 

PACIFIC .................................... 389 0.3 1.1 3.6 3.6 3.7 

PUERTO RICO ......................... 48 ¥0.4 0.3 2.1 2.1 1.9 

REGION (RURAL): 

NEW ENGLAND ....................... 23 1.6 ¥0.1 3.6 3.6 3.6 

MIDDLE ATLANTIC .................. 58 0.8 0.2 3.2 3.2 3.2 

SOUTH ATLANTIC ................... 130 ¥0.6 ¥0.5 1.0 1.0 1.0 

EAST NORTH CENT. ............... 120 0.0 0.0 2.2 2.2 2.1 

EAST SOUTH CENT. ............... 165 ¥0.8 ¥0.5 0.9 0.9 0.9 

WEST NORTH CENT. .............. 101 0.2 ¥0.2 2.2 3.4 2.1 

WEST SOUTH CENT. .............. 181 ¥0.7 ¥0.8 0.7 0.7 0.7 

MOUNTAIN ............................... 61 0.7 ¥0.4 2.5 4.2 2.6 

PACIFIC .................................... 24 0.8 0.9 4.0 3.9 3.9 

TEACHING STATUS: 

NON–TEACHING ..................... 2,839 ¥0.2 0.0 2.0 2.1 2.0 

MINOR ...................................... 706 ¥0.2 ¥0.1 1.9 2.2 2.0 

MAJOR ..................................... 326 0.7 0.1 3.1 3.0 3.1 

DSH PATIENT PERCENT: 

0 ................................................ 21 0.0 0.3 2.5 2.5 2.5 

GT 0–0.10 ................................. 328 0.3 0.2 2.7 2.8 2.7 

0.10–0.16 .................................. 334 0.1 0.0 2.3 2.5 2.3 

0.16–0.23 .................................. 680 0.1 0.0 2.2 2.3 2.2 

0.23–0.35 .................................. 1,076 0.0 0.0 2.1 2.3 2.1 

GE 0.35 ..................................... 824 0.1 0.1 2.3 2.3 2.4 

DSH NOT AVAILABLE ** .......... 608 ¥3.6 0.0 ¥1.4 ¥1.4 ¥1.5 

URBAN TEACHING/DSH: 

TEACHING & DSH ................... 938 0.2 0.0 2.4 2.6 2.5 

NO TEACHING/DSH ................ 1,477 ¥0.2 0.1 2.1 2.1 2.1 

NO TEACHING/NO DSH .......... 18 ¥0.1 0.4 2.5 2.5 2.5 


tkelley on DSK3SPTVN1PROD with RULES2
67022 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

TABLE 49—ESTIMATED IMPACT OF THE CY 2015 CHANGES FOR THE HOSPITAL OUTPATIENT PROSPECTIVE PAYMENT

SYSTEM—Continued 

Number of 

hospitals 

APC 

Recalibration 

(all changes) 

New wage 

index and 

provider 

adjustments 

All budget neutral 

changes 

(combined cols 2, 

3) with market 

basket update 

All budget neutral 

changes and 

update (column 4) 

with frontier wage 

index adjustment 

All changes 

(1) (2) (3) (4) (5) (6) 

DSH NOT AVAILABLE ** .......... 575 ¥3.3 0.1 ¥1.0 ¥0.9 ¥1.0 

TYPE OF OWNERSHIP: 

VOLUNTARY ............................ 2,006 0.1 0.0 2.4 2.5 2.4 

PROPRIETARY ........................ 1,322 ¥0.4 ¥0.1 1.7 1.8 1.7 

GOVERNMENT ........................ 543 ¥0.1 ¥0.1 2.1 2.1 2.1 

CMHCs ............................................. 72 0.0 ¥0.5 1.7 1.7 1.3 

Column (1) shows total hospitals and/or CMHCs. 

Column (2) includes all CY 2015 OPPS policies and compares those to the CY 2014 OPPS. 

Column (3) shows the budget neutral impact of updating the wage index by applying the FY 2015 hospital inpatient wage index, including all 

hold harmless policies and transitional wages. The rural adjustment continues our current policy of 7.1 percent so the budget neutrality factor is 

1. The budget neutrality adjustment for the cancer hospital adjustment is 1.000 because the payment-to-cost ratio target remains the same as in 

CY 2014. 

Column (4) shows the impact of all budget neutrality adjustments and the addition of the 2.2 percent OPD fee schedule update factor (2.9 percent reduced by 0.5 percentage point for the final productivity adjustment and further reduced by 0.2 percentage point in order to satisfy statutory 

requirements set forth in the Affordable Care Act). 

Column (5) shows the nonbudget neutral impact of applying the frontier State wage adjustment in CY 2015. 

Column (6) shows the additional adjustments to the conversion factor resulting from a change in the pass-through estimate, adding estimated 

outlier payments, and applying payment wage indexes. 

* These 4,006 providers include children and cancer hospitals, which are held harmless to pre-BBA amounts, and CMHCs. 

** Complete DSH numbers are not available for providers that are not paid under IPPS, including rehabilitation, psychiatric, and long-term care 

hospitals. 

(3) Estimated Effects of OPPS Changes 

on CMHCs 

The last line of Table 49 demonstrates 

the isolated impact on CMHCs, which 

furnish only partial hospitalization 

services under the OPPS. In CY 2014, 

CMHCs are paid under two APCs for 

these services: APC 0172 (Level I Partial 

Hospitalization (3 services) for CMHCs) 

and APC 0173 (Level II Partial 

Hospitalization (4 or more services) for 

CMHCs). Hospitals are paid for partial 

hospitalization services under APC 0175 

(Level I Partial Hospitalization (3 

services) for hospital-based PHPs) and 

APC 0176 (Level II Partial 

Hospitalization (4 or more services) for 

hospital-based PHPs). We use our 

standard ratesetting methodology to 

derive the payment rates for each APC 

based on the cost data derived from 

claims and cost data for the providertype-specific APC. For CY 2015, we are 

finalizing our proposal to continue the 

provider-type-specific APC structure 

that we adopted in CY 2011. We 

modeled the impact of this APC policy 

assuming that CMHCs will continue to 

provide the same number of days of 

PHP care, with each day having either 

3 services or 4 or more services, as seen 

in the CY 2013 claims data used for this 

final rule with comment period. We 

excluded days with 1 or 2 services 

because our policy only pays a per diem 

rate for partial hospitalization when 3 or 

more qualifying services are provided to 

the beneficiary. We estimate that 

CMHCs will experience an overall 1.3 

percent increase in payments from CY 

2014 (shown in Column 6). 

Column 3 shows that the estimated 

impact of adopting the FY 2015 wage 

index values will result in a small 

decrease of ¥0.5 percent to CMHCs. We 

note that all providers paid under the 

OPPS, including CMHCs, will receive a 

2.2 percent OPD fee schedule increase 

factor. Column 4 shows that combining 

this OPD fee schedule increase factor, 

along with changes in APC policy for 

CY 2015 and the FY 2015 wage index 

updates, will result in an estimated 

increase of 1.7 percent. Column 5 shows 

that adding the frontier State wage 

index adjustment will result in no 

change to the cumulative 1.7 percent 

increase. Column 6 shows that adding 

the changes in outlier and pass-though 

payments will result in a ¥0.4 percent 

decrease in payment for CMHCs, for a 

total increase of 1.3 percent. This 

reflects all changes to CMHCs for CY 

2015. 

(4) Estimated Effect of OPPS Changes on 

Beneficiaries 

For services for which the beneficiary 

pays a copayment of 20 percent of the 

payment rate, the beneficiary share of 

payment will increase for services for 

which the OPPS payments will rise and 

will decrease for services for which the 

OPPS payments will fall. For further 

discussion on the calculation of the 

national unadjusted copayments and 

minimum unadjusted copayments, we 

refer readers to section II.I. of this final 

rule with comment period. In all cases, 

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

beneficiary liability for copayment for a 

procedure performed in a year to the 

hospital inpatient deductible for the 

applicable year. 

We estimate that the aggregate 

beneficiary coinsurance percentage will 

be 20.0 percent for all services paid 

under the OPPS in CY 2015. The 

estimated aggregate beneficiary 

coinsurance reflects general system 

adjustments, including recalibration of 

the APC relative payment weights, 

change in the portion of OPPS payments 

dedicated to pass-through payments, 

and the CY 2015 comprehensive APC 

payment policy discussed in section 

II.A.2.e. of this final rule with comment 

period. 

(5) Estimated Effects of OPPS Changes 

on Other Providers 

The relative payment weights and 

payment amounts established under the 

OPPS affect the payments made to ASCs 

as discussed in section XII. of this final 

rule with comment period. No types of 

providers or suppliers other than 

hospitals, CMHCs and ASCs will be 

affected by the proposed changes in this 

final rule with comment period. 

(6) Estimated Effects of OPPS Changes 

on the Medicare and Medicaid Programs 

The effect on the Medicare program is 

expected to be $900 million in 

additional program payments for OPPS 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 67023 

services furnished in CY 2015. The 

effect on the Medicaid program is 

expected to be limited to increased 

copayments that Medicaid may make on 

behalf of Medicaid recipients who are 

also Medicare beneficiaries. We refer 

readers to our discussion of the impact 

on beneficiaries in section XXI.A. of this 

final rule with comment period. 

(7) Alternative OPPS Policies 

Considered 

Alternatives to the OPPS changes we 

proposed and are finalizing and the 

reasons for our selected alternatives are 

discussed throughout this final rule 

with comment period. In this section, 

we discuss some of the major issues and 

the alternatives considered. 

• Alternatives Considered for the 

Establishment of Comprehensive 

APCs 

We refer readers to the CY 2014 

OPPS/ASC final rule with comment 

period (78 FR 74861 through 74910 and 

75184 through 75185) for a discussion 

of our policy to establish comprehensive 

APCs for CY 2015 and the alternatives 

we considered. We note that we 

published tables in that final rule with 

comment period to demonstrate how 

this policy would have been 

implemented in CY 2014, and stated 

that we would be considering any 

additional public comments we receive 

when we update the policy for CY 2015 

to account for changes that may occur 

in the CY 2013 claims data. 

b. Estimated Effects of CY 2015 ASC 

Payment System Policies 

Most ASC payment rates are 

calculated by multiplying the ASC 

conversion factor by the ASC relative 

payment weight. As discussed fully in 

section XII. of this final rule with 

comment period, we are setting the CY 

2015 ASC relative payment weights by 

scaling the CY 2015 OPPS relative 

payment weights by the ASC scaler of 

0.9225. The estimated effects of the 

updated relative payment weights on 

payment rates are varied and are 

reflected in the estimated payments 

displayed in Tables 50 and 51 below. 

Beginning in CY 2011, section 3401 of 

the Affordable Care Act requires that the 

annual update to the ASC payment 

system (which currently is the CPI–U) 

after application of any quality reporting 

reduction be reduced by a productivity 

adjustment. The Affordable Care Act 

defines the productivity adjustment to 

be equal to the 10-year moving average 

of changes in annual economy-wide 

private nonfarm business multifactor 

productivity (MFP) (as projected by the 

Secretary for the 10-year period ending 

with the applicable fiscal year, year, 

cost reporting period, or other annual 

period). For ASCs that fail to meet their 

quality reporting requirements, the CY 

2015 payment determinations will be 

based on the application of a 2.0 

percentage point reduction to the 

annual update factor, which currently is 

the CPI–U. We calculated the CY 2015 

ASC conversion factor by adjusting the 

CY 2014 ASC conversion factor by 

0.9998 to account for changes in the prefloor and pre-reclassified hospital wage 

indexes between CY 2014 and CY 2015 

and by applying the CY 2015 MFPadjusted CPI–U update factor of 1.4 

percent (projected CPI–U update of 1.9 

percent minus a projected productivity 

adjustment of 0.5 percentage point). The 

CY 2015 ASC conversion factor is 

$44.071. 

(1) Limitations of Our Analysis 

Presented here are the projected 

effects of the changes for CY 2015 on 

Medicare payment to ASCs. A key 

limitation of our analysis is our inability 

to predict changes in ASC service-mix 

between CY 2013 and CY 2015 with 

precision. We believe that the net effect 

on Medicare expenditures resulting 

from the CY 2015 changes will be small 

in the aggregate for all ASCs. However, 

such changes may have differential 

effects across surgical specialty groups 

as ASCs continue to adjust to the 

payment rates based on the policies of 

the revised ASC payment system. We 

are unable to accurately project such 

changes at a disaggregated level. Clearly, 

individual ASCs will experience 

changes in payment that differ from the 

aggregated estimated impacts presented 

below. 

(2) Estimated Effects of ASC Payment 

System Policies on ASCs 

Some ASCs are multispecialty 

facilities that perform the gamut of 

surgical procedures from excision of 

lesions to hernia repair to cataract 

extraction; others focus on a single 

specialty and perform only a limited 

range of surgical procedures, such as 

eye, digestive system, or orthopedic 

procedures. The combined effect on an 

individual ASC of the update to the CY 

2015 payments will depend on a 

number of factors, including, but not 

limited to, the mix of services the ASC 

provides, the volume of specific services 

provided by the ASC, the percentage of 

its patients who are Medicare 

beneficiaries, and the extent to which an 

ASC provides different services in the 

coming year. The following discussion 

presents tables that display estimates of 

the impact of the CY 2015 updates to 

the ASC payment system on Medicare 

payments to ASCs, assuming the same 

mix of services as reflected in our CY 

2013 claims data. Table 50 depicts the 

estimated aggregate percent change in 

payment by surgical specialty or 

ancillary items and services group by 

comparing estimated CY 2014 payments 

to estimated CY 2015 payments and 

Table 51 shows a comparison of 

estimated CY 2014 payments to 

estimated CY 2015 payments for 

procedures that we estimate will receive 

the most Medicare payment in CY 2014. 

Table 50 shows the estimated effects 

on aggregate Medicare payments under 

the ASC payment system by surgical 

specialty or ancillary items and services 

group. We have aggregated the surgical 

HCPCS codes by specialty group, 

grouped all HCPCS codes for covered 

ancillary items and services into a single 

group, and then estimated the effect on 

aggregated payment for surgical 

specialty and ancillary items and 

services groups. The groups are sorted 

for display in descending order by 

estimated Medicare program payment to 

ASCs. The following is an explanation 

of the information presented in Table 

50. 

• Column 1—Surgical Specialty or 

Ancillary Items and Services Group 

indicates the surgical specialty into 

which ASC procedures are grouped and 

the ancillary items and services group 

which includes all HCPCS codes for 

covered ancillary items and services. To 

group surgical procedures by surgical 

specialty, we used the CPT code range 

definitions and Level II HCPCS codes 

and Category III CPT codes as 

appropriate, to account for all surgical 

procedures to which the Medicare 

program payments are attributed. 

• Column 2—Estimated CY 2014 ASC 

Payments were calculated using CY 

2013 ASC utilization (the most recent 

full year of ASC utilization) and CY 

2014 ASC payment rates. The surgical 

specialty and ancillary items and 

services groups are displayed in 

descending order based on estimated CY 

2014 ASC payments. 

• Column 3—Estimated CY 2015 

Percent Change is the aggregate 

percentage increase or decrease in 

Medicare program payment to ASCs for 

each surgical specialty or ancillary 

items and services group that are 

attributable to updates to ASC payment 

rates for CY 2015 compared to CY 2014. 

As seen in Table 50, for the six 

specialty groups that account for the 

most ASC utilization and spending, we 

estimate that the update to ASC rates for 

CY 2015 will result in a 1-percent 

decrease in aggregate payment amounts 

for eye and ocular adnexa procedures, a 

6-percent increase in aggregate payment 


tkelley on DSK3SPTVN1PROD with RULES2
67024 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

amounts for digestive system 

procedures, a 1-percent increase in 

aggregate payment amounts for nervous 

system procedures, a 2-percent increase 

in aggregate payment amounts for 

musculoskeletal system procedures, a 3- 

percent increase in aggregate payment 

amounts for genitourinary system 

procedures, and a 5-percent increase in 

aggregate payment amounts for 

integumentary system procedures. 

An estimated increase in aggregate 

payment for the specialty group does 

not mean that all procedures in the 

group will experience increased 

payment rates. For example, the 

estimated increase for CY 2015 for 

digestive system procedures is likely 

due to an increase in the ASC payment 

weight for some of the high volume 

procedures, such as CPT code 43239 

(Upper GI endoscopy biopsy) where 

estimated payment will increase by 9 

percent for CY 2015. 

Also displayed in Table 50 is a 

separate estimate of Medicare ASC 

payments for the group of separately 

payable covered ancillary items and 

services. The payment estimates for the 

covered surgical procedures include the 

costs of packaged ancillary items and 

services. We estimate that aggregate 

payments for these items and services 

will decrease by 4 percent for CY 2015. 

TABLE 50—ESTIMATED IMPACT OF THE CY 2015 UPDATE TO THE ASC PAYMENT SYSTEM ON AGGREGATE CY 2015 

MEDICARE PROGRAM PAYMENTS BY SURGICAL SPECIALTY OR ANCILLARY ITEMS AND SERVICES GROUP

Surgical specialty group 

Estimated 

CY 2014 

ASC payments 

(in millions) 

Estimated CY 

2015 percent 

change 

(1) (2) (3) 

Total ......................................................................................................................................................................... $3,819 1 

Eye and ocular adnexa ............................................................................................................................................ 1,560 ¥1 

Digestive system ...................................................................................................................................................... 781 6 

Nervous system ....................................................................................................................................................... 568 1 

Musculoskeletal system ........................................................................................................................................... 472 2 

Genitourinary system ............................................................................................................................................... 165 3 

Integumentary system ............................................................................................................................................. 137 5 

Respiratory system .................................................................................................................................................. 53 3 

Cardiovascular system ............................................................................................................................................ 36 ¥1 

Ancillary items and services .................................................................................................................................... 24 ¥4 

Auditory system ....................................................................................................................................................... 14 1 

Hematologic & lymphatic systems ........................................................................................................................... 6 14 

Table 51 below shows the estimated 

impact of the updates to the revised 

ASC payment system on aggregate ASC 

payments for selected surgical 

procedures during CY 2015. The table 

displays 30 of the procedures receiving 

the greatest estimated CY 2014 aggregate 

Medicare payments to ASCs. The 

HCPCS codes are sorted in descending 

order by estimated CY 2014 program 

payment. 

• Column 1—CPT/HCPCS code. 

• Column 2—Short Descriptor of the 

HCPCS code. 

• Column 3—Estimated CY 2014 ASC 

Payments were calculated using CY 

2013 ASC utilization (the most recent 

full year of ASC utilization) and the CY 

2014 ASC payment rates. The estimated 

CY 2014 payments are expressed in 

millions of dollars. 

• Column 4—Estimated CY 2015 

Percent Change reflects the percent 

differences between the estimated ASC 

payment for CY 2014 and the estimated 

payment for CY 2015 based on the 

update. 

TABLE 51—ESTIMATED IMPACT OF THE CY 2015 UPDATE TO THE ASC PAYMENT SYSTEM ON AGGREGATE PAYMENTS

FOR SELECTED PROCEDURES

CPT/HCPCS 

Code Short descriptor 

Estimated 

CY 2014 

ASC payments 

(in millions) 

Estimated 

CY 2015 

percent 

change 

(1) (2) (3) (4) 

66984 ................ Cataract surg w/iol, 1 stage ...................................................................................................... $1,131 ¥1% 

43239 ................ Upper GI endoscopy, biopsy .................................................................................................... 170 10 

45380 ................ Colonoscopy and biopsy .......................................................................................................... 167 7 

45385 ................ Lesion removal colonoscopy .................................................................................................... 107 6 

66982 ................ Cataract surgery, complex ........................................................................................................ 93 ¥1 

64483 ................ Inj foramen epidural l/s ............................................................................................................. 90 0 

62311 ................ Inject spine l/s (cd) ................................................................................................................... 79 0 

45378 ................ Diagnostic colonoscopy ............................................................................................................ 72 6 

66821 ................ After cataract laser surgery ...................................................................................................... 63 3 

64493 ................ Inj paravert f jnt l/s 1 lev ........................................................................................................... 47 0 

G0105 ............... Colorectal scrn; hi risk ind ........................................................................................................ 45 1 

64635 ................ Destroy lumb/sac facet jnt ........................................................................................................ 45 ¥5 

63650 ................ Implant neuroelectrodes ........................................................................................................... 41 4 

G0121 ............... Colon ca scrn not hi rsk ind ..................................................................................................... 41 1 

64590 ................ Insrt/redo pn/gastr stimul .......................................................................................................... 38 ¥1 

15823 ................ Revision of upper eyelid ........................................................................................................... 35 2 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 67025 

TABLE 51—ESTIMATED IMPACT OF THE CY 2015 UPDATE TO THE ASC PAYMENT SYSTEM ON AGGREGATE PAYMENTS

FOR SELECTED PROCEDURES—Continued 

CPT/HCPCS 

Code Short descriptor 

Estimated 

CY 2014 

ASC payments 

(in millions) 

Estimated 

CY 2015 

percent 

change 

(1) (2) (3) (4) 

63685 ................ Insrt/redo spine n generator ..................................................................................................... 34 29 

29827 ................ Arthroscop rotator cuff repr ...................................................................................................... 34 1 

64721 ................ Carpal tunnel surgery ............................................................................................................... 32 ¥1 

29881 ................ Knee arthroscopy/surgery ......................................................................................................... 30 ¥1 

29824 ................ Shoulder arthroscopy/surgery ................................................................................................... 27 1 

29880 ................ Knee arthroscopy/surgery ......................................................................................................... 25 ¥1 

43235 ................ Uppr gi endoscopy diagnosis ................................................................................................... 23 10 

62310 ................ Inject spine c/t ........................................................................................................................... 23 0 

29823 ................ Shoulder arthroscopy/surgery ................................................................................................... 22 1 

52000 ................ Cystoscopy ............................................................................................................................... 22 1 

G0260 ............... Inj for sacroiliac jt anesth .......................................................................................................... 21 0 

45384 ................ Lesion remove colonoscopy ..................................................................................................... 21 7 

67042 ................ Vit for macular hole .................................................................................................................. 21 1 

26055 ................ Incise finger tendon sheath ...................................................................................................... 19 ¥2 

(3) Estimated Effects of ASC Payment 

System Policies on Beneficiaries 

We estimate that the CY 2015 update 

to the ASC payment system will be 

generally positive for beneficiaries with 

respect to the new procedures that we 

are adding to the ASC list of covered 

surgical procedures and for those that 

we are designating as office-based for 

CY 2015. First, other than certain 

preventive services where coinsurance 

and the Part B deductible is waived to 

comply with section 1833(a)(1) and (b) 

of the Act, the ASC coinsurance rate for 

all procedures is 20 percent. This 

contrasts with procedures performed in 

HOPDs under the OPPS, where the 

beneficiary is responsible for 

copayments that range from 20 percent 

to 40 percent of the procedure payment 

(other than for certain preventive 

services). Second, in almost all cases, 

the ASC payment rates under the ASC 

payment system are lower than payment 

rates for the same procedures under the 

OPPS. Therefore, the beneficiary 

coinsurance amount under the ASC 

payment system will almost always be 

less than the OPPS copayment amount 

for the same services. (The only 

exceptions would be if the ASC 

coinsurance amount exceeds the 

inpatient deductible. The statute 

requires that copayment amounts under 

the OPPS not exceed the inpatient 

deductible.) Beneficiary coinsurance for 

services migrating from physicians’ 

offices to ASCs may decrease or increase 

under the revised ASC payment system, 

depending on the particular service and 

the relative payment amounts under the 

MPFS compared to the ASC. However, 

for those additional procedures that we 

are designating as office-based in CY 

2015, the beneficiary coinsurance 

amount under the ASC payment system 

generally will be no greater than the 

beneficiary coinsurance under the 

MPFS because the coinsurance under 

both payment systems generally is 20 

percent (except for certain preventive 

services where the coinsurance is 

waived under both payment systems). 

(4) Alternative ASC Payment Policies 

Considered 

Alternatives to the minor changes that 

we are making to the ASC payment 

system and the reasons that we have 

chosen specific options are discussed 

throughout this final rule with comment 

period. There are no major changes to 

ASC policies for CY 2015. 

c. Accounting Statements and Tables 

As required by OMB Circular A–4 

(available on the Office of Management 

and Budget Web site at: http://

www.whitehouse.gov/sites/default/files/

omb/assets/regulatory_matters_pdf/a4.pdf), we have prepared two 

accounting statements to illustrate the 

impacts of this final rule with comment 

period. The first accounting statement, 

Table 52 below, illustrates the 

classification of expenditures for the CY 

2015 estimated hospital OPPS incurred 

benefit impacts associated with the CY 

2015 OPD fee schedule increase, based 

on the 2014 Trustee’s Report. The 

second accounting statement, Table 53 

below, illustrates the classification of 

expenditures associated with the 1.4 

percent CY 2015 update to the ASC 

payment system, based on the 

provisions of this final rule with 

comment period and the baseline 

spending estimates for ASCs in the 2014 

Trustee’s Report. Lastly, the tables 

classify most estimated impacts as 

transfers. 

TABLE 52—ACCOUNTING STATEMENT: CY 2015 ESTIMATED HOSPITAL OPPS TRANSFERS FROM CY 2014 TO CY 2015 

ASSOCIATED WITH THE CY 2015 HOSPITAL OUTPATIENT OPD FEE SCHEDULE INCREASE

Category Transfers 

Annualized Monetized Transfers .............................................................. $900 million. 

From Whom to Whom .............................................................................. Federal Government to outpatient hospitals and other providers who 

receive payment under the hospital OPPS. 

Total ................................................................................................... $900 million. 


tkelley on DSK3SPTVN1PROD with RULES2
67026 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

TABLE 53—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED TRANSFERS FROM CY 2014 TO CY 2015 AS A

RESULT OF THE CY 2015 UPDATE TO THE ASC PAYMENT SYSTEM

Category Transfers 

Annualized Monetized Transfers .............................................................. $42 million. 

From Whom to Whom .............................................................................. Federal Government to Medicare Providers and Suppliers. 

Total ................................................................................................... $42 million. 

d. Effects of Requirements for the 

Hospital OQR Program 

In section XIII. of this final rule with 

comment period, we are finalizing 

policies affecting the Hospital OQR 

Program. Of 3,325 hospitals that met 

eligibility requirements for the CY 2014 

payment determination, we determined 

that 88 hospitals did not meet the 

requirements to receive the full OPD fee 

schedule increase factor. Most of these 

hospitals (70 of the 88) chose not to 

participate in the Hospital OQR Program 

for the CY 2014 payment determination. 

We estimate that approximately 90 

hospitals will not receive the full OPD 

fee schedule increase factor for the CY 

2017 payment determination and 

subsequent years. 

In section XIII.E. of this final rule 

with comment period, we are finalizing 

our proposal to add one claims-based 

quality measure, OP–32: Facility 7-Day 

Risk-Standardized Hospital Visit Rate 

after Outpatient Colonoscopy, for the 

Hospital OQR Program for the CY 2018 

payment determination and subsequent 

years, instead of the CY 2017 payment 

determination and subsequent years as 

proposed. Because this measure is 

claims-based, it will not require 

additional burden from data reporting or 

other action on the part of the hospitals. 

Therefore, we do not anticipate that this 

measure will cause any additional 

facilities to fail to meet requirements the 

Hospital OQR Program for the CY 2018 

payment determination and subsequent 

years. 

In section XIII.C.3. of this final rule 

with comment period, for the CY 2017 

payment determination and subsequent 

years, we are finalizing our proposal to 

remove OP–6 and OP–7 from the 

Hospital OQR Program. However, we 

are not finalizing our proposal to 

remove OP–4 and are retaining that 

measure in the Hospital OQR Program 

for reasons discussed in section XIII.C.3. 

In sections XIII.D.3.b. and c. of this final 

rule with comment period, we are also 

finalizing our proposal to exclude OP– 

31 from the CY 2016 payment 

determination measure set and to 

change that measure from required to 

voluntary for the CY 2017 payment 

determination and subsequent years. 

Hospitals will not be subject to a 

payment reduction with respect to this 

measure for the CY 2016 payment 

determination or during the period of 

voluntary reporting. 

We anticipate a reduction in burden 

of approximately 840,517 hours or $25.2 

million across participating hospitals 

from the two measures we are removing 

and the measure we are making 

voluntary, as further detailed in sections 

XIII.C.3. and XIII.D.3.c. of this final rule 

with comment period, respectively, and 

the information collection requirements 

in section XIX.C.1. of this final rule with 

comment period. We refer readers to the 

information collection requirements 

section of this final rule with comment 

period (section XIX.C.1. of this final rule 

with comment period) for a detailed 

discussion of the financial burden of the 

requirements of the Hospital OQR 

Program. 

The validation requirements that we 

are finalizing for the CY 2017 payment 

determination and subsequent years 

will result in medical record 

documentation of approximately 6,000 

cases per quarter (up to 12 cases per 

quarter for 500 hospitals) submitted to 

the designated CMS contractor. In 

section XIII.H.3.e. of this final rule with 

comment period, we are finalizing our 

proposal to allow hospitals to submit 

medical record documentation for 

validation using either of two methods: 

(1) Through paper medical records; or 

(2) by securely transmitting electronic 

versions of medical information by 

either (a) downloading or copying the 

digital image (that is, a PDF) of the 

patient chart onto CD, DVD, or flash 

drive and shipping the electronic media 

following instructions specified on the 

QualityNet Web site; or (b) securely 

submitting digital images (PDFs) of 

patient charts using a Secure File 

Transfer Portal on the QualityNet Web 

site. 

As stated in prior rulemaking (76 FR 

74577), we will pay for the cost of 

sending paper medical record 

documentation to the designated CMS 

contractor at the rate of 12 cents per 

page for copying and approximately 

$1.00 per case for postage. For both new 

electronic methods, we are finalizing 

our proposal in the information 

collection requirements section of this 

final rule with comment period to 

reimburse hospitals for sending medical 

records electronically at a rate of $3.00 

per patient chart. 

As we stated in the CY 2014 OPPS/ 

ASC final rule with comment period (78 

FR 75192), we have found that an 

outpatient medical chart generally 

contains up to 10 pages. However, 

because we do not yet know how many 

hospitals will choose to submit data 

electronically or through paper, we 

cannot estimate the total cost of 

expenditures and are unable to estimate 

the number of hospitals that will fail the 

validation documentation submission 

requirement for the CY 2017 payment 

determination. Because we will pay for 

the data collection effort, we believe 

that a requirement for medical record 

documentation for up to12 cases per 

quarter for 500 hospitals for CY 2015 

represents a minimal burden to Hospital 

OQR Program participating hospitals. 

e. Effects of CY 2015 Policies for the 

ASCQR Program 

In section XIV. of this final rule with 

comment period, we are adopting 

policies affecting the ASCQR Program. 

Of 5,260 ASCs that met eligibility 

requirements for CY 2014, we 

determined that 116 ASCs did not meet 

the requirements to receive the full 

annual payment update. 

In section XIV.B.5. of this final rule 

with comment period, we are finalizing 

the adoption of one claims-based quality 

measure, ASC–12: Facility Seven-Day 

Risk-Standardized Hospital Visit Rate 

after Outpatient Colonoscopy, for the 

ASCQR Program beginning with the CY 

2018 payment determination, rather 

than beginning with the CY 2017 

payment determination as proposed. 

The measure is claims-based and will 

not require additional data reporting or 

other action by ASCs. Therefore, we do 

not anticipate that this measure will 

cause any additional ASCs to fail to 

meet the ASCQR Program requirements. 

We present the time and burdens 

associated with our finalized policies 

and proposals in section XIX.C.2. of this 

final rule with comment period. 

In section XIV.E.3.b. of this final rule 

with comment period, we noted the 3- 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 67027 

month delay in data collection for ASC– 

9 and ASC–10 for the CY 2016 payment 

determination. We do not believe that 

this 3-month delay in data collection 

will significantly affect the number of 

ASCs that meet the ASCQR Program 

requirements. 

In section XIV.E.3.c. of this final rule 

with comment period, we are finalizing 

our proposal that ASC–11, which was to 

be first included in the CY 2016 

payment determination, will not be 

included in the CY 2016 measure set, 

and that the measure will be voluntary 

for the CY 2017 payment determination 

and subsequent years. ASCs will not be 

subject to a payment reduction for the 

CY 2016 payment determination, nor 

will ASCs be subject to a payment 

reduction for the CY 2017 payment 

determination and subsequent years for 

failing to report this voluntary measure. 

Because this measure has not yet 

affected any payment determination, we 

do not believe that there will be any 

impact on the number of ASCs that meet 

the ASCQR Program requirements as a 

result of our decision not to include this 

measure in the measure set for the CY 

2016 payment determination and to 

make this measure voluntary for the CY 

2017 payment determination and 

subsequent years. 

We do not believe that the other 

measures we previously adopted will 

cause any additional ASCs to fail to 

meet the ASCQR Program requirements. 

(We refer readers to the CY 2014 OPPS/ 

ASC final rule with comment period for 

a list of these measures (78 FR 75130)). 

Further, we do not believe that any of 

the other proposals we are finalizing in 

this final rule with comment period will 

significantly affect the number of ASCs 

that do not receive a full annual 

payment update for the CY 2017 

payment determination. We are unable 

to estimate the number of ASCs that will 

not receive the full annual payment 

update based on the CY 2015 and CY 

2016 payment determinations (78 FR 

75192). For this reason, using the CY 

2014 payment determination numbers 

as a baseline, we estimate that 

approximately 116 ASCs will not 

receive the full annual payment update 

in CY 2017 due to failure to meet the 

ASCQR Program requirements. 

We invited public comment on the 

burden associated with these 

information collection requirements. We 

did not receive any public comments. 

f. Effects of Changes to the Rural 

Provider and Hospital Ownership 

Exceptions to the Physician SelfReferral Law 

Section 6001(a) of the Affordable Care 

Act amended the rural provider and 

hospital ownership exceptions to the 

physician self-referral law (sections 

1877(d)(2) and (d)(3) of the Act, 

respectively) to impose additional 

restrictions on physician ownership or 

investment in hospitals. The amended 

rural provider and hospital ownership 

exceptions provide that a hospital may 

not increase the number of operating 

rooms, procedure rooms, and beds 

beyond that for which the hospital was 

licensed on March 23, 2010 (or, in the 

case of a hospital that did not have a 

provider agreement in effect as of this 

date, but did have a provider agreement 

in effect on December 31, 2010, the date 

of effect of such agreement). We issued 

regulations addressing the prohibition 

against facility expansion in the CY 

2011 OPPS/ASC final rule with 

comment period (75 FR 72240). 

Section 6001(a)(3) of the Affordable 

Care Act added section 1877(i)(3)(A)(i) 

of the Act to set forth that the Secretary 

shall establish and implement an 

exception process to the prohibition on 

expansion of facility capacity. We 

issued regulations that govern the 

expansion exception process in the CY 

2012 OPPS/ASC final rule with 

comment period (76 FR 74517) at 42 

CFR 411.362(c). The regulations 

addressing the expansion exception 

process were issued by January 1, 2012, 

and the process was implemented on 

February 1, 2012. 

As required by the statute, the 

expansion exception process provides 

that hospitals that qualify as an 

‘‘applicable hospital’’ or a ‘‘high 

Medicaid facility’’ may request an 

exception to the prohibition on facility 

expansion. The existing expansion 

exception process requires the use of 

filed Medicare cost report data from the 

Healthcare Cost Report Information 

System (HCRIS) for hospitals to 

demonstrate that they satisfy the 

relevant eligibility criteria set forth in 

§ 411.362(c)(2) for applicable hospitals 

and § 411.362(c)(3) for high Medicaid 

facilities (76 FR 42350 through 42352). 

As discussed in section XV.C. of the CY 

2015 OPPS/ASC proposed rule (79 FR 

41054 through 41056), we proposed to 

permit physician-owned hospitals to 

use certain non-HCRIS data sources to 

demonstrate satisfaction of the 

expansion exception process eligibility 

criteria. In section XV.C. of this final 

rule with comment period, we are 

finalizing our proposal with certain 

modifications. Under our policy, we 

will continue to require each hospital 

seeking to qualify for an expansion 

exception to access and utilize data for 

its estimations or determinations to 

demonstrate that the hospital meets the 

relevant criteria and to provide a 

detailed explanation regarding whether 

and how it satisfies each of the relevant 

criteria. We believe the impact of our 

modification on affected hospitals will 

be minimal, given that the use of data 

from a non-HCRIS data source is 

voluntary. 

Our policy will require each 

requesting hospital also to provide 

actual notification that it is requesting 

an expansion exception directly to 

hospitals whose data are part of the 

comparisons set forth in 

§ 411.362(c)(2)(ii) and (c)(3)(ii) of the 

regulations, in addition to performing 

the other methods of notification 

specified in our existing regulations. We 

are finalizing this policy, and we believe 

the impact of this additional 

requirement on physician-owned 

hospitals will be minimal. 

We believe that our policy will affect 

a relatively small number of physicianowned hospitals. We estimate that there 

are approximately 265 physician-owned 

hospitals in the country. Since the 

process was implemented in February 

2012, we have received only four 

requests, only one of which has been 

considered sufficiently complete to 

continue with publication in the 

Federal Register, under the current 

regulations. We anticipate receiving a 

similar number of requests each year. 

We do not believe that we can use the 

four requests to estimate accurately the 

potential increase in operating rooms, 

procedure rooms, and beds pursuant to 

approved expansion exception requests, 

and we are not aware of any data that 

may indicate such an increase. At this 

time, we also have no data or 

projections that may help estimate the 

number of physicians that will be 

affected by these proposals as a result of 

their ownership interests in hospitals. 

We believe that beneficiaries may be 

positively impacted by our policies. 

Specifically, an increase in operating 

rooms, procedure rooms, and beds may 

augment the volume or nature of 

services offered by physician-owned 

hospitals. An expansion in the number 

of hospital beds may also permit 

additional inpatient admissions and 

overnight stays. Increased operating 

rooms, procedure rooms, and beds may 

result in improved access to health care 

facilities and services. We believe that 

our policies are necessary to conform 

our regulations to the amendments to 

section 1877 of the Act. 

We solicited public comments on 

each of the issues outlined above that 

contain estimates of the costs and 

benefits of the proposed rule. We 

specifically solicited comments on the 

potential impact on State governments, 

because we proposed to define external 


tkelley on DSK3SPTVN1PROD with RULES2
67028 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

data sources as data sources generated, 

maintained, or under the control of a 

State Medicaid agency. We did not 

receive any public comments on our 

estimates. 

g. Effects of Policies Related to CMSIdentified Overpayments Associated 

With Payment Data Submitted by 

Medicare Advantage (MA) 

Organizations and Medicare Part D 

Sponsors 

In section XVII. of this final rule with 

comment period, we discuss our final 

decisions to set forth in regulations a 

formal process, including appeals 

processes, that allows us to recoup 

overpayments in the limited set of 

circumstances where CMS makes a 

determination that an overpayment to 

an MA organization or Part D sponsor 

occurred because the organization or 

sponsor submitted erroneous payment 

data to CMS. It is difficult to predict 

how many times CMS will annually 

determine an overpayment due to 

erroneous payment data submitted to 

CMS by an MA organization or Part D 

sponsor and that, therefore, will be 

subject to the offset and appeals 

regulations. However, we predict that it 

will be highly unlikely to exceed 10 

cases a year and will probably be fewer. 

Further, electing to appeal a CMS 

overpayment determination under the 

final regulations is completely at the 

discretion of the MA organization or 

Part D sponsor. The MA organization or 

Part D sponsor may agree that the data 

require correction and resubmit the 

data; MA organizations and Part D 

sponsors that receive notification of an 

overpayment are under no obligation to 

initiate the appeal process. If the MA 

organization or Part D sponsor chooses 

not to appeal, there are no costs or 

burden associated with the appeal. If the 

MA organization or Part D sponsor 

chooses to appeal the overpayment 

determination, there will be costs 

associated with preparing the appeal 

request. 

We are establishing three levels of 

appeal (reconsideration, informal 

hearing, and Administrator review), 

each of which the MA organization or 

Part D sponsor will have to request. 

Once the appeal has been filed, 

however; there will be little or no cost 

experienced by the MA organization or 

Part D sponsor because the appeal 

process is on the record and will not 

involve oral testimony. The extent to 

which there will be costs associated 

with preparing the appeal request is 

subject to preference and choice. We 

estimate that it will take a plan 5 hours 

to prepare and file a reconsideration 

request. In terms of cost, it has been our 

experience that most appeals have been 

prepared by high-level officials of the 

plan or lawyers. According to the most 

recent wage data provided by the 

Bureau of Labor Statistics (BLS) for May 

2012, the mean hourly wage for the 

category of ‘‘Lawyers’’—which we 

believe, considering the variety of 

officials who have submitted appeals, is 

the most appropriate category—is 

$62.93. Multiplying this figure by 50 

hours (10 submissions × 5 hours) results 

in a projected annual cost burden of 

$3,147. We estimate the preparation and 

filing of a request for a hearing, or for 

Administrator’s review will take 2 

hours, at most, because the MA 

organization or Part D sponsor cannot 

submit new evidence. The hearing 

officer or Administrator is limited to a 

review of the record. Multiplying this 

figure by 40 hours (10 submissions × 4 

hours) results in a projected annual cost 

burden of $2,517. It is estimated that if 

the costs of benefits and overhead are 

included, the total annual costs for 

requests at the three levels will be 

approximately $11,000. 

B. Regulatory Flexibility Act (RFA) 

Analysis 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities, if a rule has a significant impact 

on a substantial number of small 

entities. For purposes of the RFA, we 

estimate that most hospitals, ASCs and 

CMHCs are small entities as that term is 

used in the RFA. For purposes of the 

RFA, most hospitals are considered 

small businesses according to the Small 

Business Administration’s size 

standards with total revenues of $38.5 

million or less in any single year. Most 

ASCs and most CMHCs are considered 

small businesses with total revenues of 

$15 million or less in any single year. 

We estimate that this final rule with 

comment period may have a significant 

impact on approximately 2,006 

hospitals with voluntary ownership. For 

details, see the Small Business 

Administration’s ‘‘Table of Small 

Business Size Standards’’ at http://

www.sba.gov/content/table-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 603 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a metropolitan statistical area and has 

100 or fewer beds. We estimate that this 

final rule with comment period may 

have a significant impact on 

approximately 709 small rural hospitals. 

The analysis above, together with the 

remainder of this preamble, provides a 

regulatory flexibility analysis and a 

regulatory impact analysis. 

C. Unfunded Mandates Reform Act 

Analysis 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require spending in any 1 year of $100 

million in 1995 dollars, updated 

annually for inflation. That threshold 

level is currently approximately $141 

million. This final rule with comment 

period does not mandate any 

requirements for State, local, or tribal 

governments, or for the private sector. 

D. Conclusion 

The changes we are making in this 

final rule with comment period will 

affect all classes of hospitals paid under 

the OPPS and will affect both CMHCs 

and ASCs. We estimate that most classes 

of hospitals paid under the OPPS will 

experience a modest increase or a 

minimal decrease in payment for 

services furnished under the OPPS in 

CY 2015. Table 49 demonstrates the 

estimated distributional impact of the 

OPPS budget neutrality requirements 

that will result in a 2.3 percent increase 

in payments for all services paid under 

the OPPS in CY 2015, after considering 

all of the changes to APC 

reconfiguration and recalibration, as 

well as the OPD fee schedule increase 

factor, wage index changes, including 

the frontier State wage index 

adjustment, estimated payment for 

outliers, and changes to the passthrough payment estimate. However, 

some classes of providers that are paid 

under the OPPS will experience more 

significant gains and others will 

experience modest losses in OPPS 

payments in CY 2015. 

The updates to the ASC payment 

system for CY 2015 will affect each of 

the approximately 5,300 ASCs currently 

approved for participation in the 

Medicare program. The effect on an 

individual ASC will depend on its mix 

of patients, the proportion of the ASC’s 

patients who are Medicare beneficiaries, 

the degree to which the payments for 

the procedures offered by the ASC are 

changed under the ASC payment 

system, and the extent to which the ASC 

provides a different set of procedures in 

the coming year. Table 50 demonstrates 

the estimated distributional impact 

among ASC surgical specialties of the 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 67029 

MFP-adjusted CPI–U update factor of 

1.4 percent for CY 2015. 

XXII. Federalism Analysis 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

costs on State and local governments, 

preempts State law, or otherwise has 

Federalism implications. We have 

examined the OPPS and ASC provisions 

included in this final rule with 

comment period in accordance with 

Executive Order 13132, Federalism, and 

have determined that they will not have 

a substantial direct effect on State, local 

or tribal governments, preempt State 

law, or otherwise have a Federalism 

implication. As reflected in Table 49 of 

this final rule with comment period, we 

estimate that OPPS payments to 

governmental hospitals (including State 

and local governmental hospitals) will 

increase by 2.1 percent under this final 

rule with comment period. While we do 

not know the number of ASCs or 

CMHCs with government ownership, we 

anticipate that it is small. The analyses 

we have provided in this section of this 

final rule with comment period, in 

conjunction with the remainder of this 

document, demonstrate that this final 

rule with comment period is consistent 

with the regulatory philosophy and 

principles identified in Executive Order 

12866, the RFA, and section 1102(b) of 

the Act. 

This final rule with comment period 

will affect payments to a substantial 

number of small rural hospitals and a 

small number of rural ASCs, as well as 

other classes of hospitals, CMHCs, and 

ASCs, and some effects may be 

significant. 

List of Subjects 

42 CFR Part 411 

Kidney diseases, Medicare, Physician 

referral, Reporting and recordkeeping 

requirements. 

42 CFR Part 412 

Administrative practice and 

procedure, Health facilities, Medicare, 

Puerto Rico, Reporting and 

recordkeeping requirements. 

42 CFR Part 416 

Health facilities, Health professions, 

Medicare, Reporting and recordkeeping 

requirements. 

42 CFR Part 419 

Hospitals, Medicare, Reporting and 

recordkeeping requirements. 

42 CFR Part 422 

Administrative practice and 

procedure, Health facilities, Health 

maintenance, organizations (HMO), 

Medicare, Penalties, Privacy, Reporting 

and recordkeeping requirements. 

42 CFR Part 423 

Administrative practice and 

procedure, Emergency medical services, 

Health facilities, Health maintenance 

organizations (HMO), Health 

professionals, Medicare, Penalties, 

Privacy, Reporting and recordkeeping 

requirements. 

42 CFR Part 424 

Emergency medical services, Health 

professions, Medicare. 

For reasons stated in the preamble of 

this document, the Centers for Medicare 

& Medicaid Services is amending 42 

CFR Chapter IV as set forth below: 

PART 411—EXCLUSIONS FROM 

MEDICARE AND LIMITATION ON 

MEDICARE PAYMENT 

■ 1. The authority citation for part 411 

continues to read as follows: 

Authority: Secs. 1102, 1860D–1 through 

1860D–42, 1871, and 1877 of the Social 

Security Act (42 U.S.C. 1302, 1395w–101 

through 1395w–152, 1395hh, and 1395nn). 

■ 2. Section 411.362 is amended by— 

■ a. Under paragraph (a), adding a 

definition of ‘‘External data source’’ in 

alphabetical order. 

■ b. Revising paragraphs (c)(2)(ii), 

(c)(2)(iv), (c)(2)(v), (c)(3)(ii), and (c)(5). 

The addition and revisions read as 

follows: 

§ 411.362 Additional requirements 

concerning physician ownership and 

investment in hospitals. 

(a) * * * 

External data source means a data 

source that— 

(1) Is generated, maintained, or under 

the control of a State Medicaid agency; 

(2) Is reliable and transparent; 

(3) Maintains data that, for purposes 

of the process described in paragraph (c) 

of this section, are readily available and 

accessible to the requesting hospital, 

comparison hospitals, and CMS; and 

(4) Maintains or generates data that, 

for purposes of the process described in 

paragraph (c) of this section, are 

accurate, complete, and objectively 

verifiable. 

* * * * * 

(c) * * * 

(2) * * * 

(ii) Medicaid inpatient admissions. 

Has an annual percent of total inpatient 

admissions under Medicaid that is equal 

to or greater than the average percent 

with respect to such admissions for all 

hospitals located in the county in which 

the hospital is located during the most 

recent 12-month period for which data 

are available as of the date that the 

hospital submits its request. For 

purposes of this paragraph, the most 

recent 12-month period for which data 

are available means the most recent 12- 

month period for which the data source 

used contains all data from the 

requesting hospital and each hospital 

located in the same county as the 

requesting hospital. 

(A) Until such time that the 

Healthcare Cost Report Information 

System (HCRIS) contains sufficiently 

complete inpatient Medicaid discharge 

data, a hospital may use filed Medicare 

hospital cost report data or data from an 

external data source (as defined in 

paragraph (a) of this section) to estimate 

its annual percent of total inpatient 

admissions under Medicaid and the 

average percent with respect to such 

admissions for all hospitals located in 

the county in which the hospital is 

located. 

(B) On or after such date that the 

Secretary determines that HCRIS 

contains sufficiently complete inpatient 

Medicaid discharge data, a hospital may 

use only filed Medicare hospital cost 

report data to estimate its annual 

percent of total inpatient admissions 

under Medicaid and the average percent 

with respect to such admissions for all 

hospitals located in the county in which 

the hospital is located. 

* * * * * 

(iv) Average bed capacity. Is located 

in a State in which the average bed 

capacity in the State is less than the 

national average bed capacity during the 

most recent fiscal year for which HCRIS, 

as of the date that the hospital submits 

its request, contains data from a 

sufficient number of hospitals to 

determine a State’s average bed capacity 

and the national average bed capacity. 

CMS will provide on its Web site State 

average bed capacities and the national 

average bed capacity. For purposes of 

this paragraph, ‘‘sufficient number’’ 

means the number of hospitals, as 

determined by CMS, that would ensure 

that the determination under this 

paragraph would not materially change 

after additional hospital data are 

reported. 

(v) Average bed occupancy. Has an 

average bed occupancy rate that is 

greater than the average bed occupancy 

rate in the State in which the hospital 

is located during the most recent fiscal 

year for which HCRIS, as of the date that 

the hospital submits its request, 

contains data from a sufficient number 


tkelley on DSK3SPTVN1PROD with RULES2
67030 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

of hospitals to determine the requesting 

hospital’s average bed occupancy rate 

and the relevant State’s average bed 

occupancy rate. A hospital must use 

filed hospital cost report data to 

determine its average bed occupancy 

rate. CMS will provide on its Web site 

State average bed occupancy rates. For 

purposes of this paragraph, ‘‘sufficient 

number’’ means the number of 

hospitals, as determined by CMS, that 

would ensure that the determination 

under this paragraph would not 

materially change after additional 

hospital data are reported. 

(3) * * * 

(ii) Medicaid inpatient admissions. 

With respect to each of the 3 most 

recent 12-month periods for which data 

are available as of the date the hospital 

submits its request, has an annual 

percent of total inpatient admissions 

under Medicaid that is estimated to be 

greater than such percent with respect 

to such admissions for any other 

hospital located in the county in which 

the hospital is located. For purposes of 

this paragraph, the most recent 12- 

month period for which data are 

available means the most recent 12- 

month period for which the data source 

used contains all data from the 

requesting hospital and every hospital 

located in the same county as the 

requesting hospital. 

(A) Until such time that the 

Healthcare Cost Report Information 

System (HCRIS) contains sufficiently 

complete inpatient Medicaid discharge 

data, a hospital may use filed Medicare 

hospital cost report data or data from an 

external data source (as defined in 

paragraph (a) of this section) to estimate 

its annual percentage of total inpatient 

admissions under Medicaid and the 

annual percentages of total inpatient 

admissions under Medicaid for every 

other hospital located in the county in 

which the hospital is located. 

(B) On or after such date that the 

Secretary determines that HCRIS 

contains sufficiently complete inpatient 

Medicaid discharge data, a hospital may 

use only filed Medicare hospital cost 

report data to estimate its annual 

percentage of total inpatient admissions 

under Medicaid and the annual 

percentages of total inpatient 

admissions under Medicaid for every 

other hospital located in the county in 

which the hospital is located. 

* * * * * 

(5) Community input and timing of 

complete request. Upon submitting a 

request for an exception and until the 

hospital receives a CMS decision, the 

hospital must disclose on any public 

Web site for the hospital that it is 

requesting an exception and must also 

provide actual notification that it is 

requesting an exception, in either 

electronic or hard copy form, directly to 

hospitals whose data are part of the 

comparisons in paragraphs (c)(2)(ii) and 

(c)(3)(ii) of this section. Individuals and 

entities in the hospital’s community 

may provide input with respect to the 

hospital’s request no later than 30 days 

after CMS publishes notice of the 

hospital’s request in the Federal 

Register. Such input must take the form 

of written comments. The written 

comments must be either mailed or 

submitted electronically to CMS. If CMS 

receives written comments from the 

community, the hospital has 30 days 

after CMS notifies the hospital of the 

written comments to submit a rebuttal 

statement. 

(i) If only filed Medicare hospital cost 

report data are used in the hospital’s 

request, the written comments, and the 

hospital’s rebuttal statement— 

(A) A request will be deemed 

complete at the end of the 30-day 

comment period if CMS does not 

receive written comments from the 

community. 

(B) A request will be deemed 

complete at the end of the 30-day 

rebuttal period, regardless of whether 

the hospital submits a rebuttal 

statement, if CMS receives written 

comments from the community. 

(ii) If data from an external data 

source are used in the hospital’s request, 

the written comments, or the hospital’s 

rebuttal statement— 

(A) A request will be deemed 

complete no later than 180 days after 

the end of the 30-day comment period 

if CMS does not receive written 

comments from the community. 

(B) A request will be deemed 

complete no later than 180 days after 

the end of the 30-day rebuttal period, 

regardless of whether the hospital 

submits a rebuttal statement, if CMS 

receives written comments from the 

community. 

* * * * * 

PART 412—PROSPECTIVE PAYMENT 

SYSTEMS FOR INPATIENT HOSPITAL 

SERVICES 

■ 3. The authority citation for Part 412 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh), sec. 124 of Pub. L. 106–113 (113 

Stat. 1501A–332), sec. 1206 of Pub. L. 113– 

67, and sec 112 of Pub. L. 113–93. 

§ 412.3 [Amended] 

■ 4. Section 412.3 is amended by— 

■ a. Removing paragraph (c). 

■ b. Redesignating paragraphs (d) and 

(e) as paragraphs (c) and (d), 

respectively. 

■ c. In redesignated paragraph (d)(1), 

removing the cross-reference ‘‘paragraph 

(e)(2)’’ and adding in its place the crossreference ‘‘paragraph (d)(2)’’. 

PART 416—AMBULATORY SURGICAL 

SERVICES 

■ 5. The authority citation for Part 416 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

■ 6. Section 416.164 is amended by 

revising paragraphs (a)(11) and (b)(5) to 

read as follows: 

§ 416.164 Scope of ASC services. 

(a) * * * 

(11) Radiology services for which 

separate payment is not allowed under 

the OPPS and other diagnostic tests or 

interpretive services that are integral to 

a surgical procedure, except certain 

diagnostic tests for which separate 

payment is allowed under the OPPS; 

* * * * * 

(b) * * * 

(5) Certain radiology services and 

certain diagnostic tests for which 

separate payment is allowed under the 

OPPS. 

* * * * * 

■ 7. Section 416.171 is amended by 

revising paragraphs (b)(1), (b)(2), and (d) 

introductory text to read as follows: 

§ 416.171 Determination of payment rates 

for ASC services. 

* * * * * 

(b) * * * 

(1) Covered ancillary services 

specified in § 416.164(b), with the 

exception of radiology services and 

certain diagnostic tests as provided in 

§ 416.164(b)(5); 

(2) The device portion of deviceintensive procedures, which are 

procedures assigned to an APC with a 

device cost greater than 40 percent of 

the APC costs when calculated 

according to the standard OPPS APC 

ratesetting methodology. 

* * * * * 

(d) Limitation on payment rates for 

office-based surgical procedures and 

covered ancillary radiology services and 

certain diagnostic tests. 

Notwithstanding the provisions of 

paragraph (a) of this section, for any 

covered surgical procedure under 

§ 416.166 that CMS determines is 

commonly performed in physicians’ 

offices or for any covered ancillary 

radiology service or diagnostic test 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 67031 

under § 416.164(b)(5), excluding those 

listed in paragraphs (d)(1) and (d)(2) of 

this section, the national unadjusted 

ASC payment rates for these procedures 

and services will be the lesser of the 

amount determined under paragraph (a) 

of this section or the amount calculated 

at the nonfacility practice expense 

relative value units under 

§ 414.22(b)(5)(i)(B) of this chapter 

multiplied by the conversion factor 

described in § 414.20(a)(3) of this 

chapter. 

* * * * * 

PART 419—PROSPECTIVE PAYMENT 

SYSTEM FOR HOSPITAL OUTPATIENT 

DEPARTMENT SERVICES 

■ 8. The authority citation for Part 419 

continues to read as follows: 

Authority: Secs. 1102, 1833(t), and 1871 

of the Social Security Act (42 U.S.C. 1302, 

1395l(t), and 1395hh). 

■ 9. Section 419.2 is amended by 

revising paragraphs (b)(7) and (b)(16) to 

read as follows: 

§ 419.2 Basis of payment. 

* * * * * 

(b) * * * 

(7) Ancillary services; 

* * * * * 

(16) Drugs and biologicals that 

function as supplies when used in a 

surgical procedure (including, but not 

limited to, skin substitutes and similar 

products that aid wound healing and 

implantable biologicals); 

* * * * * 

■ 10. Section 419.22 is amended by 

revising paragraph (j) to read as follows: 

§ 419.22 Hospital services excluded from 

payment under the hospital outpatient 

prospective payment system. 

* * * * * 

(j) Except as provided in 

§ 419.2(b)(11), prosthetic devices and 

orthotic devices. 

* * * * * 

■ 11. Section 419.32 is amended by 

adding paragraph (b)(1)(iv)(B)(6) to read 

as follows: 

§ 419.32 Calculation of prospective 

payment rates for hospital outpatient 

services. 

* * * * * 

(b) * * * 

(1) * * * 

(iv) * * * 

(B) * * * 

(6) For calendar year 2015, a 

multifactor productivity adjustment (as 

determined by CMS) and 0.2 percentage 

point. 

* * * * * 

§ 419.46 [Amended] 

■ 12. Section 419.46 is amended by— 

■ a. In paragraph (c)(1), removing the 

phrase ‘‘section 1833(17)(C)’’ and 

adding in its place the phrase ‘‘section 

1833(t)(17)(C)’’. 

■ b. In paragraph (d) introductory text 

and paragraph (d)(1), removing the term 

‘‘waiver’’ and adding in its place the 

term ‘‘exception’’ each time it appears. 

■ c. In paragraph (d)(2), removing the 

term ‘‘waivers’’ and adding in its place 

the term ‘‘exceptions’’. 

■ d. In paragraph (e) introductory text, 

removing the phrase ‘‘section 

1833(17)(C)’’ and adding in its place the 

phrase ‘‘section 1833(t)(17)(C)’’. 

■ 13. Section 419.64 is amended by 

revising paragraph (a)(4)(iv) to read as 

follows: 

§ 419.64 Transitional pass-through 

payments: Drugs and biologicals. 

* * * * * 

(a) * * * 

(4) * * * 

(iv) A biological that is not a skin 

substitute or similar product that aids 

wound healing. 

* * * * * 

■ 14. Section 419.66 is amended by 

revising paragraph (b)(3) and removing 

paragraph (b)(4)(iii) to read as follows: 

§ 419.66 Transitional pass-through 

payments: Medical devices. 

* * * * * 

(b) * * * 

(3) The device is an integral part of 

the service furnished, is used for one 

patient only, comes in contact with 

human tissue, and is surgically 

implanted or inserted (either 

permanently or temporarily) or applied 

in or on a wound or other skin lesion. 

* * * * * 

PART 422—MEDICARE ADVANTAGE 

PROGRAM 

■ 15. The authority citation for Part 422 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

■ 16. A new § 422.330 is added to 

subpart G to read as follows: 

§ 422.330 CMS-identified overpayments 

associated with payment data submitted by 

MA organizations. 

(a) Definitions. For purposes of this 

section— 

Applicable reconciliation date occurs 

on the date of the annual final deadline 

for risk adjustment data submission 

described at § 422.310(g)(2)(ii). 

Erroneous payment data means 

payment data that should not have been 

submitted either because the data 

submitted are inaccurate or because the 

data are inconsistent with Medicare Part 

C requirements. 

Payment data means data submitted 

by an MA organization to CMS and used 

for payment purposes, including 

enrollment data and data submitted 

under § 422.310. 

(b) Request to correct payment data. 

(1) When CMS identifies erroneous 

payment data submitted by an MA 

organization (other than an error 

identified through the process described 

in § 422.311), CMS may send a data 

correction notice to the MA organization 

requesting that the MA organization 

correct the payment data. 

(2) The notice will include or make 

reference to the specific payment data 

that need to be corrected, the reason 

why CMS believes that the payment 

data are erroneous, and the timeframe 

for correcting the payment data. 

(c) Payment offset. (1) If the MA 

organization fails to submit the 

corrected payment data within the 

timeframe as requested in accordance 

with paragraph (b) of this section, CMS 

will conduct a payment offset against 

payments made to the MA organization 

if— 

(i) The payment error affects 

payments for any of the 6 most recently 

completed payment years; and 

(ii) The payment error for a particular 

payment year is identified after the 

applicable reconciliation date for that 

payment year. 

(2) CMS will calculate the payment 

offset amount using the correct payment 

data and a payment algorithm that 

applies the payment rules for the 

applicable year. 

(d) Payment offset notification. CMS 

will issue a payment offset notice to the 

MA organization that includes at least 

the following: 

(1) The dollar amount of the offset 

from plan payments. 

(2) An explanation of how the 

erroneous data were identified and used 

to calculate the payment offset amount. 

(3) An explanation that, if the MA 

organization disagrees with the payment 

offset, it may request an appeal within 

30 days of issuance of the payment 

offset notification. 

(e) Appeals process. If an MA 

organization does not agree with the 

payment offset described in paragraph 

(c) of this section, it may appeal under 

the following three-level appeal process: 

(1) Reconsideration. An MA 

organization may request 

reconsideration of the payment offset 

described in paragraph (c) of this 

section, according to the following 

process: 


tkelley on DSK3SPTVN1PROD with RULES2
67032 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

(i) Manner and timing of request. A 

written request for reconsideration must 

be filed within 30 days from the date 

that CMS issued the payment offset 

notice to the MA organization. 

(ii) Content of request. The written 

request for reconsideration must specify 

the findings or issues with which the 

MA organization disagrees and the 

reasons for its disagreement. As part of 

its request for reconsideration, the MA 

organization may include any additional 

documentary evidence in support of its 

position. Any additional evidence must 

be submitted with the request for 

reconsideration. Additional information 

submitted after this time will be rejected 

as untimely. 

(iii) Conduct of reconsideration. In 

conducting the reconsideration, the 

CMS reconsideration official reviews 

the underlying data that were used to 

determine the amount of the payment 

offset and any additional documentary 

evidence timely submitted by the MA 

organization. 

(iv) Reconsideration decision. The 

CMS reconsideration official informs 

the MA organization of its decision on 

the reconsideration request. 

(v) Effect of reconsideration decision. 

The decision of the CMS 

reconsideration official is final and 

binding unless a timely request for an 

informal hearing is filed in accordance 

with paragraph (e)(2) of this section. 

(2) Informal hearing. An MA 

organization dissatisfied with CMS’ 

reconsideration decision made under 

paragraph (e)(1) of this section is 

entitled to an informal hearing as 

provided for under paragraphs (e)(2)(i) 

through (e)(2)(v) of this section. 

(i) Manner and timing for request. A 

request for an informal hearing must be 

made in writing and filed with CMS 

within 30 days of the date of CMS’ 

reconsideration decision. 

(ii) Content of request. The request for 

an informal hearing must include a copy 

of the reconsideration decision and 

must specify the findings or issues in 

the decision with which the MA 

organization disagrees and the reasons 

for its disagreement. 

(iii) Informal hearing procedures. The 

informal hearing will be conducted in 

accordance with the following: 

(A) CMS provides written notice of 

the time and place of the informal 

hearing at least 30 days before the 

scheduled date. 

(B) The informal hearing is conducted 

by a CMS hearing officer who neither 

receives testimony nor accepts any new 

evidence that was not timely presented 

with the reconsideration request. The 

CMS hearing officer is limited to the 

review of the record that was before the 

CMS reconsideration official when CMS 

made its reconsideration determination. 

(C) The CMS hearing officer will 

review the proceeding before the CMS 

reconsideration official on the record 

made before the CMS reconsideration 

official using the clearly erroneous 

standard of review. 

(iv) Decision of the CMS hearing 

officer. The CMS hearing officer decides 

the case and sends a written decision to 

the MA organization explaining the 

basis for the decision. 

(v) Effect of hearing officer’s decision. 

The hearing officer’s decision is final 

and binding, unless the decision is 

reversed or modified by the 

Administrator in accordance with 

paragraph (e)(3) of this section. 

(3) Review by the Administrator. The 

Administrator review will be conducted 

in the following manner: 

(i) An MA organization that has 

received a hearing officer’s decision 

may request review by the 

Administrator within 30 days of the 

date of issuance of the hearing officer’s 

decision under paragraph (e)(2)(iv) of 

this section. The MA organization may 

submit written arguments to the 

Administrator for review. 

(ii) After receiving a request for 

review, the Administrator has the 

discretion to elect to review the hearing 

officer’s determination in accordance 

with paragraph (e)(3)(iv) of this section 

or to decline to review the hearing 

officer’s decision. 

(iii) If the Administrator declines to 

review the hearing officer’s decision, the 

hearing officer’s decision is final and 

binding. 

(iv) If the Administrator elects to 

review the hearing officer’s decision, the 

Administrator will review the hearing 

officer’s decision, as well as any 

information included in the record of 

the hearing officer’s decision and any 

written argument submitted by the MA 

organization, and determine whether to 

uphold, reverse, or modify the hearing 

officer’s decision. 

(v) The Administrator’s determination 

is final and binding. 

(f) Matters subject to appeal and 

burden of proof. (1) The MA 

organization’s appeal is limited to CMS’ 

finding that the payment data submitted 

by the MA organization are erroneous. 

(2) The MA organization bears the 

burden of proof by a preponderance of 

the evidence in demonstrating that 

CMS’ finding that the payment data 

were erroneous was incorrect or 

otherwise inconsistent with applicable 

program requirements. 

(g) Applicability of appeals process. 

The appeals process under paragraph (e) 

of this section applies only to payment 

offsets under paragraph (c) of this 

section. 

PART 423—VOLUNTARY MEDICARE 

PRESCRIPTION DRUG BENEFIT 

■ 17. The authority citation for Part 423 

continues to read as follows: 

Authority: Secs. 1102, 1106, 1860D–1 

through 1860D–42, and 1871 of the Social 

Security Act (42 U.S.C. 1302, 1306, 1395w– 

101 through 1395w–152, and 1395hh). 

■ 18. A new § 423.352 is added to read 

as follows: 

§ 423.352 CMS-identified overpayments 

associated with payment data submitted by 

Part D sponsors. 

(a) Definitions. For purposes of this 

section— 

Applicable reconciliation date occurs 

on the later of either the annual 

deadline for submitting— 

(1) Prescription drug event (PDE) data 

for the annual Part D payment 

reconciliations referred to in 

§ 423.343(c) and (d); or 

(2) Direct and indirect remuneration 

data. 

Erroneous payment data means 

payment data that should not have been 

submitted either because the data 

submitted are inaccurate or because the 

data are inconsistent with Medicare Part 

D requirements. 

Payment data means data submitted 

by a Part D sponsor to CMS and used 

for payment purposes, including 

enrollment data and data submitted 

under § 423.329(b)(3), § 423.336(c)(1), 

and § 423.343, and data provided for 

purposes of supporting allowable 

reinsurance costs and allowable risk 

corridor costs as defined in § 423.308, 

including data submitted to CMS 

regarding direct and indirect 

remuneration. 

(b) Request to correct payment data. 

(1) When CMS identifies erroneous 

payment data submitted by a Part D 

sponsor, CMS may send a data 

correction notice to the Part D sponsor 

requesting that the Part D sponsor 

correct the payment data. 

(2) The notice will include or make 

reference to the specific payment data 

that need to be corrected, the reason 

why CMS believes that the payment 

data are erroneous, and the timeframe 

for correcting the payment data. 

(c) Payment offset. (1) If the Part D 

sponsor fails to submit the corrected 

payment data within the timeframe as 

requested in accordance with paragraph 

(b) of this section, CMS will conduct a 

payment offset against payments made 

to the Part D sponsor if— 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 67033 

(i) The payment error affects 

payments for any of the 6 most recently 

completed payment years; and 

(ii) The payment error for a particular 

payment year is identified after the 

applicable reconciliation date for that 

payment year. 

(2) CMS will calculate the payment 

offset amount using the correct payment 

data and a payment algorithm that 

applies the payment rules for the 

applicable year. 

(d) Payment offset notification. CMS 

will issue a payment offset notice to the 

Part D sponsor that includes at least the 

following: 

(1) The dollar amount of the offset 

from plan payments. 

(2) An explanation of how the 

erroneous data were identified and used 

to calculate the payment offset amount. 

(3) An explanation that, if the Part D 

sponsor disagrees with the payment 

offset, it may request an appeal within 

30 days of issuance of the payment 

offset notification. 

(e) Appeals process. If a Part D 

sponsor does not agree with the 

payment offset described in paragraph 

(c) of this section, it may appeal under 

the following three-level appeal process: 

(1) Reconsideration. A Part D sponsor 

may request reconsideration of the 

payment offset described in paragraph 

(c) of this section, according to the 

following process: 

(i) Manner and timing of request. A 

written request for reconsideration must 

be filed within 30 days from the date 

that CMS issued the payment offset 

notice to the Part D sponsor. 

(ii) Content of request. The written 

request for reconsideration must specify 

the findings or issues with which the 

Part D sponsor disagrees and the reasons 

for its disagreement. As part of its 

request for reconsideration, the Part D 

sponsor may include any additional 

documentary evidence in support of its 

position. Any additional evidence must 

be submitted with the request for 

reconsideration. Additional information 

submitted after this time will be rejected 

as untimely. 

(iii) Conduct of reconsideration. In 

conducting the reconsideration, the 

CMS reconsideration official reviews 

the underlying data that were used to 

determine the amount of the payment 

offset and any additional documentary 

evidence timely submitted by the Part D 

sponsor. 

(iv) Reconsideration decision. The 

CMS reconsideration official informs 

the Part D sponsor of its decision on the 

reconsideration request. 

(v) Effect of reconsideration decision. 

The decision of the CMS 

reconsideration official is final and 

binding unless a timely request for an 

informal hearing is filed in accordance 

with paragraph (e)(2) of this section. 

(2) Informal hearing. A Part D sponsor 

dissatisfied with CMS’ reconsideration 

decision made under paragraph (e)(1) of 

this section is entitled to an informal 

hearing as provided for under 

paragraphs (e)(2)(i) through (e)(2)(v) of 

this section. 

(i) Manner and timing for request. A 

request for an informal hearing must be 

made in writing and filed with CMS 

within 30 days of the date of CMS’ 

reconsideration decision. 

(ii) Content of request. The request for 

an informal hearing must include a copy 

of the reconsideration decision and 

must specify the findings or issues in 

the decision with which the Part D 

sponsor disagrees and the reasons for its 

disagreement. 

(iii) Informal hearing procedures. The 

informal hearing will be conducted in 

accordance with the following: 

(A) CMS provides written notice of 

the time and place of the informal 

hearing at least 30 days before the 

scheduled date. 

(B) The informal hearing is conducted 

by a CMS hearing officer who neither 

receives testimony nor accepts any new 

evidence that was not timely presented 

with the reconsideration request. The 

CMS hearing officer is limited to the 

review of the record that was before the 

CMS reconsideration official when CMS 

made its reconsideration determination. 

(C) The CMS hearing officer will 

review the proceeding before the CMS 

reconsideration official on the record 

made before the CMS reconsideration 

official using the clearly erroneous 

standard of review. 

(iv) Decision of the CMS hearing 

officer. The CMS hearing officer decides 

the case and sends a written decision to 

the Part D sponsor explaining the basis 

for the decision. 

(v) Effect of hearing officer’s decision. 

The hearing officer’s decision is final 

and binding, unless the decision is 

reversed or modified by the 

Administrator in accordance with 

paragraph (e)(3) of this section. 

(3) Review by the Administrator. The 

Administrator review will be conducted 

in the following manner: 

(i) A Part D sponsor that has received 

a hearing officer’s decision may request 

review by the Administrator within 30 

days of the date of issuance of the 

hearing officer’s decision under 

paragraph (e)(2)(iv) of this section. The 

Part D sponsor may submit written 

arguments to the Administrator for 

review. 

(ii) After receiving a request for 

review, the Administrator has the 

discretion to elect to review the hearing 

officer’s determination in accordance 

with paragraph (e)(3)(iv) of this section 

or to decline to review the hearing 

officer’s decision. 

(iii) If the Administrator declines to 

review the hearing officer’s decision, the 

hearing officer’s decision is final and 

binding. 

(iv) If the Administrator elects to 

review the hearing officer’s decision, the 

Administrator will review the hearing 

officer’s decision, as well as any 

information included in the record of 

the hearing officer’s decision and any 

written argument submitted by the Part 

D sponsor, and determine whether to 

uphold, reverse, or modify the hearing 

officer’s decision. 

(v) The Administrator’s determination 

is final and binding. 

(f) Matters subject to appeal and 

burden of proof. (1) The Part D 

sponsor’s appeal is limited to CMS’ 

finding that the payment data submitted 

by the Part D sponsor are erroneous. 

(2) The Part D sponsor bears the 

burden of proof by a preponderance of 

the evidence in demonstrating that 

CMS’ finding that the payment data 

were erroneous was incorrect or 

otherwise inconsistent with applicable 

program requirements. 

(g) Applicability of appeals process. 

The appeals process under paragraph (e) 

of this section applies only to payment 

offsets under paragraph (c) of this 

section. 

PART 424—CONDITIONS FOR 

MEDICARE PAYMENT 

■ 19. The authority citation for Part 424 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

■ 20. Section 424.13 is amended by— 

■ a. Revising paragraph (a) introductory 

text. 

■ b. Removing paragraph (a)(1). 

■ c. Redesignating paragraphs (a)(2), (3), 

and (4) as paragraphs (a)(1), (2), and (3), 

respectively. 

■ d. Revising redesignated paragraph 

(a)(1)(i). 

■ e. Revising paragraph (b). 

The revisions read as follows: 

§ 424.13 Requirements for inpatient 

services of hospitals other than inpatient 

psychiatric facilities. 

(a) Content of certification and 

recertification. Medicare Part A pays for 

inpatient hospital services (other than 

inpatient psychiatric facility services) 

for cases that are 20 inpatient days or 

more, or are outlier cases under subpart 

F of part 412 of this chapter, only if a 


tkelley on DSK3SPTVN1PROD with RULES2
67034 Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations 

physician certifies or recertifies the 

following: 

(1) * * * 

(i) Continued hospitalization of the 

patient for medical treatment or 

medically required diagnostic study; or 

* * * * * 

(b) Timing of certification. For outlier 

cases under subpart F of Part 412 of this 

chapter, the certification must be signed 

and documented in the medical record 

and as specified in paragraphs (e) 

through (h) of this section. For all other 

cases, the certification must be signed 

and documented no later than 20 days 

into the hospital stay. 

* * * * * 

Dated: October 22, 2014. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Dated: October 26, 2014. 

Sylvia M. Burwell, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2014–26146 Filed 10–31–14; 4:15 pm] 

BILLING CODE 4120–01–P 


tkelley on DSK3SPTVN1PROD with RULES2